Phil Roth's technical analysis utilizes four kinds of indicators. The following is a brief description of the indicators and their efficacy.

1. Trend and Momentum. These indicators tell us the direction and the force behind a stock or market move. They include measures of price, breadth, volume, and relative strength.
2. Sentiment. These indicators try to determine which market participants are bullish and which are bearish, and how bullish or how bearish they are.
3. Supply-Demand. These indicators deal with the amount of new stock coming to the market and the buying power on the sidelines. Secondary offerings and mutual fund cash are two important measures.
4. Intermarket Analysis. These indicators deal with the interaction of the equity, fixed income, commodity, and currency markets.

The most important technical precept is "investors make bottoms; traders make tops." People with long-term time horizons (investors) are motivated by price and value. People with short-term time horizons (traders) are motivated by trend. Investors are willing to buy into adversity because they are not concerned with immediate gratification. If the trend has been down for a while, traders continue to exit to reduce the pain of being long and press their shorts. The ultimate buyer is the investor.

The trend continues down when traders' liquidations are overpowering investment buying. A bottom is reached at the point in a downtrend where prices begin to stabilize because investment demand is beginning to offset trader liquidation. Hence, there are three elements to a bottom:

1. Prices stabilize after a decline.
2. Investors are on the buy side.
3. Traders are on the sell side.

A top is the opposite. Investors are liquidating because prices have become "high". Traders are still buying because they perceive the trend to be up. Analogous to a bottom, a top has three elements also:

1. Price stall after an advance.
2. Investors are on the sell side.
3. Traders are on the buy side.

This is not to say traders are dumb and investors are smart. During trends everybody can be right for a while. It is when traders are very optimistic and investors have become cautious that the failure of stocks to make upside progress is a potential negative. It is when traders are very pessimistic and investors are becoming motivated to buy that the failure of stocks to continue falling is a potential positive. Note that the trend is analyzed first, then a judgment about momentum increasing or waning is made, and then the sentiment of investors and traders is investigated. It is not simply a matter of contrary opinion; some people are wrong at turning points, some are right.

Finally, there is one more important consideration, and that is the technical position of equity alternatives. Since technical analysis is, in its essence, a study of supply and demand, anything that affects the supply and demand for stocks is fodder for investigation. In other words, as equity alternatives fluctuate in price, the supply-demand picture for stocks changes. Equity alternatives include fixed income investments, real estate, and hard assets, among others. Since the most important equity alternative is bonds, forecasting long term interest rates is the main focus.

Stock selection is a subtle matter. Phil practices "Edwards & Magee"-type analysis. His timing decisions are made by looking for changes in volume and volatility. For readers who want to pursue this aspect further, The Technical Analysis Of Stock Trends, by Edwards & Magee, is highly recommended.