[ Chat, QDEK, and Rational Analysis ]
Wink and others,
Thanks very much for the encouraging words of support. It's time I leave this QSound incident in the past and move on. The time and effort spent on this was tremendous, but I will continue to look at this peripherally as my trading career continues. There will be other opportunities, I'm sure.
And for you Wink:
members.aol.com
Please pardon the simplicity of the chart analysis; in my opinion, it's currently harmful to one's portfolio to be invested in this company from an opportunity cost standpoint. Stocks with such technical characteristics will not attract the sponsorship of traders or institutions proficient in the art of technical analysis IMO.
While I have not looked at the company's fundamentals, the chart has told me enough of the story to show that the company has continually underperformed relative to expectations, and that no bullish prospects currently exist for this issue in the future.
Technical Analysts (a.k.a. Technicians) "cheat" when they look at a chart, because they can get the entire story of the company's fundamentals with just one brief look. The chart is like a research assistant. Everyone's cumulative knowledge of the company is automatically reflected on the chart. Pure Fundamental Analysts, who don't read charts, would take a much longer route to get to the same conclusion (examination of balance sheet, cash flow developments, etc.)
Of course, combined in a chart are the elements of the company's fundamentals and (don't forget this) the forces of emotion. It's up to the Rational Analyst (the Technical and Fundamental Analyst) to determine which is which, and to exploit the two to his/her advantage.
I believe implementing one discipline without the other can leave the Analyst or Technician in a disadvantageous position when matched up against the techniques implemented by the Rational Analyst: the pure technician could be swayed to sell a fundamentally strong stock if emotion carries the stock price beyond certain technical boundaries. Here, FA has the upper hand.
But what if there is an imperfect level of information dissemination (the real world), and the stock begins to sell off without explanation? The uninformed Fundamental Analyst would continue to buy, perhaps even average down an already losing position, thinking that he/she is getting an even better bargain, when in fact, the selloff is reflecting insider knowledge that the fundamentals are deteriorating. Here, the Technician wins out for heeding the charts.
The two are joined at the hip to some extent. The failure to heed one discipline over another can leave one vulnerable to investment losses. I use each as a tool to confirm or filter out the other. If my fundamental analysis is not being confirmed by the charts, then I will assume that there is something I do not yet know or have not accounted for that is affecting the stock's price. I will wait until the chart comes around to my way of thinking so I have confirmation from both the FA and TA side.
The two will require balance and experience if it is to be used to one's best advantage. Since the tools are there to help you out in the market, why not use both to your advantage?
Rainier |
