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Fundamental Analysis

Doubling Stocks Review: Is this a scam? If you are looking for the truth about doubling stocks this is a necessity. One always thought there was something wrong with a doubling of stocks.

Monday, July 12, 2010


Successful participation in the financial markets virtually demands some mastery of chart analysis.Consider the fact that all decisions in various markets are based,in one form or another,on a market forecast.Whether the market participant is a short-term trader or long-term investor,price forecasting is usually the first,most important step in the decision-making process.To accomplish that task,there are two methods of forecasting available to the market analyst—the fundamental and the technical.Fundamental analysis is based on the traditional study of supply and demand factors that cause market prices to rise or fall.In financial markets,the fundamentalist would look at such things as corporate earnings,trade deficits,and changes in the money supply.The intention of this approach is to arrive at an estimate of the intrinsic value of a market in order to deter-mine if the market is over- or under-valued.
Technical or chart analysis,by contrast,is based on the study of the market action itself.While fundamental analysis studies the reasons or causes for prices going up or down,technical analysis studies the effect,the price movement itself.
That’s where the study of price charts comes in.Chart analysis is extremely useful in the price-forecasting process.Charting can be used by itself with no fundamental input,or in con-junction with fundamental information.Price forecasting,how-ever,is only the first step in the decision-making process.Market Timing
The second,and often the more difficult,step is market timing.
For short-term traders,minor price moves can have a dramatic impact on trading performance.Therefore,the precise timing of entry and exit points is an indispensable aspect of any market commitment.To put it bluntly,
timing is every thing in the stock market.
For reasons that will soon become apparent,timing is almost purely technical in nature.This being the case,it can be seen that the application of charting principles becomes absolutely essential at some point in the decision-making process.Having established its value,let’s take a look at charting theory itself.


Chart analysis (also called technical analysis) is the study of market action,using price charts,to forecast
future price direction.The cornerstone of the technical philosophy is the belief that all of the factors that
influence market price—fundamental information,political events,natural disasters,and psychological factors—
are quickly discounted in market activity.In other words,the impact of these external factors will quickly show up in
some form of price movement,either up or down.Chartanalysis,therefore,is simply a short-cut form of funda-
mental analysis.Consider the following:A rising price reflects bullish fundamentals,where demand exceeds supply;falling prices wouldmean that supply exceeds demand,identifying a bearish fun damental situation.These shifts in the fundamental equationcause price changes,which are readily apparent on a price chart.The chartist is quickly able to profit from these price changes without necessarily knowing the specific reasons causing them.The chartist simply reasons that rising prices areindicative of a bullish fundamental situation and that falling prices reflect bearish fundamentals.
Another advantage of chart analysis is that the market priceitself is usually a leading indicator of the known fundamentals.Chart action,therefore,can alert a fundamental analyst to thefact that something important is happening beneath the sur-face and encourage closer market analysis.Charts Reveal Price TrendsMarkets move in trends.The major value of price charts is that they reveal the existence of market trends and greatlyfacilitate the study of those trends.Most of the techniques usedby chartists are for the purpose of identifying significanttrends,to help determine the probable extent of those trends,and to identify as early as possible when they are changing direction
A candlestick chart of Intel covering two months. The narrow wick is the day’s range.
The fatter portion is the area between the open and close. Open candles are positive;
darker ones are negative.
Types of Charts Available .The most popular type of chart used by technical analysts is the daily bar chart.Each bar represents one day of trading.Japanese candlestick charts have become popular in recent years. Candlestick charts are used in the same way as bar charts,but present a more visual representation of the day’s trading.

Line charts can also be employed .The line chart simply connects each successive day’s closing prices and is the simplest form of charting.
Any Time Dimension All of the above chart types can be employed for any time dimension.The daily chart,which is the most popular time period,is used to study price trends for the past year.
A line chart of Intel for an entire year. A single line connecting successive closing prices is the simplest form of charting.
longer range trend analysis going back five or ten years,weekly and monthly charts can be employed.For short-term (or day-trading) purposes,intraday charts are most useful.Intradaycharts can be plotted for periods as short as 1-minute,5-minute or 15-minute time periods.
Courtesy Copyright charting made easy .This content copyrights protected  Written by John J.Murphy.