1. Investment Management
Technical Analysis
Unit 4

2. V.Prabakaran, Ap/MBA - Technical Analysis
Technical analysis is a method of evaluating securities by analysing the statistics generated by market activity, such as past prices and volume.
Technical analysis do not attempt to measure a security’s intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity.
V.Prabakaran, Ap/MBA - Technical Analysis

3. Several ways the technician acts
Technicians believe that behind the fundamentals are important factors.
Technicians are not committed to a Buy-and-Hold Policy
Technicians do not separate income from capital gains
Technicians act more quickly to make Commitments and to take profits and Losses
Technicians recognize that the more experience one has with the technical indicators, the more alert one becomes to pitfalls and failure of investing
V.Prabakaran, Ap/MBA - Technical Analysis

4. V.Prabakaran, Ap/MBA - Technical Analysis
Technicians insists that the market always repeats
Technicians believe that breakouts from previous trends are important signals
Technicians recognize that the securities of a strong company are often weak and those of a weak company may be strong
Technicians use charts to confirm fundamentals
V.Prabakaran, Ap/MBA - Technical Analysis

5. Basic Technical Assumptions
Market Discounts Everything
Price Moves in Trends or Waves
History Tends to Repeat Itself
Technical analysis is a study of past or historical price and volume movements so as to predict the future stock price behaviour.
V.Prabakaran, Ap/MBA - Technical Analysis

6. Fundamental vs Technical Analysis
His perspective is long-term in nature. He is conservative in his approach. He acts on ‘What should be’
His outlook is short-term oriented. He is aggressive. He acts on ‘what is’
He adopts a buy and hold policy. He does not usually expect any significant increase in the value of his investments in less than a year.
He believes in making a quick buck. He snuffles his investments quite often recognizing and foresees changes in stock prices.
He considers total gain from equity investment consists of current yield by way of dividends and long-term gains by way of capital appreciation.
He does not distinguish between current income and capital gains. He is interested in short-term profits.
He forecasts stock prices based on economic, industry and company statistics. The principal decision variables take the form of earning and dividends. He makes a judgement of the stock’s value with a risk –return.
He forecasts security prices by studying patterns of supply of and demand for securities. Technical analysis is study of stock exchange information.
V.Prabakaran, Ap/MBA - Technical Analysis

7. V.Prabakaran, Ap/MBA - Technical Analysis
Thanks…
V.Prabakaran, Ap/MBA - Technical Analysis