Is technical analysis concerned with stocks being overvalued/undervalued?
Technical analysis is concerned more with supply and demand for stocks than with any kind of fundamental valuation that a stock is or isn’t worth the current price which it is selling. Technical analysts don’t concern themselves with determining whether stocks are undervalued or overvalued in a fundamental sense. They leave that work for others to investigate. Technicians are worried about whether a stock is oversold(sells at too low a price) or overbought(sells at too high a price). Technical analysts tend to concentrate on price trends, not economic fundamentals. Price trends may result from investors buying and selling on the basis of fundamental analysis, but the “why” of a trend is not really important. It is the trend itself that is important, becuase the trend provides guidance with regard to appropriate investment decision.
