Your Questions About Stock Market Analysis Methods

or copy the link

Paul asks…

Favourite tools for Stock Chart Analysis?

G’day guys,

David here, from Melbourne, Australia.

Few months ago I set out to learn the stock market and without a doubt, I have the investors bug going for me. There is so much to learn, so many ways of going about finance. My particular interest right now is on stock chart (technical and basic) analysis. I have through my own study and by learning from people more experienced than me, managed to pick up a few tools. Recently in fact.

My favourite tools to use are the 50MA with 200MA, volume indicators, Bollinger Bands, MACDS, slow STO and RSI – sharp charts and P&F. Used in conjunction they have proven to be quite reliable, however somewhat adapted to the current sideways moving market. I also have trouble spotting heads and shoulders. Refer to my methods of analysis on a stock currently I own, displayed here: See any heads and shoulders?

I’d like to ask my fellow investors here what tools they favour using, for what situation and why. I could always do with more parts in my kit.

Thank you kindly.

financi4 answers:

I will show you my chart of Macy’s which is similar but different

This is the one I use for predicting the beginning and end of runs. Bollinger bands (BBs) are important for this and the BBwidth chart at the bottom is the difference between the upper and lower BB.

Some initial comments…I don’t like “log” charts because they tend to make an artificially linear look sometimes. I like 30 day lookbacks rather than 14 day lookbacks for ADX and RSI they give smoother curves without loss of REAL info.

Now…as you are probably aware….narrow BBs are a sign things are about to pop…the problem is Which way???

Look at July 31 in this chart…
the BBwidth is very low (narrow BBs)…but is the share price going to bounce down the tunnel or continue negative??? You get a heads up by looking at the Slow Sto And MACD (signal lines for MACD don’t work well in daily charts IMHO)….the Slow Sto is trending negative since July 26…the MACD is doing the same….conclusion: the breakout will be negative

On Aug 1 this turns true and the BBWith moves sharply upward as the other two indicators continue to fall…..THIS IS HOW YOU CAN FIND A BEARISH BREAKOUT

NOW the question is…when will it stop (temporarily or final)

Look at Aug 8…see the share price Lower than the lower BB…it will not stay below for long and sure enough 2 days later it pulls into the BB envelope…The end of the downward plunge????

Look at the Slow Sto…looks fine…look at the MACD…is falling….look at BBWidth….STILL Rising
Conclusion: There is more downside to come

Look at Aug 22…. Slow Sto rising again…..MACD is rising….BBwidth is falling ….When YOU SEE THIS FORMATION THE END OF THE BEARISH RUN HAS BEEN FOUND

NOW LOOK for a Bullish run

Oct 10….the BBWidth is rising….MACD rising….Slow Sto rising these three together signal a positive breakout….yes yes the share price was rising a week earlier….but until you see this formation you are not certain that it will fall back.

The end of the BULL run is when the Slow Sto, MACD, and the BBWdth all turn negative at the same time….hat does not happen til Oct 31

A bull run started on Jan2 BBWidth is rising….MACD rising….Slow Sto rising.
Is the run over yet….possibly yes but not confirmed….the BBwidth looks to be turning negative but the Slow Sto and MACD still look fine …if they turn negative slopes then this run is over….remember …. All three have to change for it to happen.

To summarize

BULLISH Breakout
start: Simultaneous BBWidth is rising….MACD rising….Slow Sto rising
end: Simultaneous BBWidth is falling….MACD falling….Slow Sto falling

BEARISH Breakout
start: Simultaneous BBWidth is rising….MACD falling….Slow Sto falling
end: Simultaneous BBWidth is falling….MACD rising….Slow Sto rising

Don’t believe me…..check this out against other stocks….you will find it is 100%

do I use this chart alone….Heck no I have 3-4 others I consult as well including P&F which I love.

BTW I see no head and shoulders in you chart….I find Head and Shoulders formations vastly over-rated and 100% accurate on hindsight only. 🙂

George asks…

what are the best financial advice websites available? Also free stock analysis software to use for charting?

