The market isn't all psychology, but a lot of it is.
Huge numbers of investors, including, sorry to say, institutional investors don't know how to interpret a balance sheet, much less determine the quality of management of a company from its financial reports. As you note, many of them rely on technical analysis because they think a trend line, based on price and volume and a lot of lines drawn on peaks and troughs, means something. In fact, TA by its very nature doesn't consider the financial report because it assumes (wrongly, I believe) that all this information is automatically built into the price.
The performance of AAPL today exhibits precisely what many who understand market psychology have been saying for quite a while: When the quoted price comes down from the stratosphere, no matter what the cause, more people get interested.
You haven't opened a can of worms but merely have emphasized what goes on routinely.
Art |
