Demystifying Technical Analysis - More Than Just Looking Back
Technical analysis often gets misunderstood. Some claim it’s merely a study of past price movements, incapable of providing forward-looking insights. Others dismiss it as a short-term trading tool with no relevance to long-term investors.
The reality?
Technical analysis isn’t just about history—it’s about interpreting real-time market sentiment, risk
dynamics, and investor psychology. It’s a tool that, when used correctly, can help us navigate markets with both offensive and defensive precision.
“TECHNICAL ANALYSIS IS JUST LOOKING AT THE PAST”
It’s easy to assume that because technical analysis involves charts, it’s only a study of history. But this ignores a fundamental truth… markets are forward-looking.
When we analyze price trends, momentum, and volume, we’re not just seeing past trades— we’re seeing the real-time actions of investors making decisions based on new information.
Market participants—institutions, hedge funds, and individual investors—are constantly adjusting positions based on earnings reports, economic data, interest rate changes, and geopolitical events. These factors get priced into the market as they happen, not just after the fact.
A stock breaking to new highs isn’t a historical fact—it’s a signal that investors, with all available information, are collectively betting on continued strength.
“FUNDAMENTALS MATTER MORE BECAUSE THEY USE CURRENT DATA”
Fundamental analysis looks at financial statements, economic reports, and company performance—important data, no doubt. But there’s a problem: fundamental data is inherently lagging.
Earnings reports come out quarterly, meaning the data is already outdated by the time it’s public.
Economic indicators like GDP, unemployment, and inflation are reported after the fact.
Company valuations, while useful, don’t account for shifts in investor sentiment, supply and demand imbalances, or broader market conditions.
Meanwhile, technical analysis provides a live feed of how market participants are reacting in real time. If a stock has great fundamentals but is underperforming the market, that tells us that something—perhaps not yet public—is weighing on investor sentiment.
“TECHNICAL ANALYSIS IS ONLY FOR TRADERS”
Many long-term investors dismiss technicals as a short-term trading tool. But some of the best investors in history have used technicals to guide their decisions.
Risk Management
Technicals help identify when the market is in an uptrend versus when it’s breaking down (a warning sign to reassess).
Market Sentiment
Price action reveals what the collective market believes about the overall market's future. Fundamentals may suggest the market is “cheap,” but if the price keeps falling, it may not be a bargain—it may be a value trap.
Timing Entry and Exit Points
Long-term investors don’t need to chase tops or bottoms, but they can use technicals to help avoid buying into major downtrends or selling too early in an uptrend.
Example: A fundamentally strong company may report great earnings, but if price action shows heavy selling pressure afterward, it’s a red flag that big investors are taking profits or seeing risks that aren’t obvious in the financials.
HOW WE USE TECHNICAL ANALYSIS
We don’t see technical and fundamental analysis as opposing forces—we see them as complementary tools.
- Fundamentals help us determine what to
- Technicals help us determine when to buy and when to preserve
OFFENSIVE PLAY: IDENTIFYING FAVORABLE RISK-REWARD SETUPS
Markets move in cycles, and understanding those cycles helps us to position our clients on the right side of long-term trends.
Trend Confirmation
We focus on price action, volume, and momentum to assist in determining when the market is entering a favorable environment.
Breakout & Strength Signals
When the market shows strong relative strength, it tends to keep performing, and we use technicals to identify this upward momentum.
Liquidity & Institutional Activity
Large investors move markets, and their footprints appear on the charts before major fundamental changes become widely recognized.
DEFENSIVE PLAY: MANAGING RISK & AVOIDING DOWNTRENDS
Markets don’t go up in a straight line, and risk management is at the core of what we do.
Downtrend Warnings
Just as technicals highlight strength, they also warn us when the market is rolling over. Catching these signals early helps us to proactively adjust portfolios rather than react after losses mount.
Bear Market Playbook
When long-term trends weaken, we seek to shift strategies to defensive positioning to help preserve client assets.
Volatility Adjustments
The market’s risk appetite changes, and technicals help us gauge when to lean into opportunities or take a step back.
THE BIGGER PICTURE
A DISCIPLINED, DATA-DRIVEN APPROACH
Technical analysis is not about predicting the future—it’s about increasing the probability of making informed, disciplined decisions.
We use technicals not as a magic formula but as a powerful lens to interpret real-time market behavior. Our philosophy is rooted in adaptability, refining strategies, and staying ahead of the curve—because in investing, complacency is the greatest risk.
Markets are a constantly shifting puzzle. Price action is the real-time scoreboard of supply, demand, and sentiment—ignoring it means ignoring the very mechanism that drives investments.
By blending technical analysis with a strong fundamental foundation, we create a holistic and evolving process designed to prioritize risk management, opportunity recognition, and strategic decision-making for our clients.
The question isn’t whether technicals work—it’s whether you’re using them to their full potential.
ARE YOU ON THE RIGHT SIDE OF THE MARKET?
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Austin Storck and not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including technical and fundamental analysis, asset allocation and diversification. Past performance is not a guarantee of future results.
