I'm new to trading/finance industry and have some questions about TA. I work in a fundamentally oriented firm where TA is scoffed at, yet the stock pickers here regularly buy at bad times. Look at the chart for CTB, for example (the firm bought around $12.50 in May and the stock has done nothing but go down... currently trading near $9.50 at the moment). This happens pretty often here and at other fundamental firms I know of. However, I don't know much about TA. - Why/how does it work (or does it?) - Where should I start? - I've been looking at the CMT designation as a good place to start, but it doesn't appear very reputable (in other words, why not just read the books and save money). Everything I read about TA says that it's a load of BS and is very subjective/unreliable/etc. Any advice would be appreciated.
If TA was no good, then the CMT designation must be a fraud and the college level courses must be no good. All those poor technicians running around out there thinking they got a legitimate education.... Most who criticize TA know nothing about it and they are too lazy [or worse yet, stupid] to learn it. Anyone who makes a statement like that should be made to prove it. Any of these books will explain TA. http://www.elitetrader.com/bo/index.cfm?action=showbooks&CatID=3
MWR: Both fundamental and technical analysis are tools to help a trader or investor to determine the probable outcome of a trade or investment position. Like any tool, it takes study and experience/practice to learn how to use these tools properly. Put wood working tools in the hands of a master carpenter and extraordinaryly beautiful things can be built. Put those same tools in the hands of someone like myself, and they become weapons of mass destruction. Neither fundamental or technical analysis will make anyone a master trader. That comes with years of study and practice. These tools may help an experienced trader to determine the probability of a trade, which is never 100%. Before buying too many books, you can review Chart School, most of which was probably writen by John Murphy here: http://stockcharts.com/education/ Another book that I would include in the above list is "Technical Analysis and Stock Market Profits" by Richard W. Schabacker. Charles
Here is CTB weekly chart with traditional TA. A great stock to chart. Since the bounce is already undway off the Head and shoulders target, I would wait for a low volume retest of $9 and nail it there with a fairly tight stop for the bounce to $11. If a bottom forms, then play it as it sets up. The monthly chart shows more, if $9 doesn't hold, this goes much lower to about $5 then to $3 before there is any substantial support. We will see.
If they bought into Cooper with its declining earnings I would question their fundamental judgement, without even getting into technical issues! :eek: If you want to play a bit, PM me with a list of stocks the company has traded/bought in the past year or so. Or, even longer if you prefer. My only requirement is that you include only those that are fundamentally sound, which I will define as current EPS over $1. and average daily volume over 500K, to keep it simple. I will run the portfolio through my technical system and report the results to you. I don't daytrade. It may help you to bring some bright some light to the darkness. I'll run the current system I trade, without optimizing for your list.