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Article
Publication date: 28 November 2017

Michael R. Melton, Xuan (Susan) Nguyen and Michael Simeone

The purpose of this paper is to introduce instruction of technical analysis on the undergraduate level that can coincide with traditional teachings of fundamental analysis.

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2359

Abstract

Purpose

The purpose of this paper is to introduce instruction of technical analysis on the undergraduate level that can coincide with traditional teachings of fundamental analysis.

Design/methodology/approach

Through examples using the latest in security analysis technology, this paper illustrates the importance of technical security analysis.

Findings

This research illustrates how technical analysis techniques may be used to make more significant investment decisions.

Originality value

Kirkpatrick and Dahlquist define technical analysis as a security analysis discipline for forecasting future direction of prices through the study of past market data primarily price and volume This form of analysis has stood in direct contrast to the fundamental analysis approach whereby actual facts of the company its industry and sector may be ignored. Understanding this contrast, much of academia has chosen to continue to focus its finance curricula on fundamental analysis techniques. As more universities implement trading rooms to reflect that of industry, they must recognize that any large brokerage trading group or financial institution will typically have both a technical analysis and fundamental analysis team. Thus, the need to incorporate technical analysis into undergraduate finance curricula.

Details

PSU Research Review, vol. 1 no. 3
Type: Research Article
ISSN: 2399-1747

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Book part
Publication date: 27 August 2014

David M. Smith, Christophe Faugère and Ying Wang

This study takes a novel approach to testing the efficacy of technical analysis. Rather than testing specific trading rules as is typically done in the literature, we rely…

Abstract

This study takes a novel approach to testing the efficacy of technical analysis. Rather than testing specific trading rules as is typically done in the literature, we rely on institutional portfolio managers’ statements about whether and how intensely they use technical analysis, irrespective of the form in which they implement it. In our sample of more than 10,000 portfolios, about one-third of actively managed equity and balanced funds use technical analysis. We compare the investment performance of funds that use technical analysis versus those that do not, using five metrics. Mean and median (3 and 4-factor) alpha values are generally slightly higher for a cross section of funds using technical analysis, but performance volatility is also higher. Benchmark-adjusted returns are also higher, particularly when market prices are declining. The most remarkable finding is that portfolios with greater reliance on technical analysis have elevated skewness and kurtosis levels relative to portfolios that do not use technical analysis. Funds using technical analysis appear to have provided a meaningful advantage to their investors, albeit in an unexpected way.

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Research in Finance
Type: Book
ISBN: 978-1-78190-759-7

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Article
Publication date: 1 January 1979

David Fanning

This paper outlines the present state of technical analysis and describes the various mechanisms associated with current practices. In particular, the relative strength…

Abstract

This paper outlines the present state of technical analysis and describes the various mechanisms associated with current practices. In particular, the relative strength analysis approach is identified as a useful tool for investment appraisal. Empirical research on specific technical theories is called for, especially into the relative price behaviour patterns of industrial stocks. Overall, there is seen to be some merit in a proper application of technical theories allied to accurate forecasting of company earnings and dividends.

Details

Managerial Finance, vol. 5 no. 1
Type: Research Article
ISSN: 0307-4358

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Book part
Publication date: 21 November 2016

Indranarain Ramlall

Abstract

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Applied Technical Analysis for Advanced Learners and Practitioners
Type: Book
ISBN: 978-1-78635-633-8

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Article
Publication date: 5 April 2013

Hesham I. Almujamed, Suzanne Fifield and David Power

The purpose of this paper is to investigate the technical methods that investors in the Kuwait Stock Exchange use to evaluate ordinary shares. The research examines the…

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1151

Abstract

Purpose

The purpose of this paper is to investigate the technical methods that investors in the Kuwait Stock Exchange use to evaluate ordinary shares. The research examines the extent of investors' use of technical analysis, and the technical indicators and the sources of technical information employed by investors. Further, it compares the valuation methods and the sources of information employed by Kuwaiti investors with those used by investors in other developed and emerging stock markets.

