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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: HairBall who wrote (1279)	12/10/1998 11:43:00 PM
From: j g cordes	Read Replies (1) \| Respond to of 99985

The truth about TA and FA... just the facts. OK.. so much for hot advertising copy, here's what you should be thinking about when you look at stocks with intent to predict and capitalize on where they might go. A stock's price is a function of supply and demand. Sounds too simple and it is. Price is also a function of promotion and expectation. Price is also a function of general market trends, what similar or competing companies are doing as evidenced by recent internet mania to get in at any price. Price is also a function of greed and fear, which is difficult at best to chart or put a fundamental number on. Fundamentals obviously don't tell all because most of the data in a report is old and because comparisons to competing companies are usually wanting. Technical Analysis, despite those who want platonic simplicity in their cognitive world, misses worlds of practical money making tips like what a company produces, what the hype is driving prices.. to help determin sustainability. For example I consider from fundamental analysis that RMBS has its foot in the door on memory technology, while GERN has an exciting future but far less in immediate contracts and profitability. Each chart has exhibited great enthusiasm, but fundamental understanding gives you an edge. TA is a chart of fundamental data, price and volume. Since capitalizing on price movement is how we make money TA extrapolates forward past trend, cycle, range, velocity and patterns with some success. But one can also extrapolate charts of earnings change, business profitability, turn arounds, new clients, and other fundamental data into similar charts that have similar utility. In the larger sense there is no difference between TA and FA, use them both. Each offers tools to help describe something larger and more complex. While individual analysts of each kind occasionally beat the odds and sometimes move markets, its the dog in the end which wags its own tail. Jim