InMed Pharmaceuticals Inc (INM)

[lesgetrich]

you know better than that...CHARTS DON'T APPLY TO PENNY STOCKS PERIOD!!!...Penny stocks lack the volume and trading history to correctly/accurately chart and fundamentals or accurate news is the most important factor in the movement of penny stocks.

I totally disagree with that statement. Charts don't distinguish between penny stocks or any other stock or look at what exchange they're trading on. The whole point of technicals trading is that it totally ignores all fundamentals about the company and simply looks at the trends, changes and volumes of trading of any particular ticker. It flows from the assumption that certain degrees of change in any stocks price over time trigger a psychological mass belief that a stock is overpriced or underpriced and result in a subsequent reversal of direction. If what you say were true, virtually all brokerages and independent analysts wouldn't be supplying technical analysis and data on penny stocks as they do now. On the other hand, charts can't predict unexpected developments like a tsunami in Japan that disrupts world markets or a company's actions such as a merger, acquisition, major contract or new product launch.

My own view is that technical analysis can be fairly effective to predict short term direction and changes. Volume is relative to any stocks normal volume and not an absolute measure. For example, low volume is not the same for Apple as it is for InMed. Moreover, many penny stocks have long trading histories and many big board stocks have short ones. In other words, it's not a trait that can be attributed solely to penny stocks.

Personally I am a long term investor and I believe technical analysis is less effective predicting long term price changes than a good fundamental analysis. If you have sufficient reason to believe that a company's revenues will double or triple in a year, you don't need a technical analysis to tell you that the stock price will be higher a year from now, even if the stocks price is currently in a downward trend. However, I would be less confident telling you where the price will be next week or next month. For that, I would be looking at charts unless I knew in advance that some major announcement was due any day. JMO