Moses’s Stock Corner – Fundamental or Technical Analysis
Fundamental Analysis
The primary things that influence the fundamental of a company are
- The company financial statement
- The products and new products of the company; or
- The projects or new projects of the company; or
- The contracts or new contracts of the company
- The leader and new leader of the company
- The plan and future plan
- The investment and future investment
- The market and future market
Traders and analyst will always have their perception of a stock value, or its “fair value”. They believe in a short run it may under price or over price and over time the stock will have its value correct to its fair value.
Scientifically, there are many different model to determine the under-priced or over-priced security; stocks and bonds. Among the widely used ratios in fundamental analysis is price-to-earning (P/E). There are many pitfalls in using this to evaluate a stock. Although a public company has to adhere to certain accounting practices, but the earning per share (EPS) could be distorted, such as asset value, inventory and so on.
The information is changing, the market are changing, and has discounted by other investors.
Traders are emotions and make their own decision. Therefore the market price sometimes has no link with the good or bad of company fundament information.
Technical Analysis
The same goes to technical analysis; the TA could indicate the price action is at the support. So, the price action is ready to move north. However, as said the price action is determined by traders. The supply and demand will drive the price action accordingly. There is no absolute.
So, indicators will provide you some clues. I want to make sure that a trade is setting up with a lot of things in my favor.
Trade with eyes open, trade what you see.
By Moses, February 19, 2012
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Information provided here is of the nature of a general comment only and no intend to be specific for trading advice. It has prepared without regard to any particular investment objectives, financial situation or needs. Information should not be considered as an offer or enticement to buy, sell or trade.
You should seek advice from your broker, or licensed investment advisor, before taking any action.