'What' is more important than 'Why'.
I prefer Technical Analysis as my 'Map' because $Price is an 'exact stat', whereas Fundamental analysis contains more Theory. Ever buy a stock that was supposed to go up but didn't? -Haven't we all! Theories are all about 'Supposed to's'.
When working with charts, it will help you to KNOW that Economic Fundamentals are already built into the Price. So, with charting Tech Analysis, beware of 'adding on' more analysis of economic fundamentals. Doing so may cause errors in judgment and decision-making.
What I do is keep the economy in the back of my mind, but never let it interfere with what the chart says. 'The Price is Right'... always.
" Wall Street never changes, the pockets change, the suckers change, and the stocks change, but Wall Street never changes because human nature never changes." --Jesse Livermore
Lets jump right in and see what the maps are telling us about today's equity markets. Then, by comparing today's markets with past markets maybe we can pick a bottom and "market time" the next move in prices.
We will use the NASDAQ Composite as our instrument of study.
The Golden Fat Pitch
This last map is for Gold Traders who like to "Buy the Dip". Gold is at support and is doing a "Fat Pitch". 2006 Correction (Today) - NASDAQ
The only reason an investor or speculator should ever want to have pointed out to him is the action of the market itself. Whenever the market does not act right or in the way it should - that is reason enough for you to change your opinion and change it immediately… Remember, there is always a reason for a stock acting the way it does. But also remember: the chances are that you will not become acquainted with that reason until some time in the future, when it is too late to act on it profitably. ---Jesse Livermore
Don't ever try to tell the market what to do…listen to what it is saying. ---Anonymous
1996 Correction - NASDAQ
Fundamental analysis is about as useful as an alcohol thermometer in a world where CT Scans, x-rays, MRIs, and DNA testing offer better information. -Eric Muathe (Technical Analyst)
1998 Correction - NASDAQ
BASIC THEORY OF TECHNICAL ANALYSIS
1.The market value of a security is determined solely by the interaction of supply and demand.
2004 Correction -NASDAQ
The task of beating the market is not difficult, it is the task of beating ourselves that proves overwhelming. -----Martin Pring - Investor Psychology Explained
If you bet on a horse, that is gambling. If you bet you can make three spades, that is entertainment. If you bet cotton will go up three points, that is business. See the difference? -Blackie Sherrod
Putting it all Together
2006 Correction (Today) - NASDAQ
Ok, back to today. We have to be prepared for two scenarios:
June 21, 2006