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The return that a stock can provide is often predicted with the help of technical analysis. Stock market trading tips are based on technical analysis of various parameters.

Stock market analysis is science of examining stock data and predicting their future moves on the stock market. Investors who use this style of analysis are often unconcerned about the nature or value of the companies they trade stocks in. Their holdings are usually short-term - once their projected profit is reached they drop the stock.

The basis for stock market analysis is the belief that stock prices move in predictable patterns. All the factors that influence price movement - company performance, the general state of the economy, natural disasters - are supposedly reflected in the stock market with great efficiency. This efficiency, coupled with historical trends produces movements that can be analyzed and applied to future stock market movements.

Stock market analysis is not intended for long-term investments because fundamental information concerning a company’s potential for growth is not taken into account. Trades must be entered and exited at precise times, so technical analysts need to spend a great deal of time watching market movements. Most stock tips and recommendations are based on stock analysis methods.

Investors can take advantage of these stock analysis methods to track both upswings and downswings in price by deciding whether to go long or short on their portfolios. Stop-loss orders limit losses in the event that the market does not move as expected.

There are many tools available for stock market technical analysis. Hundreds of stock patterns have been developed over time. Most of them, however, rely on the basic stock analysis methods of ’support’ and ‘resistance’. Support is the level that downward prices are expected to rise from, and Resistance is the level that upward prices are expected to reach before falling again. In other words, prices tend to bounce once they have hit support or resistance levels.

Stock Analysis Charts & Patterns

Stock market analysisrelies heavily on charts for tracking market movements. Bar charts are the most commonly used. They consist of vertical bars representing a particular time period - weekly, daily, hourly, or even by the minute. The top of each bar shows the highest price for the period, the bottom is the lowest price, and the small bar to the right is the opening price and the small bar to the left is the closing price. A great deal of information can be seen in glancing at bar charts. Long bars indicate a large price spread and the position of the side bars shows whether the price rose or dropped and also the spread between opening and closing prices.

A variation on the bar chart is the candlestick chart. These charts use solid bodies to indicate the variation between opening and closing prices and the lines (shadows) that extend above and below the body indicate the highest and lowest prices respectively. Candlestick bodies are coloured black or red if the closing price was lower than the previous period or white or green if the price closed higher. Candlesticks form various shapes that can indicate market movement. A green body with short shadows is bullish - the stock opened near its low and closed near its high. Conversely, a red body with short shadows is bearish - the stock opened near the high and closed near the low. These are only two of the more than 20 patterns that can be formed by candlesticks.

When glancing at charts the untrained eye may simply see random movements from one day to the next. Trained analysts, however, see patterns that are used to predict future movements of stock prices. There are hundreds of different indicators and patterns that can be applied. There is no one single reliable indicator, but these stock analysis methods when taken into consideration with others, investors can be quite successful in predicting price movements.

One of the most popular patterns is Cup and Handle. Prices start out relatively high then dip and come back up (the cup). They finally level out for a period (handle) before making a breakout - a sudden rise in price. Investors who buy on the handle can make good profits.

Another popular pattern is Head and Shoulders. This is formed by a peak (first shoulder) followed by a dip and then a higher peak (the head) followed again by a dip and a rise (the second shoulder). This is taken to be a bearish pattern with prices to fall substantially after the second shoulder.

Other Stock Market Analysis Methods

Moving Average - The most popular indicator is the moving average. This shows the average price over a period of time. For a 30 day moving average you add the closing prices for each of the 30 days and divide by 30. The most common averages are 20, 30, 50, 100, and 200 days. Longer time spans are less affected by daily price fluctuations. A moving average is plotted as a line on a graph of price changes. When prices fall below the moving average they have a tendency to keep on falling. Conversely, when prices rise above the moving average they tend to keep on rising.

Relative Strength Index (RSI) - This indicator compares the number of days a stock finishes up with the number of days it finishes down. It is calculated for a certain time span - usually between 9 and 15 days. The average number of up days is divided by the average number of down days. This number is added to one and the result is used to divide 100. This number is subtracted from 100. The RSI has a range between 0 and 100. A RSI of 70 or above can indicate a stock which is overbought and due for a fall in price. When the RSI falls below 30 the stock may be oversold and is a good time to buy. These numbers are not absolute - they can vary depending on whether the market is bullish or bearish. RSI charted over longer periods tend to show less extremes of movement. Looking at historical charts over a period of a year or so can give a good indicator of how a stock price moves in relation to its RSI.

Money Flow Index (MFI) - The RSI is calculated by following stock prices, but the Money Flow Index (MFI) takes into account the number of shares traded as well as the price. The range is from 0 to 100 and just like the RSI, an MFI of 70 is an indicator to sell and an MFI of 30 is an indicator to buy. Also like the RSI, when charted over longer periods of time the MFI can be more accurate as an indicator.

Bollinger Bands - This indicator is plotted as a grouping of 3 lines. The upper and lower lines are plotted according to market volatility. When the market is volatile the space between these lines widens and during times of less volatility the lines come closer together. The middle line is the simple moving average between the two outer lines (bands). As prices move closer to the lower band the stronger the indication is that the stock is oversold - the price should soon rise. As prices rise to the higher band the stock becomes more overbought meaning prices should fall. Bollinger bands are often used by investors to confirm other indicators. The wise technical analyst will always use a number of indicators before making a decision to trade a particular stock.

