Apprenticed Investor: Tracking Elephants, Part 2
But the charts have many other uses -- even for nontechnicians. Fundamentalists can use technicals to help with their risk management, as well as their decision-making process.
This can be accomplished without using complex pattern recognition to predict where a stock might go, or tracking volume for confirmation of a move.
Charts are far less squishy than fundamentals. They are not based on someone's estimate of what future earnings might be, nor do they require you to guesstimate management's skill set or presume the desirability of a new product.My biggest complaint about Wall Street's fundamental analysts is their disconcerting tendency to downgrade stocks after all the bad news is out. Hey, once the problems are publicized, it's too late for the investor to avoid the bloodshed and tears. One difference between technicians and fundamentalists is that we never listen to what management has to say: Never. Quite bluntly, I'm too trusting of an individual and don't have the insight to know when a CEO or CFO is lying to me. So listening to their sales pitches offers me little in the way of trading advantages. And as we have seen over the years, the fundies who believe management often get caught with their pants down. With that in mind, let's go over some of the less technical uses of technical analysis, focusing today on more defensive vs. offensive maneuvers:
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV