Some ideas about Technical Analysis.

Making decisions in stocks or securities investment consists of two categories:-

1) Fundamental Analysis.

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It involves analyzing the characteristics of a company in order to estimates its intrinsic value.

2) Technical Analysis.

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Market players don't care one bit about the "value" of a company or commodity.

Technicians or chartist are only interested in the price movements in the market.

Technical analysis just studies supply and demand in a market in an attempt to determine what direction or trend will continue in the future,i.e. the emotions of the markets by studying the market itself as opposed to its components.

The field of technical analysis is based on 3 assumptions:-

1) THE MARKET DISCOUNTS EVERYTHING.

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-the stock's price reflects everything that has or could affect the company including fundamental factors.

-the broader economic factors & market psychology are all being priced into the stock removing the need to actually consider the factors separately.

2) PRICE MOVES IN TRENDS.

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-Always follow the trend.Most technical strategies are based on this assumption.

3) HISTORY TENDS TO REPEAT ITSELF.

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-Market players tend to provide consistent reaction to similar market stimuli over time.

COMPARISON BETWEEN TECHNICAL & FUNDAMENTAL ANALYSIS.

-both are Two main schools of thoughts.

-A fundamental anaylst tries to determine a company's value by looking at the balance sheet,cash flow and income statement.So if the price of stock trades below its intrinsic value,it's a good investment.

-Technicians believe that all the info's they need about a stock can be found in its chart.

TIME HORIZON BETWEEN THE TWO.

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-Fundamental analysis takes a relatively long-term approach to analyzing the market.

-Technical analysis can use a timeframe of weeks,days,or even minutes.

Therefore the nature of investing style varies.

For a fundamentalist,gains will not be realized untill the stock price rise to its "correct" value but if the short-term market situation goes wrong,then the price of that particular stock will correct itself over the long run or maybe several years.

Furthermore,financial statements are filed quarterly and changes in the earnings per share dom't emerge on a daily basis like price & volume info's.

Fundamentals are the actual characteristic of a business.Hence data used to analyse a stock is generated more slowly than price & volume data used by technical analyst..

Many market participants have great success by combining the two.

Technicians ===trade.

Fundamentalist===invest.

Tracking the Dow Movement on Thursday.

Despite a bullish day,the intra-minute movement shows sign of many spinning dojis'.Many traders are liquidating on strength.In the last hour of trading,a bearish marubozu was identified and the day ended with a hammer top.A sign of bearishness.

http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:introduction_to_candlesticks

(High=13,469.27) + (Low=13,292.38) divide by 2 = (Moving Average=13,380.83)

Any follow through correction at MAV level should scrutinise thoroughly and act without hesitation.

The Dow Index Futures is very near expiry and a pullback looks imminent.Index trading is a manipulative & rigged game.The market makers will start their new game of bullishness after the expiry date.

Today the Nikkei Futures contract expires.