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Strategies & Market Trends : Technical Analysis- Indicators & Systems
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To: TA2K who wrote (3247)2/10/1999 3:25:00 AM
From: AL R  Read Replies (1) of 3325
 
Nicholas / Technical Analysis

The first thing you have to realize is what technical analysis is. It is a study of mass psychology. The chart indicates how the market feels about a stock. Doesn't matter what the company does or what it fundamentals are. Internet stocks are a good example. No earnings and high valuations. You can find many examples of stocks with good fundamentals that go down in share price. It is what the investors in the market feel about the stock which drive its market price. The market is a large auction. If fundamentals were the only thing that mattered, why is a stock's price up one day and down the next? Why do fundamentally good stocks drift down with the general market? Fear and greed drive the market. If you can read the market's mood, you can make money.

Fundamentals are for long term investors. Technical analysis is for short-term traders.

Both can make money. The fundamentalist has to be prepared to ride the ups and downs of the market place and wait until the market place discovers his stock. The technical analysis has to move when the signal is given and to get out when indicated. Patience is not his virtue. If a stock price is not doing what is expected, he should probably get out of it, no matter what the fundamentals are.

That's my take on it.

Take care,
Al
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