Fundamental and Technical Stock Market Trend Analysis

Many think stock market trading is about luck and no thinking. You invest in the stock and just wait for the value to rise. But the fact is stock market has its own analysis for every action and reaction. Every ups and down are predicted by experts who use different strategies to analyze and predict the movement.

According to the method of understanding and evaluating the market moves, there are technical analysts as well as fundamental analysts. If you happen to watch any of the stock market analysis happening on the television before the opening bell of the market, you can hear the reasoning of the fundamentalists as well as the technical analysts for their predictions.

The fundamental analysis is based on the core strength of the stock. It examines all the underlying data, the circumstances, the demand and the economy etc, to decide how the stock will stand in the present circumstances. They try to determine the approximate intrinsic value of a particular stock, and evaluate whether it has reached its peak price or is still undervalued. According to the intrinsic value, the fundamental analysts’ advice the trader to sell or buy. If the value of the stock has well crossed the intrinsic value, he expects a down fall and advices sell.

A technical analysts studies the market rather than studying the price. He gives importance to the timing rather than the history. He observes the moving trends, the average move, and gathers a support level. A technical analyst also advices about the resistance level, where a stock value trends to stagger. Once it crosses the level, it can be the next base, and support position. A technical analyst also makes his opinion on the basis if the volumes traded. A well traded stock can go in to a sudden fall due to profit selling, which is well calculated by the stock market technical analysts.

If you want to go in to the details and intricacies of the technical charting and study, you will find that it is nothing but pure mathematics. Some mathematicians tried to formulate and find similar patterns in the stock price movements. It may be quite difficult to master the technical indicators but since it is pure science, you can always count on it to reap profits.

You can be an expert in stock market trading, by learning from mistakes and constant research. What one must possess is a basic knowledge on the stock and mental strength and patience.

By Greeshma Justin