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There are two basic types of analysis that experts use to pick wining stocks They are technical analysis and fundamental analysis Both types have their followers and their non-believers However since both help decide the direction of the stock market it is important to know something about each In this issue we will be talking about technical analysis Next week I will talk about the different styles that technical experts use to pick out winners Technical Analysis Technical analysis often just called charting is the practice of trying to divine stock prices by examining trading patterns and comparing the shape of current charts to those from the past Technical analysts use a variety of charting techniques involving plotting price movements in a stock over time The shape of the chart is supposed to reveal something about whether the stock is headed up or down Critics deride technical analysis as only hocus-pocus not far removed from tea-leaf reading Advocates insist that the stock market clearly moves in broad patterns and that careful charting and knowledge of history can recognize these Whether or not technical analysis has any validity it has a good many adherents and on that basis alone influences stock prices Market Timing Market timing is a tactical asset allocation technique used by investors who believe they can predict when the market will change course For example a mutual fund manager might switch the bulk of his funds holdings from stocks into bonds or cash when he thinks -- based on analysis his own gut feeling or both -- that stocks have peaked If he times the market correctly he could make a huge profit Then when he thinks the stock market is ready to take off again he could shift back into stocks in an effort to make another big killing History has shown that few investors can consistently time the market A study by financial professors at University of California-Davis found
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