Fundamental vs Technical Analysis:
Credible investment sites will 'inform' you that fundamental analysis does not mix with technical analysis, that they oppose each other like oil opposes water. Many investment sites are pitting one form of analysis against another - as two independent schools of trading. . .
The Extraordinary Investor's Key to Success in Penny Stock Trading is the fusing together of both schools of trading. This combining of schools acts as an aid and possible double confirmation of each other to more accurately locate stocks trading at a bargain, and to predict trends and profit by them.
Fundamental vs Technical Analysis - A Team Effort
In Extraordinary Investing their is no Fundamental vs Technical Analysis. The Extraordinary Investor rather utilizes both Fundamental Analysis and Technical Analysis as a team effort knowing that this is the most effective/accurate means of understanding, discerning and profiting from future stock trends and patterns in penny stocks.
For instance: Technical data is used to help identify historic highs and lows in share values, volume of trading, and new trends. Buying opportunities and selling opportunities are planned based on this technical data but only in combination with fundamental data. . .
For instance, a stock may historically be trading at one of its lowest prices, but to determine if this historic low price is a bargain or a sign of impending disaster for the company underlying the stock is the work of fundamental analysis.
Fundamental vs Technical Analysis - Why Technical Analysis alone cannot be relied on for trading penny stocks:
Unfortunately, most of the time technical analysis gives no evidence, or gives false signals, in identifying new explosive trends in developmental or exploration penny stocks - the kind of moves that extraordinary investors look for and depend on.
Read on and you will know why. You will also learn how to use technical analysis effectively for consistent low risk profitable trades.
The topic of Fundamental vs Technical Analysis shows how essential fundamental data is to effectively identify the false from the true technical signals.
This must be done for technical signals to be of any good value in trading penny stocks on explosive trends.
If both forms of analysis agree on the next trend of a stock, then this is the best indication that the stock will actually follow the trend as predicted more so then using just fundamental analysis or technical analysis alone. This is called a double confirmation. As you continue to read, you will understand how this works to Your Advantage.
Technical data alone is poor at forewarning of an explosive trend. Many times no technical indicators exist or are misleading in predicting a new trend because the share values move quickly after just one piece of news on thinly traded stocks - penny stocks.
Technical data gives no indication of the quality of the company and its products, and how other companies and agencies view the company. Technical data can't tell you how your target company and its products compare to the competition, etc.
Such fundamental data could forewarn stock traders far in advance so they could plan accordingly before technical signals actually account for this info. Such fundamental data is especially vital to locate, plan for, and accurately trade rocket trends in penny stocks. . .
The Fundamental vs Technical Analysis - Rocket Stocks!
Regarding sleeper stocks that are potential Rocket Stocks (stock that explode 20% or more within minutes, hours, or days) many times most traders are not following, because they don't know how. But getting on board a rocket stock before it takes off is every stock trader's dream.
Especially OTC sleeper stocks with high potential to explode. . . are not followed by traders until media and marketeers start promoting them, so technical signals are not going to develop.
If traders do not follow the stock until it's promoted, then technical signals will likewise give no forewarning of the explosive move until it happens. Too late to reap low risk explosive profits.
Only fundamental analysis will give you the information you need to locate a potential rocket stock before technical patterns and signals pick up on it and before the stock actually rockets skyward, thus; before other traders know what's happening.
Fundamental vs Technical Analysis: Both schools of analysis must then be used together for successful penny stock trades.
• Technical analysis can accurately tell you the price of a stock, the volume of trading activity, the history of such price and volume trading.
• Fundamentals can help you accurately understand the quality and investment potential of the company behind the stock in relation to many other fundamental influences. Such info is so essential.
Both forms of information used together is what is required for locating explosive trends in high potential sleeper penny stocks long enough in advance to plan such trades. This is the most accurate and safest method of investing, yielding the greatest profits.
The Fundamental vs Technical Analysis: Technical Patterns
Technical patterns can be seen on charts. Some of these technical patterns can be powerful indicators in stock price movement like:
• descending/ascending triangles • pennants, • double or triple tops or bottoms, • lower lows or higher highs, • head and shoulders (right side up or upside down), • symmetrical triangles, • descending and ascending flags, • gaps and wedges.
Most of these basic technical patterns will be described in a later topic on trading penny stocks.
All of these basic patterns mentioned, if used as the sole means of locating explosive trends in penny stocks, are of little help. The rate of follow through on a specific technical pattern is dismal.
