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Using Technical and Fundamental Analysis in Security Trading

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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? – PowerPoint PPT presentation

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Title: Using Technical and Fundamental Analysis in Security Trading


1
Using Technical and Fundamental Analysis in
Security Trading
Ivaylo Penev, Portfolio Manager, ELANA Fund
Management
2
Fundamental Analysis
What is fundamental analysis?
Method of evaluating securities by measuring
their intrinsic value using economic, financial
and other qualitative and quantitative data.
3
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.
4
Fundamental Analysis
Product of fundamental analysis
  • Ratings
  • Recommendations
  • Price Targets

5
Fundamental Analysis
Ratings of a security
Credit Ratings by Agency Credit Ratings by Agency Credit Ratings by Agency

investment grade Moody's SP Fitch
investment grade Aaa AAA AAA
investment grade Aa1 AA AA
investment grade Aa2 AA AA
investment grade Aa3 AA- AA-
investment grade A1 A A
investment grade A2 A A
investment grade A3 A- A-
investment grade Baa1 BBB BBB
investment grade Baa2 BBB BBB
investment grade Baa3 BBB- BBB-
junk grade Ba1 BB BB
junk grade Ba2 BB BB
junk grade Ba3 BB- BB-
junk grade B1 B B
junk grade B2 B B
junk grade B3 B- B-
junk grade Caa CCC CCC
junk grade
junk grade C D D
6
Fundamental Analysis
Recommendations
  • Buy/outperform/accumulate
  • Hold/market perform
  • Sell/underperform/decrease

7
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.
8
Fundamental Analysis
Sources of data for fundamental analysis
  • Macroeconomic indicators
  • Industry analysis and trends
  • Financial statements
  • Supplemental sources

9
Fundamental Analysis
Macroeconomic indicators
10
Fundamental Analysis
Industry analysis
11
Fundamental Analysis
Financial statement analysis
12
Fundamental Analysis
Supplemental sources
  • Conference calls
  • Footnotes in financial reports
  • Management analysis and discussions
  • Suppliers, distributors, competition

13
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

14
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
15
Technical Analysis
Premises of technical analysis
  • Price movements represent all the information
    available
  • Prices move in trends
  • History repeats itself

16
Technical Analysis
Studying the price movements- charts
  • Line charts
  • Bar charts
  • Candlestick charts
  • Dot charts
  • Point and figure charts

17
Technical Analysis
Line chart
18
Technical Analysis
Bar chart
19
Technical Analysis
Candlestick chart
20
Technical Analysis
Candlestick
21
Technical Analysis
Doji
22
Technical Analysis
Reversal patterns Doji
23
Technical Analysis
Engulfing
24
Technical Analysis
Reversal patterns Engulfing
25
Technical Analysis
Evening and morning stars
26
Technical Analysis
Reversal patterns Evening star
27
Technical Analysis
Moving Average
28
Technical Analysis
Fibonacci Retracements
29
Technical Analysis
Bollinger Bands
30
Technical Analysis
Trendline
31
Technical Analysis
Trend channel
32
Technical Analysis
Head and shoulders
33
Technical Analysis
Thank you for your attention
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