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Using Technical and Fundamental Analysis in Security Trading. Ivaylo Penev, Portfolio Manager, ELANA Fund Management. Fundamental Analysis. What is fundamental analysis?.
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Using Technical and Fundamental Analysis in Security Trading Ivaylo Penev, Portfolio Manager, ELANA Fund Management
Fundamental Analysis What is fundamental analysis? Method of evaluating securities by measuring their intrinsic value using economic, financial and other qualitative and quantitative data.
Fundamental Analysis Goal of fundamental analysis To compute fair value of a security and to compare it with the current market value of that security in order to justify whether it is overvalued, undervalued or fairly priced.
Fundamental Analysis Product of fundamental analysis • Ratings • Recommendations • Price Targets
Fundamental Analysis Ratings of a security
Fundamental Analysis Recommendations • Buy/outperform/accumulate • Hold/market perform • Sell/underperform/decrease
Fundamental Analysis Price target A fair price of a security calculated by the analyst using different techniques, often given as a supplement to a recommendation.
Fundamental Analysis Sources of data for fundamental analysis • Macroeconomic indicators • Industry analysis and trends • Financial statements • Supplemental sources
Fundamental Analysis Macroeconomic indicators
Fundamental Analysis Industry analysis
Fundamental Analysis Financial statement analysis
Fundamental Analysis Supplemental sources • Conference calls • Footnotes in financial reports • Management analysis and discussions • Suppliers, distributors, competition
Technical Analysis What is technical analysis? Method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. Market action is defined by: • Price action • Volume • Open Interest
Technical Analysis Price action – price dynamics during a period Volume – the amount of shares/contracts traded for a period Open Interest – the number of options/futures contracts that are not closed or delivered on a particular day
Technical Analysis Premises of technical analysis • Price movements represent all the information available • Prices move in trends • History repeats itself
Technical Analysis Studying the price movements- charts • Line charts • Bar charts • Candlestick charts • Dot charts • Point and figure charts
Technical Analysis Line chart
Technical Analysis Bar chart
Technical Analysis Candlestick chart
Technical Analysis Candlestick
Technical Analysis Doji
Technical Analysis Reversal patterns – Doji
Technical Analysis Engulfing
Technical Analysis Reversal patterns – Engulfing
Technical Analysis Evening and morning stars
Technical Analysis Reversal patterns – Evening star
Technical Analysis Moving Average
Technical Analysis Fibonacci Retracements
Technical Analysis Bollinger Bands
Technical Analysis Trendline
Technical Analysis Trend channel
Technical Analysis Head and shoulders
Technical Analysis Thank you for your attention