Questions tagged [technical-analysis]

For questions relating to technical analysis, the practice of evaluating securities by analyzing statistics and patterns generated by market activity, such as past prices and volume.

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109
votes
12answers
100k views

In the stock market, why is the “open” price value never the same as previous day's “close”?

This is something that is mind-boggling to me, and it is particularly obvious in candlestick graphs: Why is the open value never the same as the previous day's close value? This is something I just ...
55
votes
9answers
17k views

Is it true that, “just ten trading days represent 63 per cent of the returns of the past 50 years”?

I have fallen down a Wikipedia rabbit hole and landed on the page titled Seven States of Randomness. I can't explain in a single sentence what it is talking about, but my question is about an odd ...
20
votes
11answers
12k views

Is this the proof that Technical Analysis does not work?

If Technical Analysis is working, why is not possible to program a bot to do it automatically? The bot will be much faster than any human, will not make any numeric error, will not fail due emotions, ...
19
votes
7answers
8k views

Paradox - When to buy & when to sell a share?

Warren Buffet says buy when everyone is selling and sell when everyone is buying. Taking into consideration the support and resistance levels, everyone is selling near the resistance level and ...
13
votes
4answers
48k views

What does “more buyers than sellers” in technical analysis of stocks actually mean?

I often hear/read technical analysts looking at volume and price action on a chart and claiming that there are "more buyers than sellers" or vice versa. Since every trade requires a buyer and a ...
13
votes
4answers
1k views

How to learn about doing technical analysis? Any suggested programs or tools that teach it?

I've been going through the OIC Education Courses recommended by @jaydles in another question about learning options. I'm about halfway through, I've learned a lot about how the stock market works ...
11
votes
2answers
7k views

Does Technical Analysis work or is it just a pointless attempt to “time the market”?

I just ran into the concept of Technical Analysis and decided to go ahead and read a book about it. Before I start reading, I'm curious. Do most people use it successfully? Or is it just a waste of ...
10
votes
4answers
5k views

S&P 500 Prediction

What technical tools can I use to help predict whether the S&P 500 will rise or fall tomorrow? (Assuming no major events occur)
10
votes
2answers
1k views

What are the primary investment strategies people use and why do they use them?

When I first started studying investing the literature I was reading pointed me towards something called technical analysis. As I started asking questions about this trying to determine exactly what ...
9
votes
2answers
2k views

Effectiveness of technical analysis techniques: Any supporting studies? [closed]

Do you find Techical Analysis to be an effective way of increasing the returns on your investments? This can be either by itself, or in combination with other indicators. If so, what techniques do ...
8
votes
2answers
1k views

How to Explain “efficient frontier” to child?

I have found this challenge almost impossible because I don't want to use too technical jargon, just nice pictures, gestures and analogies to everyday life. So I created this pathological example with ...
7
votes
7answers
15k views

Is candlestick charting an effective trading tool in timing the markets?

In the world of technical analysis, is candlestick charting an effective trading tool in timing the markets? If used correctly, how accurate can they be in picking turning points in the market?
7
votes
2answers
205 views

What kind of activity do the long candle-lines on candlestick charts correspond to?

The image at the bottom shows the price of a particular stock earlier today on a red/green candlestick chart. Some of the candle bodies have thin lines ,circled in red, sticking up (circled on one ...
6
votes
3answers
289 views

Is technical analysis based on some underlying factors in the market or do they work simply because other people use them?

The market is undoubtedly driven by people, and technical analysis is one way to analyze and predict this behavior. My question (also the title) is "Is technical analysis based on some underlying ...
6
votes
1answer
696 views

What is the OHLC of a candle when there are no trades

I hope I'm asking this in the right place. Couldn't find any definitive info anywhere. When creating a candle / time series / bucket, is the open of the series the first price in that series and not ...
6
votes
2answers
639 views

Technical Analysis not working

After reading a book and a million articles on the internet, I now know everything there's to know about the most popular technical analysis indicators, at least their theoretical use. However, when ...
6
votes
1answer
540 views

Which technical analysis indicators are considered leading stock market indicators?

Most technical analysis indicators are lagging indicators (will indicate a buy after the opportunity to buy has happened), there are also co-incident indicators that suggest a buy opportunity is ...
5
votes
2answers
485 views

Does it make sense to talk about an ETF or index in terms of technical indicators?

For example, a story today talked about SPY approaching support levels. Given that the price of the ETF is essentially determined by the price of its constituents, does this even make sense? Do ...
5
votes
1answer
816 views

Does technical analysis work on penny stocks?

Does technical analysis work on penny stocks? If yes, and we're talking about stocks that trade under $3, is there a point at which it stops being effective? If yes, does technical analysis work the ...
5
votes
2answers
2k views

Why have candlestick charts overlaps?

my understanding of candlestick charts is that they are composed of open/high/low/close values of a particular timeframe. Now, if I opt for a, say, hourly chart, this would imply that the opening ...
5
votes
1answer
178 views

What are some good software packages for Technical Analysis? [closed]

What are software packages that allow me to perform technical analysis on candlestick charts? Ideally the software will update with realtime stock data. I'm mostly using Windows but am also curious ...
4
votes
4answers
422 views

Chart analysis: What does this mean: 200 period moving average?

In a chart analysis I read the sentence the red 200 period moving average can be seen rising from the lower left of the chart. I know what a moving average is, but what is meant by the 200 period? Is ...
4
votes
4answers
774 views

Trying to understand Return on Capital (Joel Greenblatt's Magic Formula version)

I'm trying to understand the Return on Capital formula, as presented in Joel Greenblatt's The Little Book that Beats the Market. Return on Capital = EBIT / (Net Working Capital + Net Fixed Assets) ...
4
votes
3answers
6k views

How is the Efficient Frontier drawn?

I know efficient frontier is the collection of expected return on a portfolio and the level of risk(e.g. standard deviation). What I don't understand is that is the efficient frontier really drawn ...
4
votes
2answers
3k views

Rationale behind using 12, 26 and 9 to calculate MACD

The standard setting for the MACD are 12, 26 and 9. Is there a rationale why these seemingly arbitrary numbers are considered a standard? My other question is that why is 26 considered to be the ...
4
votes
4answers
509 views

Standard Deviation with Asset Prices?

I am looking for risk measures such as standard deviation for asset prices such as stock prices and index fund prices. It would be a trivial task if I had the data but since I do not have the data I ...
4
votes
2answers
594 views

Can the shorting of S&P futures negatively affect the underlying index and constituent stocks?

I hear people on financial shows talk all the time about index futures like SPY and QQQQ affecting the actual index. Can shorting these futures (in huge quantities obviously) cause the underlying ...
4
votes
3answers
371 views

Stock trading models that use fundamental analysis, e.g. PEG ratios?

I'm a finance undergrad writing a dissertation on fundamental analysis vs technical analysis applied to trading. I'm finding it easy to build technical indicators such as moving averages, while it ...
4
votes
2answers
503 views

Meaning of IV for a strike

As I understand it, IV is defined as an annualized 1 standard deviation range for an underlying. So what is the meaning of implied volatility for a strike? The IV on each strike is calculated by ...
4
votes
2answers
420 views

What are support and resistance of a stock?

Checking Second Opinion report for a stock I saw the following: Look for Support at 14.81 Watch for resistance at 15.37 Could anyone please explain what this means?
3
votes
7answers
5k views

Is there a candlestick pattern that guarantees any kind of future profit?

I have been working with candlestick patterns for a long time. Bullish engulfing is my favorite because it almost guarantees that the succeeding candle will be green. So, I am sure of a profit, even ...
3
votes
4answers
321 views

Why do value investors ignore technical analysis?

I have read a few articles about value investing, and a few biographies of value investors. I am under the impression that value investing does not involve chart reading or technical analysis at all. ...
3
votes
1answer
175 views

Does technical analysis work on small stock exchanges?

