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Once you find a stock you want to buy it can help to actually watch it for a while. But doesn’t this conflict with technical analysis generally?

Posted By Robert On Monday, January 20th, 2014 With 0 Comments

Once I find a share (using technical analysis backtesting) I want to buy I tend to watch it for a while before buying.

I use fundamentals and market breath but true technicians don’t. We all do what works for us. I think the straight technical analysis approach probably isn’t designed for buying and holding, but rather taking advantage of momentum. If judging technical analysis based on a three month, six month, one year chart, then after the short-term period (which is what technical analysis is trying to predict) returns become more random. We are interested in shares doing well at a moment in time but without stops, technical analysis driven or otherwise, we wouldn’t make money.

“In the short term, the stock market acts as a voting machine. But in the long term, it acts more like a weighing machine” Charts tell us where the votes are going, but can’t be expected to predict the company’s weight, or intrinsic value.

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