im-15-4e - CHAPTER FIFTEEN TECHNICAL ANALYSIS CHAPTER...

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CHAPTER FIFTEEN TECHNICAL ANALYSIS CHAPTER OVERVIEW This chapter discusses the concept of technical analysis in the context of the efficient market hypothesis. The origin, with the Dow theory, of technical analysis is presented and charting is explained. Various other types of technical indicators are presented. LEARNING OBJECTIVES After studying this chapter, the student should understand and be able to use the various technical indicators presented in this chapter. The student should also understand the theoretical problems of technical analysis in a world of efficient markets. PRESENTATION OF CHAPTER MATERIAL 1. Overview Technical analysis uses price and volume data to attempt to find undervalued securities. Technicians believe that there are predictable patterns in stock prices and that these patterns can be exploited to secure abnormal profits. Tools used by technicians include charts and indicators. There is not substantial evidence to support the claim that many of these techniques lead to consistently superior profits. 2. Charting Two major types of charts are used in technical analysis. The first type of chart graphs the price and trading ranges for a stock on a daily basis. Chartists using these charts look for patterns in price
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This note was uploaded on 10/28/2009 for the course MBA MBA608 taught by Professor Martin during the Spring '09 term at Beirut Arab University.

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im-15-4e - CHAPTER FIFTEEN TECHNICAL ANALYSIS CHAPTER...

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