While they may be fun to encounter in your regular social life, surprises are never something you want to experience in the financial world, especially in the stock market. Investors spend a great deal of their time trying to predict and plan for as many different scenarios as possible, so that they can choose the investment path that is the least likely to end up in a loss of money. Some people criticize technical analysis as being too limited in scope, because it is focused on price and only price, however, it's important to realize that it is in this direct approach that its strength lies. If you like this direct approach, you'll be interested in learning more about S&P 500 technical analysis.

In case you've never encountered S&P 500 technical analysis before, you should know that it still employs the basic assumptions of technical analysis, but only with regard to the Standard & Poor's stock market index. The S&P 500 was first published in 1957 and is thought to be one of the best single gauges of large cap equities in the United States. Containing around $3.5 trillion benchmarked, and index assets of approximately $915 billion of this amount, the Standard & Poor's index is far more substantial than the Dow Jones Industrial Average.

The practice of S&P 500 technical analysis is of particular interest to investors that are currently trading stocks that are listed on this index because it can provide them assistance with making more timely decisions about when to buy certain stocks and when to sell them. One of the most attractive characteristics of technical analysis in general is that it is so flexible in its application, and can just as easily be applied to the enormous S&P index as to the much more limited Dow Jones Industrial Average.

If you're going to use it effectively, it's important that you're familiar with the basic assumptions of S&P technical analysis that are applicable any market or industry. Technical analysts believe that the market is able to adjust for outside factors all on its own, and that extra research into public opinion and company history is unnecessary. It is also assumed that the market prefers to move in trends, unless an interrupting force exerts pressure to reverse or gap the trend. Lastly, technical analysts believe that history is inclined to repeat itself, and past price movements can be used to predict the future.