Design/methodology/approach

A semi‐structured questionnaire guided the interviews with institutional investors, technical analysts and investment analysts in Kuwait.

Findings

Technical analysis is commonly used among research participants, particularly when timing their entry and exit points. The participants use a mixture of trend and pattern seeking; the Moving Average Rule was heavily used in the market but the Filter Rule Approach was not. Interviewees believed that investors did not have complete information about Kuwaiti quoted companies. Investors in Kuwait behave like their counterparts in other developed and emerging stock markets; fundamental analysis is considered the main valuation method among research participants, while technical and risk analyses were ranked second and third, respectively.

Practical implications

Interviewees in Kuwait paid more attention to technical analysis than did investors in developed countries; technical analysts looked at a company's fundamentals before they consulted graphs when deciding to purchase ordinary shares. Further, chartists followed trades of large investors to make profits. This topic needs to be investigated in emerging markets because these markets may be inefficient; trends and patterns may characterise the data from these markets and practitioners may use these techniques to exploit such patterns in returns. Further, the findings in this study may aid the regulators of these markets in their development of a framework that could improve efficiency by increasing the level of disclosure and transparency among listed firms.

Originality/value

This is one of the first studies in Kuwait to report the views of technical analysts and institutional investors about technical approaches to equity investment that are used in the market. Most studies on this topic have been conducted in developed stock markets. The current study considers the case for an emerging stock market, which is important in the Gulf and Middle East region. Further, access to technical analysts has been limited in prior research but this was not an issue in the current investigation.

Details

Qualitative Research in Financial Markets, vol. 5 no. 1
Type: Research Article
ISSN: 1755-4179

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Article
Publication date: 1 March 2001

Charles B. Keating, Abel A. Fernandez, Derya A. Jacobs and Paul Kauffmann

This article presents the design and application of a Modified Sociotechnical Systems (MoSTS) methodology for holistic analysis of complex technical processes. Successes…

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1831

Abstract

This article presents the design and application of a Modified Sociotechnical Systems (MoSTS) methodology for holistic analysis of complex technical processes. Successes and failures of process redesign initiatives have demonstrated the strong influence of human elements on outcomes. (Sociotechnical Systems) STS provides a foundation for structured analysis and redesign of complex processes which emphasizes human aspects in process redesign. The MoSTS methodology is developed from STS research and practice and applied to analyze a complex technical process in the research and development sector. MoSTS is shown to be an effective methodology to facilitate analysis for process redesign, particularly where human influences may have a significant impact on success. The article concludes with limitations and implications for process analysis based on the MoSTS methodology application.

Details

Business Process Management Journal, vol. 7 no. 1
Type: Research Article
ISSN: 1463-7154

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Article
Publication date: 1 August 2001

Stephanos Papadamou and Stavros Tsopoglou

Reviews previous research on exchange rate forecasting, identifies some problems in building a predictive model and examines the profitability of using various technical

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1237

Abstract

Reviews previous research on exchange rate forecasting, identifies some problems in building a predictive model and examines the profitability of using various technical rules (as used by traders) in the USD/DM and USD/BP foreign exchange markets. Takes 1989‐1996 data, divided into two sub‐periods with different macroeconomic features; and compares the results from the technical rules in detail and with a buy and hold strategy. Finds that no rules produced statistically significant profits for the whole period (although they did for the first sub‐period) and some evidence that buy and hold is superior, especially if risk is taken into account. Considers the implications of the findings and the underlying reasons for them.

