Hello all my first post on this forum so please be kind.
This thread is simply fantastic and I'd like to suggest a couple of things. Any of you that followed MTC or HOME on the LSE or AMD on the NYSE, and these are just 3 recent examples of countless more, after earnings these stocks dived.
AMD posted its first profits for 3 years and the following day it sank like the titanic. Now are you suggesting that these very positive fundamentals drove this stock?
Welcome to the board !
Are you saying that a few example of positive earning stocks going down proves anything about FA or TA?
Neither technicals nor fundamentals drove this stock. Selling drove the stock. The question is - what drove the selling ?
AMD had more than doubled in price from Nov 2009 until the start of 2010 when it started to move down, along with the rest of the market. The reason for people pulling money out of the markets is not TA, it's more than likely (can't prove cause & effect) profit taking & jitters about a US economy that is really showing no signs of recovery. I welcome a TA explanation for this pullback (drumroll for an overbrought stochastic).
AMD, along with most stocks was in decline when they announced their non GAAP earnings on Jan 22nd. The results were better than earnings estimates. The estimates were that the company would lose 18c per share and it actually lost 5c per share. By no measure should continued losses be considered 'good'. Don't be fooled by earnings & earnings estimates. They are all products of Wall St - a machine designed to part you from your cash.
AMD wasn't the only tech company announcing earnings on this day and the whole tech sector took a big hit that day. Looking at the stock and not the overall market/sector is a big no-no in any method - TA or FA.
Trading earnings is not as simple as good results=price rise, bad results=price falls. This has no bearing whatsoever on the merits of TA vs FA. If only the world and human beings were so predictable.
I would be interested to hear what you think drove the AMD selling and how it somehow proves something about TA.
MTC and HOME again posted better than expected results and still went down. I put it you all that in these cases the technicals drove the PPS. Now some may suggest the old addage buy on rumour sell on news but they continued to sink for many days and indeed are still sinking almost a month later.
I'll take the middle road. Fundamentals and technicals both matter. I think Grey would agree with me as he mentioned when and when not to trade based on fundamentals mucking his technicals up.
In that case, why would Grey, in a live trading session, recommend buying an oil stock right after the 10:30 oil inventories announcement ?
Perhaps because he may be open to all things that move price ?
The thing is - Grey is of course 100% right - you can't ignore the fundamentals & that is my point. A lot of TA proponents say you can ignore everything but TA because everything is in the price. The thing is - if everything is in the price then SOMEONE must be looking outside of TA. If future events are known and that is shown in the price, then it follows that those in on the move EARLIEST are those trading on this information, which is fundamental. If future news is already known, then someone knew it & traded on it before the TA traders. It also follows that people that say this are relying on someone else to do the legwork.
In February, there were 5 listed companies who's supply of shares changed, without announcement or news. Suddenly, the float of shares had the potential to increase. Some people know about this event in advance but most do not. Knowing how the market works leads you to knowing about this type of event. If you traded pure TA on one of those stocks, you would not be taking into account the new supply, unless you are expecting everyone else to do that & you to follow their lead.