A technical trader actually has to wait until the trend is well established before a trade can be made. By then, its really too late to capture a rocket trend without much risk of being caught when the trend collapses.
Why technical signals are not more successful with penny stocks? Because frequently fundamental news can send shares higher or lower without any evident technical pattern or in spite of a technical pattern. Explosive or rocket trends are the result! This happens so often.
Why does this happen? Mainly because most penny stock traders:
• technical traders are waiting for trends to be well confirmed before trading - too late, by then the quick rocket trend could be almost over and also to difficult to buy shares at that time.
• other traders do not follow penny stocks until media and marketeers begin their advertising campaign - too late, the stock has already trended up 20% or more, so very hard to buy shares without paying a huge premium. The trend could collapse anytime.
• Investor Pigs (the risky followers) are trading on stock scam promotions by newsletter, hot stock tips, message board scamster tips, etc. The stock is already at inflated prices - too late.
Fundamental vs Technical Analysis:
Why most traders miss out on Rocket Trends
Riding on a rocket trend before it takes off is every stock trader's dream, but most never get on board. Why? They don't know how to locate them in time.
Most traders rely on technical data, and others are novice and pig traders - they follow the advice of others (stock picks scams mostly, but also marketeer stock promotions and advice in every form of social media).
Such traders miss the ride of an explosive trend most of the time. They try to hitch a ride of a rocket stock while it is shooting upward using technical signals, but by then the trend is near its peak, the shares hard to buy, and risk is unreasonable.
Many times the basic technical patterns are false, or do not accurately predict the trend it is suppose to with penny stocks because of these fast changing fundamentals on such thinly traded stocks.
Fundamental vs Technical Analysis: How can I identify the genuine technical signals and patterns from the false and ride the next trend up?
When solid technical patterns are collaborated with good fundamental analysis then the chances of success are more like 50% to 90%.
Reading Between the Lines
When basing trades on good fundamental research an investor can Read Between The Lines a stock's future potential before technical indicators even form and before that final news release is publicized.
Solid fundamental analysis is, therefore, an agent that isolates the true from the false technical indicators and patterns.
Fundamental vs Technical Analysis: How to get on board a Rocket Stock before it Takes Off
Fundamental analysis provides data as to why a potential move up or down is imminent if at all and how explosive a trend up or down may be. This is vital information in locating the true from the false technical signals.
Study penny stocks in the way this site teaches and you will locate rocket stocks before they take off and set yourself up for a nice ride up worth 20% to well over 300% on your investment. All this will be explained as you continue reading.
Fundamental vs Technical Analysis: Recognizing real technical signals from the false.
This is easy and accurate when both schools of analysis agree on a stock's direction. This combined knowledge provides a more solid indication that the new trend will occur. And that is how you can identify the genuine technical signals and patterns from the false. You can then invest on a technical signal before the trend up begins.
Fundamental vs Technical Analysis: Use Together for Greater Accuracy
Complete Fundamental Analysis is Essential to Capture Explosive Trends in Penny Stocks. . .
Missed fundamental analysis = Missed opportunities... How often have you observed a penny stock using technical analysis and limited fundamental news only to sit there and watch the penny stock price shoot up over 60% or more practically right in front of you or in after hours trading with no apparent warnings? This used to burn me up, I was so upset.
Fundamental vs Technical Analysis - Locating and Targeting Rocket Stocks in Time to Reap 20% to well over 300% profits! ...
How do I find a rocket stock that is ready to explode in share price? Is this possible??? For 20 years, I thought that finding stocks ready to explode in value was fictional - cannot be done with accuracy. I was so wrong.
How often have you followed a stock using technical analysis only to see it shoot up and then fall down again, but then months later - after you completely forgot about it - it rises slowly but surely, so that in about two years the stock has gained 1000s of percent? Sad to say, this also has happened to me many times.
Had you used fundamental analysis as the predominant means of screening, targeting and studying penny stocks, you could have known the "why" for such moves far enough in advance that only fundamentals can give.
Fundamental vs Technical Analysis:
How can technical analysis be used reliably to invest in rocket stocks - the explosive trends of penny stocks?. . .
The most reliable means of locating and investing in rocket stocks with very little risk is to first search for penny stocks that have very little activity, and that are trading at historic lows.
