Fundamental Analysis and Confirmation
For the technical analyst, the problem with fundamentals is a matter of timing. By the time the latest fundamentals have been published, considerable time—usually a number of months—has passed. The value in fundamentals for stock selection has to involve the analysis of several years of fundamental trends.
When you know that a lag time makes fundamentals ineffective for analyzing current prices and for confirming trend reversal or continuations, the fundamentals do serve a purpose in technical analysis. Specifically, a correlation between fundamental volatility and technical volatility points to degrees of risk and the strength of all signals—reversal, continuation, and confirmation.
This lag time is forever ...
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