4504c16 - Technical Analysis Chapter 16 What is Technical Analysis o Use of published market data for analysis of both aggregate stock prices and

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Technical Analysis Chapter 16 What is Technical Analysis? o Use of published market data for analysis of both aggregate stock prices and individual stocks o May produce insight into the psychological dimensions of the market o Used by investors and investment advisory firms o Oldest approach to stock selection Technical Approach o Prices move in trends determined by changing attitudes of investors o Identify change in trend at an early stage and maintain investment posture until evidence indicates otherwise o Market itself is own best source of data about trends Data includes prices, volume, and technical indicators o Technicians disagree with fundamental analysis because they believe it is extremely difficult to estimate intrinsic value and to obtain and analyze information consistently Technicians believe market data indicates forces of demand and supply Record of investor mood that can be detected and is likely to continue Tools For Technical Analysis o Use of graphs, charts, and technical trading rules and indicators o Price and volume primary tools of the pure technical analyst Technicians use charts to identify trends and patterns in stock prices that provide trading signals Volume data used to gauge market condition and to assess its trend The Dow Theory o Based on three types of price movements Primary move: a broad market movement that lasts several years
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This note was uploaded on 07/09/2011 for the course FIN 4504 taught by Professor Banko during the Summer '08 term at University of Florida.

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4504c16 - Technical Analysis Chapter 16 What is Technical Analysis o Use of published market data for analysis of both aggregate stock prices and

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