Of facts and anticipation

When I first started my interest in investment, my thoughts were to take interest in market news, thinking that if there is good news, the stock in particular will rise, vise versa, the counter will fall on bad news. I started reading the Business Times trying to make sense on what they were saying, taking into account that I am trained and an Engineer and have no knowledge on business terms.

My ex-company was listed then, it is still now. The management continuously giving us good impression of the company other than releasing news of company's achievement. That was a time when my comapny's share been falling for a while. The funny thing is that market reaction to such news were unexpected, at least by me. The company's share continued downtrend even with news of great potential growth for the company being anounced.

It was only until I started learning about a particular technique in market analysis ( in this case Technical Analysis) that I also learned about how market evaluate news release. The first thing my teacher said to the class on the first day of Technical Analysis was," there is no such thing as a saint in this world". True enough people don't act after the news release, they act before it was released. They anticipate a price movement ahead.

This conclusion can be easily proven by noting stocks running up prior to any news release. No matter what the law says, news leak and thus insider trading, it is more a matter if you are caught. This is also why Contrarion concept works.

So one objective of Technical Analysis is to detect the signals of such activities. If you cannot be the first beneficial party, at least you are secondary. Forget about Fundamental analysis, you are likely to be looking at past year data and not likely to know what's going on inside.