After finding some like this, then you must do a complete fundamental analysis of the company underlying the stock to find out the quality of the company, its management, its products, its contacts (interested parties), its debt and history of operation.
Include the economic outlook! Why? . . . Penny stocks are very sensitive to economic news because investment money dries up in bad times and flows in good times.
Investment money is the life blood of penny stocks, since most are not making a profit, and are going into debt to fund development and exploration activities.
These are some major influences of a company that can tell you whether such company is solid material for a future rocket stock move or whether it is a scam or dud stock. Such fundamental info can be used reliably to confirm technical signals as being true or false, and then invest appropriately for low risk profits.
Fundamental vs Technical Analysis:
Other ways that technical analysis is used reliably to invest in rocket stocks. . .
When selling shares: Many times a technical pattern or signal for most types of stocks will exist to accurately show that an explosive trend is winding down and will soon reverse. Why? Because the explosive move has already been discovered and now technical data can be used to track all the present trading volume/price data and activity for a signal to sell the shares before prices suddenly drop again. . .
However using technical data like that are flawed with many rocket stocks. Why"? Most rocket stock explosions are the result of marketeer promotions and Pump and Dump activity.
Once the share prices of a stock shoot up to a certain price level the Marketeers and other traders sell or dump most of their shares creating a huge plunge in share values within minutes.
If you know how such scams operate in advance, you can pretty much gauge the right time to sell - which is when the highest point of a trend begins to level off, unable to reach that point again, and prices begin to swing wildly.
Dumping of shares by marketeers is the norm for penny stocks. This creates the rocket stock activity of such stocks. Other methods must be used to overcome this risk.
You will learn this and much more as you continue reading the Extraordinary Strategies for Penny Stocks as show on this site. I left nothing out. This site will program your mind to eliminate unneeded risk and take advantage of the trading risks of others through the extraordinary investment strategies revealed on this site.
Fundamental vs Technical Analysis:
Summarizing some important lessons. . .
Below is a summary of what you are learning to do as you read this site:
1. Fundamentals, experience and technical data are used together to confirm sell signal so as to be able to sell at the right time - before the bottom falls out on the price of shares after an explosive trend up.
2. When buying or selling shares: Many times no technical pattern will exist to show that an explosive move in share prices is imminent or future because the price will just explode or implode out of seemingly nowhere. WHY? This effect is the result of marketeer involvement.
In reality, some exciting bits of news is published on the web about a high potential penny stock, and all of the sudden traders start buying like crazy creating a stampede of buying causing share prices to explode with no technical warning.
• So, in most cases, especially when anticipating rocket stock moves, fundamentals must be relied upon as the sole evidence or witness that such a trend up is imminent - but most likely weeks or months before it actually occurs.
• But in some cases, when fundamentals locate a future trend up, technical patterns may also agree if some traders are already beginning to take notice and are starting to invest in that stock - before marketeers begin promoting.
Fundamental vs Technical Analysis:
Technical signal confirmations of present trading activity can then help confirm fundamental analysis as possessing a very real possibility of creating the desired trend change that you are banking on. . .
This shows us that technical patterns that are confirmed by fundamentals are more likely real. Double confirmations like this act as a second witness to the validity of the fundamental data you are relying on to show a future trend in share values of a given stock is really possible.
Fundamental vs Technical Analysis: In Essence:
• Fundamental analysis that agrees with a technical signal shows which technical patterns are real with great accuracy,
• Those technical signals that are found to be real can then confirm that those same fundamentals are most likely significant or "real" in causing a trend change in share prices at that point in time.
• In the case of rocket stocks, fundamentals must be relied upon weeks or months before technical signals ever form to teach you that the likeliness of a sleeper penny stock being a victim of a marketeer promotion is most likely. In this case, you would want to do further research, and then if all seems good, invest in that stock before marketeers invest in and promote the stock.
Fundamental vs Technical Analysis:
Technical analysis aids fundamental initiated investing - not the other way around.
Except for very short term trading like day trading and swing trading of small to medium cap stocks, and indexes and commodities, if you want to successfully trade a penny stock before it makes a major price move and before marketeers and traders jump on the bandwagon, and if you want to save yourself a lot of time, headache and loss, the surest way is to study and act upon good fundamental analysis and plan accordingly.
Technical Analysis vs Fundamental Analysis:
Technical data are best used with Complete Fundamental Research of all essential facts.
Technical data are best utilized. . .