Knowing that this market is difficult to judge for long-term investing, I have been researching methods for playing the market on the weekly swings we have been seeing. I have seen many of the financial charting paid services out there (which I might consider based on others opinions), but are there any free (open source-type) software people have been using? (I am partly interested in this because I feel I have been duped by paid so-called financial advisors) Give me our ideas since we got to work together on this-right?

financi4 answers:

I’m a swing and day trader. I use technical analysis to make my trades.

Watch the video every trading day a couple of hours after market close;

Other good sites (esp. For swing trading);

I use ThinkOrSwim for most of my stock trading. Simply the best platform out there with great charting. I also use Interactive Brokers (platform not as good). For Forex I use GFT (pretty good).

I’ve spent a lot of money on stock & FX alert systems. Nothing works better than the one you create for yourself. Money Management and Psychology are just as important as the position you take.

Motley Fool is mediocre & used by amatuers. Prophet Charting is owned by ThinkOrSwim and is one of the charting offerings (for free) on the ThinkOrSwim platform. Tim Knight (the founder) is on the weekly free webinar on occassion as well as other very helpful experts…….

(Archieved webinars)……………………

John asks…

Good books to expand knowledge about markets and company analysis?

Hey guys im looking for any good books which might expand my knowledge of the markets and in company analysis. I dont want any stupid books with designed ‘methods‘ to pick stocks, but rather general books from which you can learn something that you can devise into your own strategy.

financi4 answers:

Book Title : Marketing Management
Author : Philip Kotler

1. This book have excellent resource for the marketing professional.
2. Great case studies, easy to understand context and a wealth of information.

Really this is a great Book .

Book Cover :-

Donald asks…

Technical analysis VS fundamental analysis?

Which has been proven a better method in the stock market?

financi4 answers:

Use technical supported next with fundamental. I’ve seen too many stocks either rise or fall in complete opposition with their financials, but then look at the technical and it shows some pattern that explains it all. So follow the chart patterns first. Then compliment it with the fundamentals. If both look good, then buy or sell.

Steven asks…

What’s your view on the market?

I mean in terms of predictability and ‘understandability’.
My mood is actually against EMH, pure randomness, quantum logic, Brownian motion, random walk, Benouli trials and such things – as with all due my respect, the logic behind Prof. Fama’s arguments is pretty flawed. He assumes a world where all investors use some magical “fortunes formula” – and just because everyone uses this formula – it’s no longer a fortunes formula. It’s like if someone discovers a formula to make gold – if he keeps it on his own – voila. If he sends email to CNN about it – the gold is now useless…as cheap as water. In our world however, some investors will use funny technics such as “three white soldiers”, “heads and tails”…while others will rely on C++ neural networks and reasonably sounding concepts – the investors who rely on over(buying/selling) would theoretically be able to buy/sell from the participants who rely on other assumptions – that are not backed with decent logic.
So, the point is obvious: The market is like a game – the better sellers and the better buyers – win. It is unrealistic to assume such thing as EMH as not all investors use and interpret information the same way.
In my personal humble studies though, I was able to reach a certain predictability using neural networks with both linear and non-linear algroythms and with both Backprop and RBF algorythms. Not only that, but even ‘simpler’ technical analysis methods proved to be very correct – such as the stochastic oscilator. Interesting point of course comes from the fact that while no technical indicator is 100% punctual – a good money management decision and risk aversity can theoretically produce extraordinary gains.
This is my belief currently, the quest for the fortunes formula doesn’t have to be addressed in some new totally unobserved future directions. The formula is already around! All you need to do is to complete the puzzle. In simple words: Use the power of technical analysis for predictability, use the power of quantitative analysis or money managment and use the power of fundamental analysis for reason and discipline. Combining all this would produce theoretically returns as high as 10000% yearly. Bad? So it’s like:

neural networks + kelly criterion + margin + compound interest + hedging + stocks + anti-non-market risk measures.

