Trade GM Off Its Stock Chart

Do both your technical and fundamental homework before buying (or selling) GM.
Author:
Publish date:

By Stockpickr Guest Columnist Ira Krakow

There are two basic schools of stock analysis: fundamental-based analysis and technical-based analysis.

Fundamentalists research news, analyze financial statements and SEC filings to unearth reasons that the company's stock is either too low or too high. If the price is too low, the strategy is to buy and hold until the market realizes the company's intrinsic value. If the price is too high, the strategy is to sell before the market socks our portfolio with losses. In either case, fundamentalists believe that their analytical skills add value, the so-called "alpha," because the market is not always right.

Market technicians, on the other hand, believe that The Market Knows All, that price movements, as reflected in the stock chart, incorporate all knowledge about a company. They see the market as a giant

eBay

(EBAY) - Get Report

auction. If there are more buyers than sellers, the price rises; otherwise, the price falls. The alpha is that there is no alpha.

But neither approach gives us the whole picture. A stock's fundamentals, such as a company's revenue or profit margin, can be great, while its technical action, as reflected in its stock chart, can be lousy, or vice versa.

Let's look at the auto sector, which has also had its share of news.

To read more,

visit Stockpickr.com

.

This article was written by a member of the Stockpickr community. Stock recommendations and comments presented on Stockpickr.com are solely those of the members quoted. They do not represent the opinions of Stockpickr.com on whether to buy, sell or hold shares of a particular stock. Members should be cautious about any and all stock recommendations and should consider the source of any advice on stock selection. Various factors, including personal or corporate ownership, may influence or factor into a member's stock analysis or opinion. All members are advised to conduct their own independent research into individual stocks before making a purchase decision. In addition, investors are advised that past stock performance or portfolio performance is no guarantee of future price appreciation or performance. Furthermore, Stockpickr.com does not guarantee the accuracy or completeness of information on the site, nor does Stockpickr.com assume any liability for any loss that may result from reliance by any person upon any such information or recommendations. Such information recommendations are for general information only.