Researching the Stock Market

By George Polizogopoulos

The stock market environment is now highly charged with differing assumptions theories and analysis because of research in stock market. This environment has given way to a new breed of brokerage houses and brokers who conduct research in stock market to fully understand the market and its behavior given the differing sets and circumstances of factors that would tend to influence its mood and temperament.
These researchers tend to measure the volatility of the market and its placidness against a backdrop of historical movements that would enable them to draft a conclusive pattern of its behavior, initiate theoretical formulation of its swings, angles, curvatures and every thing else worthy of formulation. Even stay at home investors have now become stock market researchers on their own initiative aided by the wonders of internet broadband technology and the many software applications brimming with different indicators and analytical formulations.
Research Using the Fundamental Analysis
These on-going researching projects are divided into two fronts. The first kind of research is known as the Fundamental Analysis. This kind of research would concentrate more on the full examination of listed companies to know their real value utilizing all the needed valuation techniques and procedures to include the scrutiny of all financial statements. This research to a company's weakness or strength will involve the examination of its balance sheet, income and expense statements, annual reports, cash flows, budget projections and variances, corporate legal statements of officers, company performance measured against industry standards, macro-economics and all other information that can lead to a full evaluation of the real worth of the target company. Those that usually would undertake these kinds of researches are those whose aims are to uncover under valued stocks, snap it at their lowest price levels and earn profit from their investments when the real worth of the stocks becomes public.
Research based on Technical Analysis
The second kind of research in the stock market is what is known as the Technical Analysis. This kind of analysis is entirely different since it does not involve itself with the make-up of any listed companies. Instead, it focuses its analysis and observations of the price movement of a share listings that it is interested in, study its market history and patterns using the market charts and other software tools. Those that undertake this kind of research usually are investors who believe in market trending or patterns. They are one in saying that the market always move in trend and are sometimes subject to unexplained behavior or volatility but will in effect return to its normal pattern. Most of those who de research on this market behavior have one thing in mind - to correctly analyze where the price of share will move so that they can profit from their investment.
Technical Analysis and its Three focus grouping
Unlike fundamental Analysis where there is only one focus which would be none other than to determine the actual worth of a listed share, with technical analysis, you get to know three kinds of focus grouping.
The first group goes for the concept that the market is not random and thus it follows certain trends which would make their research trend oriented based on the market's charts.
The second group on the other hand, would go for the opposite direction. This group would embrace the random theory of the stock market, or any random indication that the market has. And instead of studying the charts, they will be memorizing the teachings of gurus espousing the random theory.
The third group will be the historians. Their research in stock market will focus more on the history of the stock market movements. Their belief is that history repeats itself every now and then. Like the trend believers, they would also be studying the charts history and will try to ascertain if when the history will again repeat itself.
George Polizogopoulos is a staff writer for MyShareTrading.com, an information hub for share trading including forex trading, derivatives, options, warrants and CFD's.
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