The Real Story: Picture Worth 1,000 Words
There are two main schools of thought on Wall Street. Some believe that fundamentals are all-important when analyzing a stock. They can't be bothered with ascending triangles, stochastics or other technical indicators. Earnings, cash flow and the predictability of those numbers are what drive stock prices, according to the fundies.
On the other hand, pure technicians believe that information is already in the stock price. They look at supply and demand of the security. Channel checks, meetings with management, and earnings models won't tell you the trend of the stock as far as they're concerned.
"Price is fact. Earnings on the other hand are estimates," says Ralph Acampora, the head of technical research at Knight Capital Group. "You restate earnings. You never restate price."
Then there are those (like me) who believe both methodologies are functional, although perhaps not always equally. I find technical analysis especially useful when working with contrarian investment ideas. One of the downfalls of contrarian investing is that sometimes you have to wait before your thesis is played out. For example, I could be correct that
(LAMR) business is not as robust as the bulls claim, as detailed
|Losing Its Sizzle
P.F. Chang's China Bistro breaks its long uptrend
Select the service that is right for you!COMPARE ALL SERVICES
- $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
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV