Stock Trading.

Fundamental Analysis or Technical Analysis

There are two major types of analysis for predicting the performance of a company's stock - Fundamental analysis and Technical analysis. The latter looks for peaks, bottoms, trends, patterns, and other factors of a stock's price movement. It is a technique many people attempt, though very few are truly successful.

• Fundamental Analysis probes the Balance Sheet, the Income Statement, and the Statement of Sources and Uses of Working Capital.
  
  
• Fundamental market analysis is the examination of the underlying forces that affect the interests of the economy, industrial sectors and companies. As with most analysis, the goal is to derive a forecast for the future.
  
  
• Some analysts analyze the company's balance sheet to determine the the value of the company and try to buy the stock at a price lower than the liquidation value or at a low price compared to the valuation of the net assets of the company.
  Other fundamental analysts focus on the expected future earnings of the company and try to buy the stock at a low price compared to the future earnings (low PE: price earning ratio).
  
  
• Industry groups are compared against other industry groups and companies against other companies. Usually, companies are compared with others in the same group.
  
  
• Stocks move as a group. By understanding a company's business, investors can better position themselves to categorize stocks within their relevant industry group.
  
  
• Fundamental analysis is good for long-term. It will help identify companies that represent good value.

• It's hard to apply fundamental index analysis for QQQQ timing (AMEX: QQQQ), S&P 500 timing (AMEX: SPY), Dow Jones timing (AMEX: DIA) since it's a index derivatives. What really can help here is the volume based technical analysis for indexes.
  
  
• Fundamental analysis is the development of a thorough understanding of the business.

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