Technical Analysis, Manufacturing process / Technology

Technical analysis is a trading discipline employed to evaluate investments and identify trading opportunities by analyzing statistical trends gathered from trading activity, such as price movement and volume. Unlike fundamental analysts, who attempt to evaluate a security’s intrinsic value, technical analysts focus on patterns of price movements, trading signals and various other analytical charting tools to evaluate a security’s strength or weakness.

Technical analysis can be used on any security with historical trading data. This includes stocks, futures, commodities, fixed-income, currencies, and other securities. In this tutorial, we’ll usually analyze stocks in our examples, but keep in mind that these concepts can be applied to any type of security. In fact, technical analysis is far more prevalent in commodities and forex markets where traders focus on short-term price movements.

The Basics of Technical Analysis

Technical analysis as we know it today was first introduced by Charles Dow and the Dow Theory in the late 1800s. Several noteworthy researchers including William P. Hamilton, Robert Rhea, Edson Gould and John Magee further contributed to Dow Theory concepts helping to form its basis. In modern day, technical analysis has evolved to included hundreds of patterns and signals developed through years of research.

Technical analysts believe past trading activity and price changes of a security can be valuable indicators of the security’s future price movements. They may use technical analysis independent of other research efforts or in combination with some concepts of intrinsic value considerations but most often their convictions are based solely on the statistical charts of a security. The Market Technicians Association (MTA) is one of the most popular groups supporting technical analysts in their investments with the Chartered Market Technicians (CMT) designation a popular certification for many advanced technical analysts.

The Underlying Assumptions of Technical Analysis

There are two primary methods used to analyze securities and make investment decisions: fundamental analysis and technical analysis. Fundamental analysis involves analyzing a company’s financial statements to determine the fair value of the business, while technical analysis assumes that a security’s price already reflects all publicly-available information and instead focuses on the statistical analysis of price movements. Technical analysis attempts to understand the market sentiment behind price trends by looking for patterns and trends rather than analyzing a security’s fundamental attributes.

Manufacturing process / Technology

In the simplest sense, production technology is the machinery that makes creating a tangible physical product possible for a business. To the small business, this means a workshop at the very least, with more elaborate operations making use of machines and assembly lines. Choosing a production scale model within a company’s capital means is important; simpler workshops tend to lead to lower production volume but cost less to assemble, while higher output operations require more complex and costly machines, which are sometimes cost prohibitive.

Components of Production Technology

1. The Modern Artisan Workshop

The artisan workshop represents the basic minimum effective level of modern production technology. An artisan workshop builds upon the traditional workshops of craftsmen from before the industrial revolution and replaces most of the simple hand tools used with time-saving electrically driven tools. These tools offer the skilled tradesperson the advantage he needs in order to more quickly produce goods to the same level of quality he would otherwise make with hand tools. The tablesaw, drill press and belt sander are all examples of modern variations on simple hand tools used to save the modern craftsman time. Artisan workshops focus on low or medium output of higher than average quality goods to maintain a competitive advantage over large-scale factory-produced items of similar type.

2. CNC Machining and Extending the Artisan Workshop

A computer number-controlled or CNC machine also referred to as computer-aided manufacturing – further extends the capability of an artisan workshop, allowing the skilled craftsman to program the device to perform highly detailed repetitive tasks such as router and drill operation. CNC machines are expensive investments; however, when used to address the more time-consuming steps of producing an item in the standard artisan workshop, they can significantly improve the overall profitability of that manufacturing business. Because of their high initial cost when compared to manually operated shop tools, CNC machines are generally unavailable to all but the most successful small business. Investing in a CNC machine is a pivotal decision for a small business and should be done with careful consideration of how much the machine will actually boost profits when compared to continuing with the manual method.

3. Automated Assembly Line-Style Mass Production

Automated assembly-line mass production represents the apex of modern industrial production, and is the driving force behind industrial titans such as automobile manufacturers and the makers of household appliances. The higher the degree of mechanization and use of robotics in the assembly line process, the fewer human workers are required to produce a product; however, in replacing human laborers with robots, the initial investment cost rises dramatically. The extremely high initial cost of automated assembly line mass production places such production methods far beyond the grasp of small business owners as far as practicality is concerned. Maintaining advanced automated assembly lines also requires the professional services of highly skilled robotics technicians, again making practical implementation difficult for the small business owner.

4. Practicality Considerations for Small Business

When it comes to investing in production technology, a small business’s focus should be on generating the best dollar return on capital investment within the confines of the company’s reasonable budget. The IRS states that small businesses are a success when they generate profit at least three out of every five years. This general rule means that for the small business person, if it takes more than two years to pay off the initial capital investment in production technology, the businesses likely exceeded its ideal maximum production technology budget. This doesn’t mean that smaller to medium businesses have to abandon advanced production methods entirely; instead, they can adapt some practices from larger-scale industry that suit their own needs and capabilities. For example, small and medium businesses looking to capitalize upon the mass production method of industrial manufacturing can take a page out of Henry Ford’s book and use a simple conveyor belt line along with labor division to simplify and speed up the production process while still using artisan shop-style manually operated tools.

Types of Manufacturing Process

The four main types of manufacturing are casting and molding, machining, joining, and shearing and forming.

1. Molding in Manufacturing

If the products you’re creating start out as liquid, chances are the manufacturer uses molding. One popular type of molding is casting, which involves heating plastic until it becomes liquid, then pouring it into a mold. Once the plastic cools, the mold is removed, giving you the desired shape. You can also use casting to make plastic sheeting, which has a wide variety of applications. There are four other types of molding: injection molding, which melts plastic to create 3-D materials such as butter tubs and toys; blow molding, used to make piping and milk bottles; compression molding, used for large-scale products like car tires; and rotational molding, used for furniture and shipping drums.

2. Machining in Manufacturing

It would be difficult to make products like metal parts without the use of some type of machine. Manufacturers use tools like saws, sheers and rotating wheels to achieve the desired result. There are also tools that use heat to shape items. Laser machines can cut a piece of metal using a high-energy light beam, and plasma torches can turn gas into plasma using electricity. Erosion machines apply a similar principle using water or electricity, and computer numerical control machines introduce computer programming into the manufacturing mix.

3. Joining in Manufacturing

You can only get so far with molds and machines. At some point you need to be able to put multiple parts together to make one piece. Otherwise, just about all you can create is IKEA-like furniture that needs to be assembled, part by part. Joining uses processes like welding and soldering to apply heat to combine materials. Pieces can also be joined using adhesive bonding or fasteners.

4. Shearing and Forming in Manufacturing

When dealing with sheet metal, shearing comes into play. Shearing uses cutting blades to make straight cuts into a piece of metal. Also known as die cutting, you’ll often see shearing used on aluminum, brass, bronze and stainless steel. Another metal-shaping process is forming, which uses compression or another type of stress to move materials into a desired shape. Although forming is often used with metal, it also can be used on other materials, including plastic.