Technical analysis Assignment Example | Topics and Well Written Essays - 2250 words - 1

Technical analysis - Assignment Example In positive markets, there exist more companies moving higher than those moving on the lower end. Both the top-down approach and the bottom-up approaches aim at the same goal of identifying great stocks on the market. In top-down, the investors aim at defining the big picture in which different companies are looked at with the potential that they have in future. In bottom-up, strategy applies the strategy to the broad sector and various economic conditions prevailing on the market. When the majority of stocks are falling, some indices may remain performing well on the market. The indices performing better may be as a result of their strong position on the market. These normally occur when the company has a strong market capitalization compared to the others. Stock indices measure the type of sections in the market and their performance. â€Å"The more shares that change hands, the more important the price move† indicates to the changes in prices based on the volumes of stocks traded on the market. Trade based on the volumes movements indicates the traders follow demand and supply. In cases of high volume movements, the demand is high and the prices increase affecting the price upwards in cases of low demand and a high volume supply, the prices move downwards. Money that provides the promise of an association with better returns to investors motivate them to invest is smart money. On the other hand, dumb money provides money that carries harm to the invertors’ money. Weeding out dumb money provides room for smart money investors. The NASDAQ graph below indicates a change in volume preceding a change in price. Winner stocks hold good values and a volatility that provides a controllable aspect to the prices. Winner stocks hold a value price volatility that allows for a good movement of the prices. Winner stocks too have a beta that easily reacts to the