Welcome to the mysmp.com technical analysis trading center. Put simply, technical analysis is the art of being able to analyze previous market trends to create future price projections. As opposed to fundamental analysis which bases its projections on financial statements and corporate guidance, true technicians will ignore this information and use stock price and volume as their guide.
Technical analysis is based on the theory that the market is a discounting mechanism which prices in the fundamentals before they are known to the general public. Do you ever wonder why a stock will move higher into an earnings release, only to report great earnings and then fall on profit taking? There is a saying which describes this phenomena, “buy on the rumor, sell on the news”. The best time to buy is when nobody is interested and the best time to sell is when everyone wants a piece of the action. The challenge with stock trading is to be able to spot this activity and trade with the big money, not against it.