Stock Analysis - Research Paper Example

? Stock Analysis Table of Contents Table of Contents 2 Introduction 3 Technical Analysis 3 The Fundamental Evaluation approach 4 Market Breadth 6 Stocks’ Relative Strengths 7 Discussion 7 References 9 Appendix 10 Introduction Various approaches are useful in scrutinizing securities in order to aid someone in making decisions concerning different investment directions and actions (Timo, 2009). The broad categories of these approaches are the fundamental evaluation approach and the technical scrutiny approach. The fundamental evaluation method implies the comprehensive investigation of a business with the purpose of determining its approximate total worth. On the other side, the technical scrutiny approach involves the analysis of a company’s stock price fluctuations only (Timo, 2009). Thesis statement: this paper seeks to analyze the stock price fluctuations of a given venture in the previous sixty months in order to find out its actual stock trend from accumulated data. In addition, it will conclude the venture’s market breadth for the last year, its 200-day moving average for its stock, index, and all trends of its stock. This will be in pursuit of determining its relative strength for the last sixty months, and thus advise on the right move to make regarding the selling or the buying of its stock. Technical Analysis The technical evaluation approach comprises of the prospecting of the future fiscal price fluctuations of a business. This approach bases on a comprehensive study of its previous price motions (Timo, 2009). This approach does not conclude its results as accurate and precise future prospects. Its main purpose is to aid potential investors in foreseeing the latent effects and directions of the venture’s stock prices as time passes. This method exploits the use of a broad range of charts that exhibit price movements for a certain period. This approach is completely reliable in issues regarding stocks, goods, indices, prospects, or all other trade tools whose price movements rely on the magnitude of the powers of supply and demand. In this context, price describes the overall scrutiny and analysis of its close, low, open, or high concerning a particular good during a given period. The period is widely flexible and can last for a minute or ten years. Furthermore, advanced approaches include open transaction values or volume in the analysis (Timo, 2009). This approach supports that a commodity’s present price exhibits all related information regarding the commodity comprehensively. Thus, the price stands for the good’s fair worth, and, as a result, is capable of acting as the foundation for analysis and study. This approach exploits all information contained in the price to exhibit market forecasts of its subsequent fluctuation. The Fundamental Evaluation approach This approach refers to a tactic of analyzing securities and commodities with the purpose of trying to determine their intrinsic worth. In doing this, it heavily depends on the thorough scrutiny of inter-related fiscal, economic, and other various quantitative and qualitative aspects (Timo, 2009). This approach supports comprehensive analysis of all features that possess the potential to influence the final commodity’s worth. These aspects include macroeconomic effects that include the overall fiscal situation of the market, and company-based aspects that include management systems and the company’s present fiscal standing. The main purpose of embarking on this kind of analysis is to offer a certain value to investors, which they can then rely on when comparing the commodity with market climates, and thus determine the move to make. Numerous investors utilize this method, either alone or in combination with other evaluation equipment when analyzing stocks. In this approach, the chief factor is the final earnings from investments. This directly refers to the net profits that a company is raking in, both currently and in the future. When a venture’s profits decrease, the market worth of its stocks tends to lessen. Increased profits, on the other hand, indirectly imply higher market value of its stocks, and thus generates confidence regarding sustained levels of dividends. This approach is most suitable in situations concerning long-term investment decisions. This is because it aids investors to spot and forecast long-term fiscal, demographic, technical, and customer inclinations and thus spot viable investment alternatives (Timo, 2009). It also helps investors to discover ventures that possess valuable capital, sturdy and healthy balance sheets, and ensured continuity regarding market relevance. Moreover, this approach greatly benefits investors to improve their innate comprehension of business activities. This helps them to spot and keep off from ventures that seem weak and are liable to collapse, and spot healthy businesses in the process. In addition, investors can rely on this method when grading ventures according to relevance and business strengths. However, though this approach offers numerous advantages’ it also possesses significant demerits. This approach demands a significant period of one’s time and resources for complete analysis. As a result, its proposals often differ from those in various stock markets. In addition, the particular analysis techniques vary depending on industry types and individual business specifics (Timo, 2009). Thus, investors always have to apply different structures when scrutinizing different industries. Moreover, this method heavily relies on assumptions, which tend to produce results that tend to differ substantially from the actual occurrences. The technical approach possesses numerous benefits in comparison to fundamental approaches. It is very beneficial for short-term predictions regarding stock performances. In addition, it saves investors from having to comprehend the full workings of a company before deciding to invest. Successful trading heavily relies on correct timings, and the fundamental approach does not conclusively allow for this luxury. The technical approach is best in circumstances concerning short-term gains. It is also widely relevant in different markets and stock varieties. Thus, it offers traders a wide choice of opportunities regarding stock buying and selling. Market Breadth This term describes a technical analysis skill that helps in predicting the future course of the general market through scrutinizing the amount of businesses that are performing successfully in relation to the ventures that are suffering losses (Timo, 2009). In general, positive market breadth happens in situations where the companies that are gaining momentum are more than the ones performing poorly. On the other hand, negative market breadths imply that most of the businesses in a particular market are performing detrimentally. In virtually all settings, investors scrutinize business performance concerning stocks for a period lasting for about fifty-two weeks before concluding the overall market climate. In this context, breadth indicators exploit performance results to determine the appropriate fluctuation of stock in a certain market. The 52-week low or high factor describes the highest and lowest values that bracket a particular stock has fluctuated within in a particular period. The Hindenburg omen system is beneficial in forecasting latent fiscal market collapses (Timo, 2009). The hypothesis of Market Breadth is applicable in prospecting a particular market’s health in relation to the range of stock improvement or decrease in a single trading event or day. The advance and decline index is a technical evaluation factor that shows the sum variation regarding the total number of advancing and falling stock worth. Stocks’ Relative Strengths This very significant evaluation tool aids an investor in determining an estimate of how a particular stock in a market is progressing in comparison to the whole market activity. This is a numerical value set in percentage values. For instance, if a particular stake gains a relative strength amounting 75%, this directly implies that it has performed better than 75% of the total stocks in a certain market in a particular timeframe (Timo, 2009). Practically, this tool bases its accuracy on a stake’s total worth. Subsequently, investors then calculate the total percentage value in comparison to the whole market. As a result, the higher percentage value a stock possesses, the higher its average performance. This value is of vital significance to traders. Stocks having a higher percentage value tend to exhibit a reliable market validation and continued relevance (Timo, 2009). When traders are in pursuit of discovering stocks that are experiencing a positive performance, they utilize this tool in order to conclude whether the upward move is only a current drastic blip or is an evidence of continued growth. Though successful investing discourages the use of this tool as a sole determinant in stocks choice, it is among the key indicators of overall stock performance (Timo, 2009). Discussion The company’s relative strength is obviously high and very healthy. In addition, its market breadth has continuously managed an upward improvement for the previous sixty months. Technical evaluation regarding the company exhibits that the company is healthy and market-relevant. To investors, it would be a good idea to buy more stakes in the company as research has concluded that its stocks will continue to gain overall worth. References Timo, S. (2009). Fundamental Analysis, Behavioral Finance and Technical Analysis on the Stock Market: Theoretical Concepts and Their Practical Synthesis Capabilities. Munich: GRIN Verlag. Appendix Stock Price Data Stock Data Chart Stock Return Data Chart Cumulative Chart Index Chart Stock Major Trend Chart Stock Intermediate Trend Stock Short-Term Trend Read More