Charts reflect the confidence in the companies management overall. People ultimately invest in other people, not just companies or corporations. When a stock is stable, or steadily increasing, it reflects an increased sense of confidence in the companies ability to manage itself. Knowing how to read a chart is helpful not only during times of News and contract spikes, but when new companies and technology enters the market.
Back in 1999 I had an opportunity to be a part of a company that could record and stream video over the internet. There were two companies that were developing the technology. Well, back then I didn't cover my bases all that well. I invested in a company called WEBTV. It's market focus was to put a video juke box in bars and other gathering areas and to make all possible recordings of music and music video available upon request. Of course the request would be simply entering in what ever you knew about the song you wanted to hear, lyrics, artists name, year of release...etc. The point was, every possible recording of every possible song or video would be available at your establishment. I thought this was going to be GREAT.
The other company focused on recording television broadcasts for retransmission later. IT would record television shows on a local hard drive so you could play it later. I thought, well heck, I already have a VCR, I will go with WEBTV.
The other company, that I could have chosen, that I thought was not worth it based on it's market perspective.... TIVO!
TIVO had the executive leadership, TIVO had the market research behind what it was they were doing. TIVO should have been my choice, but I was more impressed with the idea of having everything at my disposal for the, what 4 hours I would be in a bar or club, with 50 to maybe 100 other people. It was still a good idea, but the leadership of the company had no track record and couldn't get the job done. WEBTV, is no more. At the time, TIVO shares were going for .50 / share.
Remember though, knowledge of charts are simply a reflection of the confidence in the companies management as well as the buying habits of the marketplace itself. Investing in a company is not what makes you rich. However, when it is a good company, with a good management staff, and a good marketing campaign and a good product to such an extent that a whole butt ton of other people invest in it too, that is what generally makes you rich.
