A method of evaluating securities by analyzing statistics generated by
market activity, such as past prices and volume. Technical analysts do
not attempt to measure a security's intrinsic value, but instead use
charts and other tools to identify patterns that can suggest future
activity.
Technical analysts believe that the historical performance of stocks and markets are indications of future performance.
In
a shopping mall, a fundamental analyst would go to each store, study
the product that was being sold, and then decide whether to buy it or
not. By contrast, a technical analyst would sit on a bench in the mall
and watch people go into the stores. Disregarding the intrinsic value of
the products in the store, the technical analyst's decision would be
based on the patterns or activity of people going into each store.
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