Stock Market Technical Analysis

When investing or trading, many traders and investors use stock market technical analsysis as they place stock market trades. Basically the people who buy and sell a stock leave clues of the pyschology behind the movement of stocks and based on a few factors you can determine what the future will bring with decent accuracy. You can use technical analysis mearly as a money management tool by making sure you sell a stock that drops below a certain crutial point, and measure your reward for selling vs your risk of buying.

Ycan also use stock market technical analysis to determine if something is going on with a company. Perhaps just before earnings a stock starts breaking out on volume. Now I'm a little bit cynical but I believe certain people find ways of insider trading. Rumors spread or people spy, people get bribed, and people reveal. Some people just are good at analyzing a CEO's body language and a simple conversttion is enough to ell. Whatever the reason, I believe that the people with the most money or at least enough to move the stock, can tell what's going on and have the greatest interest in what's happening. If they start buying and suddenly the people who would normally sell the stock when it got above a certain point start selling, this is a clear indication that the bears have given up for the moment, the bulls have marched on, and the stock should continue it's momentum. Generally a stock setting up before earnings indicates that something may be happening and if it breaks out as it's announced or right before, you can be fairly confident that it will continue.

Technical analysis is not only about looking for breakouts and breakdowns in the market. Stocks can move for many reasons, and you may be able to catch a trend. Here are a few ways to determine a stocks movement and understand what should happen in the future.
Channeling stocks go up and down in a range. This means the bears are selling when the stock goes to a certain point and the stock falls in value, the bulls buy the "dips" and the bears sell the "rips" if a stock rips higher to the same area and sells off a few times this forms what is known as "resistence" the people selling the stock around that level prevent it from going much higher. When investors buy the dips they buy around the same mar and this forms what's known as "support". There's several different variations of this that are basically the same type of pyschology behind it. The bears and bulls fight not knowing which way the stock will move but both are convinced it will move one way. Then something happens and suddenly one side "wins" and then most likely the stock will continue in that dirrection.
Breakout - This is when a stock sets up in a certain way. It could be a long gradual fall followed by a long gradual climb, followed by the stock selling off at resistens, followed by the dip buyers coming in quickly, and finally the sellers giving up. This forms what's known as a "cup&Handle breakout" and is a stock market pattern that happens before a breakout. Another pattern is a double bottom, a triangle, a wedge, head and shoulders, inverse head and shoulders and so on. A breakout is when a stock smashes through resistence on good volume indicating the buyers have more conviction and will generally "win".
breakdown -

Certain patterns are much more likely to complete and produce a certain outcome. A "head and shoulders" pattern generally results in a breakdown. However, a stock could show a false breakdown or breakout and suddenly whip around the other way, and all the people that suddenly believe in the stok market pattern will rush to raise cash and cover their wrong decision, while all those who got in or out will rush back to do the opposite. This is why although a study of stock market analysis can determine more often than not what a stock will do, or when a stock will move large, it isn't always right and it can turn violently. For this reason you need to be very quick if you are going to be using stock market patterns.