Details

Managerial Finance, vol. 27 no. 8
Type: Research Article
ISSN: 0307-4358

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Book part
Publication date: 4 September 2003

Stan Aungst, Russell R. Barton and David T. Wilson

Quality Function Deployment (QFD) proposes to take into account the “voice of the customer,” through a list of customer needs, which are (qualitatively) mapped to technical

Abstract

Quality Function Deployment (QFD) proposes to take into account the “voice of the customer,” through a list of customer needs, which are (qualitatively) mapped to technical requirements in House One. But customers do not perceive products in this space, nor do they not make purchase decisions in this space. Marketing specialists use statistical models to map between a simpler space of customer perceptions and the long and detailed list of needs. For automobiles, for example, the main axes in perceptual space might be categories such as luxury, performance, sport, and utility. A product’s position on these few axes determines the detailed customer requirements consistent with the automobiles’ position such as interior volume, gauges and accessories, seating type, fuel economy, door height, horsepower, interior noise level, seating capacity, paint colors, trim, and so forth. Statistical models such as factor analysis and principal components analysis are used to describe the mapping between these spaces, which we call House Zero.

This paper focus on House One. Two important steps of the product development process using House One are: (1) setting technical targets; (2) identifying the inherent tradeoffs in a design including a position of merit. Utility functions are used to determine feature preferences for a product. Conjoint analysis is used to capture the product preference and potential market share. Linear interpolation and the slope point formula are used to determine other points of customer needs. This research draws from the formal mapping concepts developed by Nam Suh and the qualitative maps of quality function deployment, to present unified information and mapping paradigm for concurrent product/process design. This approach is the virtual integrated design method that is tested upon data from a business design problem.

Details

Evaluating Marketing Actions and Outcomes
Type: Book
ISBN: 978-0-76231-046-3

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Article
Publication date: 1 January 2004

NECMI K AVKIRAN

Data envelopment analysis (DEA) and window analysis are used to follow the changes in Australian trading banks' pure technical efficiency, scale efficiency, and the nature…

Abstract

Data envelopment analysis (DEA) and window analysis are used to follow the changes in Australian trading banks' pure technical efficiency, scale efficiency, and the nature of returns to scale. The main findings indicate declining average efficiency scores until 1991, followed by a steady rise thereafter. Pure technical inefficiency emerges as a greater source of inefficiency than scale inefficiency. Overall, regional banks exhibit increasing returns to scale and major trading banks exhibit decreasing returns to scale. Also worthy of note is the mixed size of banks operating at optimal returns to scale.

Details

Studies in Economics and Finance, vol. 22 no. 1
Type: Research Article
ISSN: 1086-7376

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Article
Publication date: 15 October 2020

Renu Isidore R., P. Christie and C. Joe Arun

Decision-making in the equity market has been a challenging task for investors belonging to all age groups. This study aims to find linkages between the decision-making…

Abstract

Purpose

Decision-making in the equity market has been a challenging task for investors belonging to all age groups. This study aims to find linkages between the decision-making techniques in the equity market and the biological age of the investor.

Design/methodology/approach

This is an exploratory study and by surveying a sample of 436 secondary equity investors residing in the Chennai region of India, the study measured the decision-making techniques. Using the ANOVA test, the decision-making technique mostly used by investors belonging to an age category was determined. Further, the linkages were investigated in isolation for the male and female investors. By using regression analysis, a model was developed to predict the actual equity return. The financial characteristics of the various age groups were also analyzed using cross-tabulation.

Findings

The results of the study show that the age of the investor plays an important role in the choice of decision-making technique used. The younger investors, who earn the lowest returns were less likely to use industry analysis but more likely to use technical analysis and advocate’s recommendation. Specifically, the younger male investors were less likely to use industry analysis and more likely to use the advocate’s recommendation. The younger female investors were also less likely to use industry analysis. The middle-aged respondents, who earn the highest return were less likely to use technical analysis and advocate’s recommendation owing to lower means. Specifically, the middle-aged male investors were less likely to use the advocate’s recommendation and technical analysis. Then, middle-aged female investors were more likely to use industry analysis.

Originality/value

The findings would be beneficial for financial advisors and wealth managers to suggest age-appropriate strategies for the various investor groups. This age-based profiling of investors would make investors aware of their decision-making techniques and encourage them to make more rational decisions.

Details

Qualitative Research in Financial Markets, vol. 13 no. 1
Type: Research Article
ISSN: 1755-4179

Keywords

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