Fortunes formula with simple addition… ;).

The market??? To quote the man who proved Einstein wrong(Niels Borh): “Prediction is hard – especially on the future” – hard…but NOT impossible. And to quote Hegel: “The only thing we have learnt from history is that we haven’t learnt anything” – speaking of how some good concepts lie around and people are not ready to use them…for some reason.


financi4 answers:

There is no logic to the market like you said heads or tails. It “the market” is weird like the words in a Dr. Seus book. You can never predict what is going on and that is they way they want it. The investers are in the dark, but there are some who know exactly what is going on. It is like somebody holding their hands behind their back and asking you how many fingers they got up. After you guess or invest for the purposes of this conversation they change it to whatever most benefits them. That is why I don’t play carnival, I mean mainstream market games.

William asks…

Portfolio Analysis and Back Testing Stocks, Mutual Fund and ETF?

Google provides many results when doing a search on this topic but i have yet to find what i am looking for. Here is what i want to be able to do…

Consider a portfolio that has a list of investment symbols and associated dollar values. I dont care how much i paid, or how long ago i bought the asset. this is just a method of comparing different portfolios across different lengths of time.

For example: $10,000 portfolio bought at time some time in the past and held to today:
80% VTI (vanguard total stock market ETF)
20% BND (vanguard total bond market ETF)

what would the value TODAY be if i had this portfolio without add/subtracting to shares:

1) 1 yr ago
2) 2 yrs ago
3) 5 yrs ago

etc…seems very straight forward to me, but i cant find a site/tool that will do this easily.

financi4 answers:

Not aware of a free website that will do back-testing as you describe. Some of the more robust trading platforms such as Tradestation will do this but they cost several hundred for the software and you also have to pay for the data feed.

You can do it yourself using an excel spreadsheet and using yahoo finance. Put in the symbol of the fund you want and then click on the left pane “Historical Prices” go to the date you want to track from and get the NAV. Put in the start balance by doing the calc based on the NAV.

Using the same screen click on Dividends and you will see the dividends paid over the time period. Do the math to add those shares based on the values held. You can then compare over time multiple time periods.

James asks…

How to choose share during Market hours ? plz sugges me some method !?

I want to do intraday in nse cash market i m also introduced with technical analysis but i didn’t understand how to catch high voletile stock from base.

What should i do when i sit in front of my laptop for trade ? 🙁

financi4 answers:

