Technical Analysis
Forecasting prices from charts, trends, and trading volume.
What is Technical Analysis?
Technicians study price and volume history - trends, support and resistance, moving averages, market breadth - rather than business fundamentals. The efficient market hypothesis in its weak form says this cannot consistently work, since past prices are already reflected.
Technical Analysis: a worked example
A stock repeatedly bouncing off $50 is said to have support there.
What is the difference between Technical Analysis and Fundamental Analysis?
Technical asks when to buy (price patterns). Fundamental asks what to buy (business value).
Often confused with Fundamental Analysis - see Technical Analysis vs Fundamental Analysis side by side.
More terms in Equities, Funds & Alternatives
Shareholder Rights (Statutory vs. Cumulative Voting)
Voting, preemptive rights, dividends when declared, inspection, limited liability.
Types of Preferred Stock
Cumulative, convertible, callable, participating, and floating-rate preferred.
American Depositary Receipt (ADR)
A dollar-denominated receipt for foreign shares, traded in the US.
Rights vs. Warrants
Rights: short-term, below market. Warrants: long-term, above market.
Restricted & Control Stock (Rule 144)
Unregistered or insider-held stock with resale limits.
Employee Stock Options (ISO vs. NSO)
Incentive options get capital gains treatment; nonqualified options create income at exercise.
Fundamental Analysis
Valuing a company from its financial statements, management, and industry.
Dividend Discount Model
A stock is worth the present value of its future dividends.