Page 199 - DCOM504_SECURITY_ANALYSIS_AND_PORTFOLIO_MANAGEMENT

Security Analysis and Portfolio Management

Notes 11. The .................. chart is similar to a bar chart.
12. .................. chartists count on discovering certain buying and selling forces in the market,
on the basis of which they predict future price trends.
13. A .................. pattern is a distinct formation on a stock chart that creates a trading signal, or
a sign of future price movements.
14. .................. is the ratio of a group of lower-grade bonds to a group of higher-grade bonds.
15. The wedge chart pattern can be either a .................. or .................. pattern.

6.13 Review Questions

1. Make a detailed critical evaluation of the Technical Analysis.

2. What do you think are the limitations of charts?
3. Moving averages are used to identify current trends and trend reversals as well as to set up
support and resistance levels. Comment.

4. Establish the superiority of Technical Analysis over Fundamental Analysis.
5. Technicians insist that the market always repeats. Justify their statement.
6. What do you think is the reason for the technicians not being committed to buy-and-hold
policy?
7. What is your opinion to the belief of critics that say, "Technical Analysis is a form of black
magic"?

8. Suggest some potential applications of Chaos Theory to the stock market.
9. Analyse various tools of technical analysis.
10. Which price indicator of the market do you believe to be better and why?
11. What do you think as the advantage of moving averages to the theory of technical analysis?

12. Technical analysis has been around for more than 100 years, and it is not likely to disappear
from the investment scene anytime soon. Comment.
13. How do you foresee the future of technical analysis?

Answers: Self Assessment

1. evaluating 2. direction
3. price 4. market action
5. price 6. earnings
7. three 8. Breadth-of-market
9. trendline 10. end

11. Candlestick 12. Bar
13. chart 14. Confidence Index
15. continuation, reversal

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