Charting Markets (formerly The Technical Indicator)

Charting Markets applies technical analysis to define market trends, track key index levels and identify potential market turning points. 

Each review charts the major U.S. benchmarks, emerging sector trends and individual stocks positioned to move.

Charting Markets is written by Michael Ashbaugh, the founder and editor of The Technical Indicator, a stand-alone subscription newsletter published on MarketWatch from 2003 to 2021.  His work has become a reference point used by thousands of market professionals and individual investors. 

Michael Ashbaugh has been quoted by The Wall Street Journal, CNBC, Reuters and Dow Jones.  He graduated Magna Cum Laude with a degree in finance from Indiana University Kelley School of Business.

What is technical analysis?

Technical analysis evaluates market data – including the relationship between price, time and volume – to identify market trends and assign probabilities to expected future outcomes.  Many of the same concepts of technical analysis are utilized in quantitative analysis and behavioral finance. 

By contrast, fundamental analysis uses tools like financial statements, as well as broader economic metrics, frequently to assign a company an intrinsic value to be evaluated versus the prevailing stock price.

Technical analysis assumes that all information – both public and non-public (as well as the collective efforts of the fundamental analysts) – is reflected in market prices. 

The strengths of technical analysis – Stay with the trend

A key strength of technical analysis is that it identifies what is happening in the markets, rather than what should be happening.  For instance, the U.S. stock market staged a massive mid-2020 rally — even amid the worst of the pandemic — largely contrary to conventional investment reasoning.

Properly applied technical analysis captured the bulk of the unexpected pandemic bull trend.

Control downside risk

Separately, technical analysis differs from fundamental analysis in that it more frequently opens the door to sell signals. 

For instance, former market favorite and now-defunct Enron Corp. – once the world’s seventh-most valuable company – signaled pending trouble in its share price months before the company’s ultimate collapse. 

Many fundamental analysts hailed Enron’s plunging share price as more attractive or “on sale” amid its death spiral.  By contrast, properly applied technical analysis flagged Enron’s bearish trend shift comparably early, avoiding the bulk of the carnage. 

Technical analysis and fundamental analysis increasingly cooperate

In today’s world, technical and fundamental analysis are increasingly applied in tandem.  The technicals are frequently used to fine-tune timing, as well as entry and exit points, against the backdrop of fundamental analysis steering bigger-picture decisions.

A final note

Please note that Charting Markets is not investment advice.  The work is published for informational purposes, and as background for your own independent research. Contact: mashbaugh@chartingmarkets.com.

To find out more about the company that provides the tech for this newsletter, visit Substack.com.