What is Technical Analysis?For most stock investors, technical analysis brings to mind charts, trendlines, and short-term trading. While trend identification is a major part of technical analysis, it tells only part of the story. What is technical analysis?Technical analysis measures historical moves in stocks, bonds, commodities, and currencies in an attempt to predict the future performance of securities’ prices. It involves identifying trend changes in the markets and economy, tops and bottoms in individual stocks, and major shifts in secular market trends. This section briefly reviews the “Dow Theory,” the origin of technical analysis. From there, we move on to “macro” indicators — those that point to movements in the economy and overall stock market averages — before discussing ways to tie these readings together to determine portfolio structure. Finally, we discuss how to read chart patterns for guidance in stock selection. |
Stock Analysis and Technical Analysis website offers free resource for analyzing stocks. For your specific situation, please consult your advisor. |