Stock Advice

Ambareesh Baliga
Amit Dalal
Anu Jain
Ashish Chugh
Ashwani Gujral
Avinash Gorashekhar
Dharmesh Dalal
Dilip Bhat
Hemant Thukral
Jitendra Mehta
Manas Jaiswal
Mehraboon Irani
Mitesh Thacker
Naresh Kothari
Nischal Maheshwari
Phani Sekhar
PN Vijay
Rahul Mohindar
Rajen Shah
Rajesh Agarwal
Sajiv Dhawan
Salil Sharma
Sandeep Singhal
Sanjeev Agarwal
Satish Betadpur
Shahina Mukadam
Shardul Kulkarni
Sharmila Joshi
Shrikant Chouhan
Siddharth Bhamre
SP Tulsian
Sudarshan Sukhani
Varun Daga
Vijay Bhambwani
VK Sharma
Aditya Birla Money
Anagram Research
Anand Rathi
Anand Rathi Securities
Angel Broking
Angel Broling
Angel Securities
Antique Stock Broking
Arihant Capital Markets
Asit C. Mehta
Bank of America-Merrill Lynch
Batlivala & Karani Securities
BNP Paribas
Bonanza Research
Centrum Research
Credit Suisse
Deutsche Bank
Eastern Financiers
Emkay Global Financial Services
Enam Securities
Fairwealth Securities
FinQuest Securities
Firstcall Research
Geojit BNP Paribas
Geojit BNP Paribas Financial Services
Goldman Sachs
HDFC Securities
Hedge Equities
Hem Securities
HSBC Global Research
ICICI Securities
India Capital Markets
India Infoline
Indiabulls Research
Indiabulls Securities Research
IndiaInfoline Research
Injaz Mena Investment Co. PSC
JM Financial
Karvy Stock Broking
Keynote Capitals Research
Kotak Institution
Kotak PCG
LKP Securities
LKP Shares
Macquarie Research
Mafatlal Securities
Mansukh Securities and Finance
Maximus Securities
Merrill Lynch
Morgan Stanley
Motilal Oswal
Networth Stock Broking
Nirmal Bang
Padmakshi Financial Services
Parag Parikh Financial Advisory Services
Parag Parikh Research
PINC Research
Prabhudas Lilladher
Reliance Equities
Reliance Money
Reliance Securities
Religare Hichens Harrison Research
Religare Research
RR Financial Consultants
SBICAP Securities
SKP Research
SKP Securities
Sunidhi Securities
Sunidhi Securities & Finance
Sushil Finance
Swastika Investmart
ULJK Research
ULJK Securities
Unicon Investment
VCK Share and Stock Broking Services
Company Price Recommendation
Shree Renuka Sugars 70.25 Enter Shree Renuka, says Jitendra Mehta
Bajaj Hindusthan 136.10 Buy Bajaj Hindusthan, says Jitendra Mehta
Larsen and Toubro 1570.90 Sell L&T; target of Rs 1520: IInfoline
Kotak Mahindra Bank 724.85 Sell Kotak Mahindra Bank; target of Rs 720: IInfoline
Reliance Industries 1083.30 Invest in Reliance Industries: Mukadam

Hot Stocks
Most Active Top Gainers Top Losers 52-week Highs 52-week Lows Company Price %Change
Reliance 1084.25 -0.59
ICICI Bank 922.45 0.48
DLF 330.25 -2.29
Tata Steel 695.70 1.40

Price Shockers Volume Shockers Only Buyers Hourly Gainers Only Sellers Hourly Losers
Exchange Traded Funds (ETFs)
Schemes Price Returns (in %)
Latest % Change 6 mth 1 yr
Junior BeES 108.97 -0.43 8.2 107.4
Bank BeES 939.00 0.70 -1.4 86.8
Reliance Banking ETF 890.00 -1.11 -1.5 86.5

Market Statistics
FII Activity MF Activity DII Activity Intraday Block Deals Bulk Deals Top Dividend Yields F&O
Top Gainers Top Losers Most Active Active Calls Active Puts Increase in Open Interest Mutual Fund
Favourite Stocks Favourite Sectors MF Bulk Deals Latest NAVs Recent Dividends MF Buys / Sells Company
Corporate Action Board Meetings AGM/EGMs Bonus Dividend Price Earning Ratios

Richard asks…

financial engineering thesis?

I have a theory that explains how financial markets (stock charts) are formed. it’s a technical analysis method but completely different from anything that’s been observed. but it’s based on natural laws. can I use this theory as a PhD thesis if I pursue a financial engineering masters degree?

financi4 answers:

You normally don’t write a PhD thesis for a financial engineering master degrees, you write a master thesis.

Your faculty advisor would provide a detailed clarification of your school’s expectations.

You will have to submit a thesis proposal. The aim of the thesis proposal is to convince your school that you research is significant original, and important; the topic is feasible in terms of availability resources (funding, equipment, supervisors, data and time allowed); and the topic matches your interests and capabilities.

In some United States doctoral programs, the term “dissertation” can refer to the major part of the student’s total time spent (along with two or three years of classes), and may take years of full-time work to complete. At most universities, dissertation is the term for the required submission for the doctorate, and thesis refers only to the master’s degree requirement.

“The difference between a PhD thesis and master thesis differences are likely to be in the length
and complexity of the research, the main difference is that a Ph. D. Must contain something new.”

Powered by Yahoo! Answers