Once you completely understand technical analysis, you will come to realize that it is the study of the price movement of a stock. Technical analysis is totally oblivious to the news, and rumors, and gossip that you typically see here in an investment chat room. Therefore, technical analysis takes into consideration all the buying and selling that is actually going on in the market place including the volume and the time frame for trading as well as stock splits and all of the really important stuff, including a clear reflection of what the true investor sentiment is regarding a stock. It's all reflected in the price movement seen on the charts.
In the final analysis, the only thing that causes a stock price to rise or fall is the perceived value of that stock in the collective minds of the traders and investors who buy and sell that stock. When the majority of people buying a stock are more aggressive and they envision higher prices to come for whatever reason and are therefore willing to pay higher and higher prices for a stock, the price goes up and the chart reflects that action. When the majority of the people who are selling a stock because they envision lower prices for whatever reason become more aggressive and are willing to sell at lower and lower prices, then the price goes down. The chart does not know or care about the reasons behind the buying or selling, it only reflects what is actually happening and has absolutely nothing to do with the sentiment of a small collection of people who voice their opinions in a chat room.
In that respect, what you see on the chart, takes into consideration the total majority sentiment of ALL investors because their collective sentiment, their perception of the value of a stock has already made that stock what it's worth today in terms of it's current price. The reason why they believe what a stock is to be valued at does not really mater at all. Only the result of those collective beliefs is important and that result is seen in the current price movement of the stock which is accurately displayed on the chart. So, what you ultimately end up asking yourself is, do I want to believe all the opinions, rumors and propaganda I hear in the chat room and base my buying and selling decisions on that, or do I want a clear picture of REAL WORLD in terms of where the stock is going based upon a reflection of the TOTAL ACCURATE sentiment of the majority of ALL traders in a given stock?
The only way I know of to get that information is in the reflection of what the chart is really telling you. It's more of an art form than an actual science and it's open to the interpretation of the analyst but, when you are the analyst and have done your due diligence by learning everything you can about technical analysis from the many books available and then actually looking at your own conclusions and the results of your trading and make the necessary adjustments in your analysis so that you can improve your results in the future, then your own technical analysis will ultimately become your very best investment adviser.
But, just like any religious belief, you'll only see it, I mean really see it only when you believe it for unless the soul goes out to greet what you see, you do not see it. Nothing do you see, not a beetle, not a blade of grass. Of course the only way to believe in anything is to first start with an attempt to understand it. Only when you know something for certain do you believes in it. Everyone believes in what he knows. As ye believe, so shall it be done unto you. If you can only believe, then all thing are possible to him who believeth. So, be careful of what you choose to believe in for it will have a profound effect on your life and your bank account. Good trading to you!
