Skip to main content
Business LibreTexts

Chapter 7: Technical Analysis: Reading Squiggles on a Computer Screen

  • Page ID
  • \( \newcommand{\vecs}[1]{\overset { \scriptstyle \rightharpoonup} {\mathbf{#1}} } \)

    \( \newcommand{\vecd}[1]{\overset{-\!-\!\rightharpoonup}{\vphantom{a}\smash {#1}}} \)

    \( \newcommand{\id}{\mathrm{id}}\) \( \newcommand{\Span}{\mathrm{span}}\)

    ( \newcommand{\kernel}{\mathrm{null}\,}\) \( \newcommand{\range}{\mathrm{range}\,}\)

    \( \newcommand{\RealPart}{\mathrm{Re}}\) \( \newcommand{\ImaginaryPart}{\mathrm{Im}}\)

    \( \newcommand{\Argument}{\mathrm{Arg}}\) \( \newcommand{\norm}[1]{\| #1 \|}\)

    \( \newcommand{\inner}[2]{\langle #1, #2 \rangle}\)

    \( \newcommand{\Span}{\mathrm{span}}\)

    \( \newcommand{\id}{\mathrm{id}}\)

    \( \newcommand{\Span}{\mathrm{span}}\)

    \( \newcommand{\kernel}{\mathrm{null}\,}\)

    \( \newcommand{\range}{\mathrm{range}\,}\)

    \( \newcommand{\RealPart}{\mathrm{Re}}\)

    \( \newcommand{\ImaginaryPart}{\mathrm{Im}}\)

    \( \newcommand{\Argument}{\mathrm{Arg}}\)

    \( \newcommand{\norm}[1]{\| #1 \|}\)

    \( \newcommand{\inner}[2]{\langle #1, #2 \rangle}\)

    \( \newcommand{\Span}{\mathrm{span}}\) \( \newcommand{\AA}{\unicode[.8,0]{x212B}}\)

    \( \newcommand{\vectorA}[1]{\vec{#1}}      % arrow\)

    \( \newcommand{\vectorAt}[1]{\vec{\text{#1}}}      % arrow\)

    \( \newcommand{\vectorB}[1]{\overset { \scriptstyle \rightharpoonup} {\mathbf{#1}} } \)

    \( \newcommand{\vectorC}[1]{\textbf{#1}} \)

    \( \newcommand{\vectorD}[1]{\overrightarrow{#1}} \)

    \( \newcommand{\vectorDt}[1]{\overrightarrow{\text{#1}}} \)

    \( \newcommand{\vectE}[1]{\overset{-\!-\!\rightharpoonup}{\vphantom{a}\smash{\mathbf {#1}}}} \)

    \( \newcommand{\vecs}[1]{\overset { \scriptstyle \rightharpoonup} {\mathbf{#1}} } \)

    \( \newcommand{\vecd}[1]{\overset{-\!-\!\rightharpoonup}{\vphantom{a}\smash {#1}}} \)

    “The fundamental analyst says, “You are buying companies, not stocks.” The technical analyst says, “You are buying stocks, not companies.” ‒ The Theory of Investment Value, John Burr Williams

    “The biggest mistake a fundamental analyst makes is thinking that a stock and a company are the same thing. The biggest mistake a technical analyst makes is thinking that a stock and a company are different.” ‒ Phil Roth, Technical Analyst

    Learning Objectives

    In this chapter, you will

    By the end of this chapter, you should be able to

    And Now for Something Completely Different!

    Your Humble Instructor is a big fan of Monty Python’s Flying Circus and all things silly. In the previous chapter, we saw how the Efficient Market Theorists were engaging in some silliness when they wrongly claimed that no one can beat the market. In this chapter, we reach the pinnacle of silliness! In our humble opinion, choosing stock investments using Technical Analysis is right up there with scanning tea leaves, palm reading, interpreting chicken entrails, and practicing voodoo. However, an attractive aspect of Technical Analysis is that anyone can practice Technical Analysis without really knowing what they are doing because no one else really knows what they are doing either. That means that you, too, can become a Technical Analyst without knowing what you are doing! Our students can get 10 extra bonus points in the chapter 7 bonus assignment just by acting as if they know what they are doing even though they really don't. But don’t worry! I don’t know what I am doing either when it comes to Technical Analysis so as long as they act as if they know what they are doing, they will get full credit. It is a no-lose situation!

    Presentation file - Study guide

    • 7.1: Technical Analysis
      Get ready for some real silliness! We are going to do our best to keep a straight face and present the concepts, tools, and techniques of Technical Analysis. And now for something completely different!
    • 7.2: A Career in Stocks
      The Industry Needs You! There has never been a better time to launch a career in the investment industry. Thousands of professionals will be retiring in the next five to 10 years. The industry needs more diversity and is actively recruiting women, minorities, bilingual speakers, and ex-military. Think about it! (Psst. Did we mention that the salaries are higher than the national averages? Hmm?)
    • 7.S: Summary
      Congratulations ‒ You Have Finished Chapter 7 ‒ Technical Analysis: Reading Squiggles on a Computer Screen

    "Technical analysis" by hardeep.singh is licensed under CC BY 2.0

    This page titled Chapter 7: Technical Analysis: Reading Squiggles on a Computer Screen is shared under a CC BY-NC-SA 4.0 license and was authored, remixed, and/or curated by Frank Paiano.

    • Was this article helpful?