ositive technical signals tend to precede good financial reports from a company. That is, the technical patterns precede and anticipate the fundamental reports. Stock price patterns reflect the buying and selling of all the people who have intimate knowledge about the company. The rest of the investment world creates the noise in stock behavior that accompanies the pattern created by those with knowledge. That is why sell strategies based on fundamentals are too slow in a volatile market.

Before the crash in 2000, many investment managers had relied on "fundamentals" to tell them when to sell. However, as the market crash approached it was often the case that by the time the company announced that earnings were going to be "soft," the stock had already declined. Sell strategies based on fundamentals (earnings, cash flow, order backlog, etc.) turned out to be much too "sluggish" in relation to market action and in comparison with sell signals based on technical analysis (volume & price patterns of the stock). The problem was compounded by the fact that analysts were often far from accurate in their forecasts regarding the financial prospects of companies. Some of the shortcomings of fundamental analysis are addressed by technical analysis.

Technical analysis offers its proponents the opportunity of responding in "real-time" to a stock's behavior. Technicians do not have to wait for the next quarterly report from the company. In other words, technicians can quickly respond to what is (current stock behavior) rather than wait to see if what ought to be (projections by fundamental analysts) actually happens (if the company actually generates the earnings expected by analysts). Each company has links with suppliers, competitors, officers, and employees. These in turn have families and friends. Many of these people are investors. There are also outside investors, thinkers, reporters, and others who are watchers of these people and their companies. The total knowledge of all these people is reflected in stock behavior. The cumulative effect of all the buying and selling activity of these people, and of those who watch these people, defines the regions of supply and demand (resistance and support) evident in the market activity of the stock and consequently in the patterns evident in the stock's behavior.

Every year in October the Stock Market has a setback called Black Monday. The reason for this is the pricing has inflated over the past year and all of a sudden the market gets a slap in the face and the pricing goes down to a more realistic value. The economy is now going through a black Monday cycle which has escalated into a giant chain reaction.. Twenty years ago I could buy a Nissan Sentra for only $6,700 but in 2009 you cannot buy one for less than $15,000. A 150% price increase during the last two decades.

Pricing over the last 20 years has inflated and people no longer will pay these prices. The only businesses that will survive are the ones that are able to bring their pricing down and yet stay in business. The reason all the car manufacturers are suffering is because rather than re price their models they want everybody to bail them out yet they want to keep their pricing the same. Look at Ford, if you buy one of their cars and for some reason lose your income then for the next year you will not have to make any payments. Other manufacturers are doing similar things.

Twenty years ago I could attend a small college and pay only about $5000 for a complete 2 year program. In 2009 my wife is attending a small school and it now costs over $20,000 for a 2 year program as a medical assistant. By the time she graduates she will owe over $15,000 just in Student Loans. A lot of manufacturers are now giving away their products to students and the unemployed. Adobe will give the unemployed free software. This is software they normally charge over a thoiusand dollars fort. Microsoft will give up to a 90% discount to students. Sun will give away training to students.

Restaurants that have a dollar menu will be the only ones that will survive the current economic conditions. Starbucks is closing hundred of stores because their pricing remains the same as when the economy was good. The reason Dunkin Donut's and McDonalds is able to survive is because they offer alternatives to people on a budget.