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 - Get Report) business is not as robust as the bulls claim, as detailed
|Losing Its Sizzle
P.F. Chang's China Bistro breaks its long uptrend