Introduction to Technical Analysis
Technical analysis is a method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. Unlike fundamental analysis, which focuses on a company's intrinsic value, technical analysis is purely chart-based, attempting to identify patterns and trends that can suggest future price movements. Technical analysis is widely used across stocks, futures, and forex markets.
Worked Example: These Figures Today
The companies used as examples above, with the current figures behind them. Illustrations of the metric — not a ranking, not a shortlist, and not a recommendation.
| Ticker | Company | Price | Change | Market Cap | MoonshotScore |
|---|---|---|---|---|---|
| AAPL | Apple Inc. | $343.91 | -1.10% | $5.0T | 89 |
| TSLA | Tesla, Inc. | $391.62 | +5.21% | $1.5T | 57 |
| SPY | SPDR S&P 500 ETF | $765.37 | +0.71% | $812.2B | — |
Applying Technical Analysis: Examples
Here are example stocks where technical analysis can be applied:
AAPL: Apple Inc., a widely followed stock, provides ample historical data for technical analysis.
TSLA: Tesla Inc., known for its volatility, can be analyzed using technical indicators to identify potential entry and exit points.
SPY: The SPDR S&P 500 ETF Trust represents the broader market, making it suitable for identifying overall market trends.
“MoonshotScore rates a US-listed stock 0 to 100 using five sector-relative pillars. Higher means stronger numbers across business quality, safety, valuation, growth and momentum. Eligible common stocks and ADRs only; funds, ETFs, warrants, units, SPACs, preferreds, and notes carry none. It is built for education and deeper due diligence, not financial advice.”
Questions worth resolving before acting on the screen
What are the limitations of technical analysis?
Technical analysis is subjective and relies on historical data, which may not always be indicative of future performance. It should be used in conjunction with other forms of analysis.
How can I learn technical analysis?
Numerous online resources, courses, and books are available. Start with basic chart patterns and indicators, then gradually explore more advanced techniques.
Is technical analysis suitable for long-term investing?
While primarily used for short- to medium-term trading, technical analysis can also help long-term investors identify favorable entry points and manage risk.