I live in Europe, in a rather small country, and we also have a stock exchange. It's really ridiculously small, compared to NYSE, NASDAQ, the Frankfurt Stock Exchange and similar. Lately I've been ...
3
votes
3answers
522 views

Most important skills needed to select profitable stocks [closed]

I have been trying to learn how to select profitable stocks for quite some time and have been doing a good amount of reading on the subject. I have had some interest in day trading, long term trading ...
3
votes
1answer
747 views

Static and Dynamic, Major/Minor Support and Resistance in Stock Trading/Investing

I was reading a short article the article is here. The author talks about Static and Dynamic support and resistance. While I understand the concept of support and resistance (also to an extent major ...
3
votes
1answer
139 views

If a trendline or pattern breaks due to some bad news but it returns back what to do?

I am a student in technical field from India. I had a question about what to do when a pattern is formed by stocks moving in one direction on one day, reversing direction on the next day, and ...
3
votes
5answers
1k views

What are some (beginner) introductory books about Technical Analysis of Stocks? [closed]

I read Technical Analysis for Dummies...and am looking for a more detailed insight into the topic.
3
votes
1answer
146 views

Can a Trend be defined?

In the price chart of a stock, commodity or FX, can an uptrend and a downtrend be defined? Can these definitions help someone to thus determine the start and end of a trend without any ambiguity or ...
3
votes
2answers
448 views

Stochastic Oscillator for Financial Analysis

I have been using the stochastic oscillator indicator to get some insight on particular stocks. Below is an example of a 14-day lookup period for K where D is a calculated as a 3-day average of K. ...
3
votes
1answer
3k views

Jesse Livermore pivotal points (US Steel example)

I reproduced table charts for US Steel from controversial Jesse Livermore's book How to Trade in Stocks in a line chart form (see pages from 58 as appeared on PDF) in an attempt to understand rules ...
3
votes
1answer
165 views

Shares - Query about RSI (Relative Strength Index)

I often look at different bits and pieces of information for shares, and I know that a common indicator is the RSI (Relative Strength Index), where I believe it's considered overbought when it goes ...
3
votes
1answer
486 views

What is the difference between the MACD line, Signal line and the Zero line?

How do the lines differ and what exactly do they show?
3
votes
4answers
674 views

How do I analyse moving averages?

I have calculated moving averages i.e. SMA, WMA , EMA for stock which I am going to buy. I have infered : If you are long term investor it is better not to retain the share as price is decreasing as ...
2
votes
3answers
86 views

Stock market: how to anticipate effect of volume on price

I started to learn about stock trading and I'm trying to crosscheck every concept with a real use case. hence, not sure I understood everything about volumes. Actually I'm going to take the example of ...
2
votes
3answers
500 views

How do I interpret this analysis from Second Opinion?

On Second Opinion analysis for a stock I read the following: OPINION: LONG RECOMMENDATION: If you are long, hold current position. Do not initiate new position. Stock is Not a Short Sell Candidate ...
2
votes
3answers
695 views

CandleStickChart: How to understand the timestamp of a candlestick

I'm in the process of learning to read candlestick charts. Many websites using candlesticks will display a single timestamp if you hover the mouse over a candle. Since a candle is a visualisation of ...
2
votes
2answers
3k views

What are some simple techniques used for Timing the Stock Market over the long term?

What are some simple techniques used for Timing the Stock Market over the long term to beat average market returns? By long term I mean 5 years and longer. It may include investing directly into ...
2
votes
3answers
636 views

Technical Analysis: the concepts of overbought / oversold don't make sense

Some technical indicators (e.g. Williams %R) indicate whether the market is overbought or oversold. But this doesn't make sense. Let me explain. Every time a stock or commodity is bought, it is ...
2
votes
5answers
5k views

How might trading volume affect future share price?

I want to know how to determine the coming ups and downs in share price using the trading volume that can help me analysis for coming events. Is there any reasonable technique for this purpose? For ...
2
votes
2answers
320 views

What is meant by a market that is technically strong

What is meant by a technically strong stock or a technically strong market? I understand what a fundamentally strong stock is, but what is a technically strong stock/ market? Does it mean a stock ...