Download presentation
Presentation is loading. Please wait.
Published byStephany Hines Modified over 9 years ago
1
Bodie Kane Marcus Perrakis RyanINVESTMENTS, Fourth Canadian Edition Copyright © McGraw-Hill Ryerson Limited, 2003 Slide 16-1 Chapter 16
2
Bodie Kane Marcus Perrakis RyanINVESTMENTS, Fourth Canadian Edition Copyright © McGraw-Hill Ryerson Limited, 2003 Slide 16-2 Chapter Summary Objective: To examine the basic principles of technical analysis and show how they relate to the efficient market hypothesis. Charting Technical indicators
3
Bodie Kane Marcus Perrakis RyanINVESTMENTS, Fourth Canadian Edition Copyright © McGraw-Hill Ryerson Limited, 2003 Slide 16-3 An attempt to exploit recurring and predictable patterns in stock prices Technicians’ beliefs: Shifts in market fundamentals can be discerned before their impact is fully reflected in prices Market fundamentals can be perturbed by irrational factors These presumptions are in contradiction with the weak form of the EMH Technical Analysis
4
Bodie Kane Marcus Perrakis RyanINVESTMENTS, Fourth Canadian Edition Copyright © McGraw-Hill Ryerson Limited, 2003 Slide 16-4 The Dow theory Primary trend Secondary or intermediate trends Tertiary or minor trends Support and resistance levels Recent variations The Elliot wave theory The theory of Kondratieff waves Charting
5
Bodie Kane Marcus Perrakis RyanINVESTMENTS, Fourth Canadian Edition Copyright © McGraw-Hill Ryerson Limited, 2003 Slide 16-5 Point and figure charts The figure has no time dimension It traces significant upward or downward moves in stock prices Candlestick charts Used to summarize price data Aid in identification of trends Other Charting Techniques
6
Bodie Kane Marcus Perrakis RyanINVESTMENTS, Fourth Canadian Edition Copyright © McGraw-Hill Ryerson Limited, 2003 Slide 16-6 Summary Reminder Objective: To examine the basic principles of technical analysis and show how they relate to the efficient market hypothesis. Charting Technical indicators
7
Bodie Kane Marcus Perrakis RyanINVESTMENTS, Fourth Canadian Edition Copyright © McGraw-Hill Ryerson Limited, 2003 Slide 16-7 Sentiment indicators Flow of funds indicators Market structure indicators Technical Indicators
8
Bodie Kane Marcus Perrakis RyanINVESTMENTS, Fourth Canadian Edition Copyright © McGraw-Hill Ryerson Limited, 2003 Slide 16-8 Trin statistic Sentiment indicators or:
9
Bodie Kane Marcus Perrakis RyanINVESTMENTS, Fourth Canadian Edition Copyright © McGraw-Hill Ryerson Limited, 2003 Slide 16-9 Odd-Lot trading Confidence Index Put/Call ratio Mutual fund cash position Sentiment Indicators (cont’d)
10
Bodie Kane Marcus Perrakis RyanINVESTMENTS, Fourth Canadian Edition Copyright © McGraw-Hill Ryerson Limited, 2003 Slide 16-10 Short interest – total number of shares of stock currently sold short in the market Some technicians interpret high levels of short interest as bullish, some as bearish Credit balances in brokerage accounts Flow of Funds Indicators
11
Bodie Kane Marcus Perrakis RyanINVESTMENTS, Fourth Canadian Edition Copyright © McGraw-Hill Ryerson Limited, 2003 Slide 16-11 Moving averages Breadth The most common measure – the spread between the number of stocks that advance and decline in price Relative strength The ratio of the price of the security to a price index for the industry Market Structure Indicators
12
Bodie Kane Marcus Perrakis RyanINVESTMENTS, Fourth Canadian Edition Copyright © McGraw-Hill Ryerson Limited, 2003 Slide 16-12 Value Line ranks 1,700 publicly traded stocks according to their anticipated 12 months price appreciation. Components of the stock ranking procedure: Relative earnings momentum Earnings surprise A value index The Value Line System
13
Bodie Kane Marcus Perrakis RyanINVESTMENTS, Fourth Canadian Edition Copyright © McGraw-Hill Ryerson Limited, 2003 Slide 16-13 Self-destructing patterns Once a useful technical rule is discovered, it ought to be invalidated once the mass of traders attempts to exploit it A new view of technical analysis Brown and Jennings propose a more complex framework than the EMH They envision an economy where many investors have private information regarding the value of a stock Can Technical Analysis Work?
Similar presentations
© 2025 SlidePlayer.com. Inc.
All rights reserved.