LMCane said:
I bleed maroon said:
Heineken-Ashi said:
While fundamentals are an absolute must, especially for individual stocks, they by no means tell a clear picture of anything. At best, the provide an underlying justification for a move in sentiment. But fundamentals can't explain a stock selling off on good earnings, good news sending markets down, or why stubborn inflation and higher for longer rates have markets moving up right now while that very thought is what sent them down in 2022.
More than anything else, the stock market is moved by sentiment. And technical analysis provides many tools which very accurately gauge sentiment. Is it perfect? Absolutely not. But by blending the technical with the fundamental and understanding where an instrument or index might be on the sentiment wave, you have a massive leg up against the fundamental follower who can't seem to understand why bad things happen to good stocks and good things happen to bad stocks.
Before you argue this, I challenge you to read the socioeconomic theory of finance by Robert Prechter. It goes piece by piece over all of the common misconceptions of what's moves markers and debunks them. The market is not linear, and if you are attempting to view it through a linear lens, you are will continue to scratch your head every single day.
In a way, we're saying the same thing. Taking in a wide variety of indicators usually improves results. You may think that those who use fundamentals are simple-minded morons, and I may think that pure technicals (yes, including the Elliot Wave) is unmitigated voodoo, but we can integrate elements together to produce a better outcome.
Carter Braxton Worth is always showing technical charts on CNBC tracking certain stocks which show TO THE PENNY a bounce or drop over the course of years.
how is this possible?
is it the way he finds to place a line?
or that something in the system of trading bounces a stock once it hits its previous all time low?
Anyone can manipulate a chart's scale and beginning/end points, to show a certain shape to support their favored "system of trading". It's generally the work of a good graphic artist, not an analyst of meaningful data. If you have to force fit the visuals to match your intended message, you just might be a charlatan.
In Robin Hood's time, he came across a town where a lot of the trees on the outskirts of town had targets painted on, and arrows in the bullseye in every one. Robin Hood went to the town leaders asking to meet their expert marksman. Once summoned, Robin asked the marksman how he gained his skill. The marksman said that he keeps shooting arrows at a tree till he hits one, and then he paints a target around the arrow.
Not saying this is a fair summary of chartist technical analysis, but just sharing for fun.