1. to track historical highs and lows of trading trends in penny stocks over a period of 10 years, which said data can then be used to possibly predict that such trends of that stock could happen again.
2. to track historical highs and lows of share prices and trading volume of penny stocks, which can be used to help determine if share prices are trading near a low or a high and what kind of volume in shares might be expected to gauge the intensity of a trend up or down.
3. as an aid in selling shares of stock once the shares have exploded upwards - previously discussed in "When Selling Shares.
4. sometimes as an aid to fundamentals in buying shares of stock that have not fully begun an explosive move yet - but is imminent.
Fundamental vs Technical Analysis:
Illustration of how they work together
Technical Analysis are your tentacles or feelers that can. . .
• locate indications of possible trends
• that a potential new and powerful trend up or down in value in a penny stock is imminent especially if technical patterns also show that trading volume is also increasing.
• show the best time to exit a trade, or sell.
• show the present share value is historically over valued or undervalued for the particular stock so as to limit risks of a downturn.
None of this information can be relied upon as accurate unless fundamentals confirm that such is the case, because fundamentals let you see inside the company (the quality of management, finances, novelty and effectiveness of products in development) and all other actions that influence the company and future outcome of the stocks value.
Therefore, fundamentals are your eyes that let you see whats within. When the confirmation is made, then you set yourself up for an exciting trade with a high degree of accuracy.
Fundamental vs Technical Analysis:
Using technical analysis without complete fundamental analysis of the company cannot be relied on in penny stock trading because technical analysis produces many false signals as to trends, entry points and exit points.
But with fundamentals showing that such a trend or trend reversal is imminent, technical signals in such cases is a more accurate confirmation of fundamental analysis and can also fine tune entry and exit points - especially exit points because of the huge trading activity in progress at that time.
Better to be prepared:
You can help avoid the problems of pure technical trading by doing complete fundamental analysis of the penny stock first so you can be aware of, and prepared for, and take advantage of potentially immanent major price moves that technical signals may, or may not, confirm.
Fundamental vs Technical Analysis:
The Extraordinary Investor. . .
Good fundamental traders (extraordinary investors) will likely already have taken a position in a particular stock before any technical indicators of a potential price move are apparent.
Then such investor will wait, just like a farmer planting his seed, knowing that in due time the seed "investment" will most likely produce much fruit.
The extraordinary investor will not have to be glued to the computer screen, and can generally go about other activities while trends are being set in motion that fundamentals inform of.
When the harvest is ripe, the extraordinary investor sells. In fact, if you do not have time, and you think the stock will explode soon, you can put in a sell order at 20% or 30% or so. That way, you can at least make money off a potential move even though you are not available to watch the move take place.
Fundamental vs Technical Analysis:
Let me stress this one more time regarding technical analysis because too often a little success makes investors lose sight of how important fundamental study was to create that success to begin with...
a. The likely hood is that technical indicators do not accurately reflect all the recent fundamental factors of the value of a stock that is about to explode is very real. This is mostly true because most investors are not following the stock and its recent advances until the stock is promoted by marketeers.
b. The likely hood is that technical analysis does not allow enough time for an investor to understand and take advantage of quick 5% to 300% price moves. Fundamentals will help an investor discover new breakthroughs within the stock's fundamentals before marketeers begin promoting and before technical investors have a clue. This is especially true of OTCBB stocks.
c. The likely hood is that you will miss altogether a short term rocket stock trend or a long term trend of a particular stock because technical analysis cannot tell you why a penny stock will trend higher over the short term or long term, only that such move may be possible based on chart patterns and complicated price and volume mathematical formulas - which by themselves are all unreliable information (many false signals) without solid fundamentals analysis to back them up when trading penny stocks.
d. If you were to buy and sell shares of stock based on every technical buy and sell signal of a penny stock you would miss out on most of the explosive moves in penny stocks and you will lose your hard earned money because most signals are fool's gold when used with penny stocks. Why? Because most advances you read about for your target sleeper stock are not being followed by most investors... Technical indicators follow investor activity, not company activity.
This concludes this page on Fundamental vs Technical Analysis.
When you are ready, please continue onto the next lesson.
Next Topic: Is called "Predicting Trends." The lesson takes what you have learned on this page and summarizes why and how fundamental analysis works with technical analysis to effectively predict trends necessary for low risk high yield profits.
In addition, more information on how to screen penny stocks for high potentials is provided.
Please click on: Predicting Trends in Penny Stocks