One general asserted truth is that profit is a goal for many of the men and women who populate this planet. Profit is the more desirable in the case of those who actually invest money because they want to extract even more financial benefits out of these particular investments. One popular way of giving a fertile employment to your money is making them circulate through stock market trading. Share owners can sell, hold their shares or even buy some more, if a series of rules (based either on well-established commonsense practices or on mere intuition) tell them the moment is just ripe for this or that strategy.

As a matter of fact, strategy is one of the terms often heard of in stock market trading. But can anyone talk about a strategy that never failed in this area? This is a frequently raised question, since it is widely acknowledged that the stock market can be tricky. The stock market may easily lead to a downfall in stock market trading. This process takes place, obviously, to the disadvantage of the investor. However, stock market trading doesn’t always end with a loss. Should loss be a certainty, people would no longer invest in the stock market.

Whether we are talking about time-honored stock market trading - taking place within the ‘real’ here and now, on the floors of stock exchange rooms - or about online stock market trading one of the regularly advised strategies is to stick to the trend. Online stock market trading has acquired, in its turn, a value over the past ten years so it can be taken into consideration also. Every stock market undergoes certain (longer) intervals of development manifest in the evolution of stock price. Terms like bull market or bear market are recurrent in stock market trading reflecting either the continuously rising stock prices or the reverse situation. Both online stock market trading as well as its longer-established relative go hand in hand with the progress of the national economy. One example at hand is provided by the extent of a bullish market during the 1990s, determined by the robust national economy of the USA - a genuine initiator of investment confidence. When the situation changed, at the beginning of the year 2000, the market turned bearish and stock prices began falling. In both situations, the advised approach was not to go against the tendency of the market.

Circumstances have long proven it is wise to be consistent with the general trend. Indeed, there is ‘fashion’ within stock market trading as well. And if you don’t want to be outdated - being outmoded in stock market trading may have damaging consequences - you go with the flow. Nevertheless, when someone trustworthy or when some reliable conditions offer you a ‘hot’ suggestion, you may want to act in its direction. Nonetheless, caution, shrewdness and wisdom must be in your proximal reach. This means that you are not to instantly trust any ‘good old pal’ who, out of good-will, provides you with a tip. You must be able to make your own research targeting the tip you received or else request the services of a stockbroker.

The latter may turn out to be a wise stratagem. Stockbrokers, even in online stock market trading, are generally certified and skilled authorities whom you can easily employ for you to take full advantage of your capital investing. Notice however that their expertise is not available free of charge. There is nothing ‘on the house’ in stock market trading. Basically, brokers get involved in stock market trading for you, making use of their fuller comprehension of the stock market status quo so as to trigger gains that will proceed to your pocket or to some further investment. Should the commission basis on which the relationship between you and your broker is built (as a general rule) not be appropriate for you, there are other possibilities as well. In online stock market trading it is less costly to supervise your own deals.

Additionally, in online stock market trading, the useful, instructive material you may need is obtainable day-and-night. Moreover, in case you take particular content in looking into your private stocks, you cannot find a richer source of information than the Internet. Online stock market trading allows you to research websites designed by investment companies so the client and the virtual investor can be aware of previous operations. By accessing reports and descriptions offered even by the companies themselves, one may even notice the excellent performance of key institutions. Even more, online stock market trading sites offer the investor support in the shape of online stock market trading tools, services and instruments that allow the investor to place an order beforehand and, should the client not be present at the moment when the market reaches the condition opted for by him or her, enter the order automatically.

Certainly, both online stock market trading and its ‘next of kin’ have their own advantages. Whereas online stock market trading provides more accessible assistance for dealing with stocks, what was the initial, fundamental stock market trading still goes on. Even if not following a time schedule as generous as that of online services, the traditional ways do not disappear. However, they both involve taking risks which is why prudence is the most often heard of strategy. In other words, it’s better to “hold for a while the bird in the hand than quickly grab two in the bush”.

Another big rally on Wall Street has given the Standard&Poor’s 500 index a - the market barometer preferred by professional investors - a one half percent boost for 2009. (May 4)

The economy will worsen in the coming months and cause the market to fall another 20 to 25 percent in the United States and abroad, said Nouriel Roubini, a New York University business professor, on CNBC’s “Squawk Box” on Monday. Source: CNBC www.cnbc.com

The recent volatility in the U.S. Stock Market has sent foreign currencies sky-rocketing while our Dollar continues its downward spiraling fall, leaving investors with questions like: What do we do next? What can our Dollar buy? How is this affecting my business, my retirement plans, my cash-flow, my partners, my family, my life?

Whether you are an Active Trader or a Managed Account Investor, this is the perfect time to address these questions to your Certified Financial Planner, Money Manager, or Financial Advisor, knowing full-heartedly that YOU and only you, are responsible for your Financial decisions. A health check of your portfolio with your trusted fiancial advisor must happen now. However, one thing you must do right away (whether you are in the Western Hemisphere or in another part of the World) is take a look in the mirror and remind yourself that : ” No one cares about Your Money, like YOU care about your Money”! ~ So what should you do?

• Trust your Instincts above all else.

• Do your own research of your holdings.

• Be informed and brainstorm with your Coach.

• Get sound, professional advice from your financial advisors.

• Resolve to “decide” even if it means “take no action at this time”.

You must come face-to-face with the fact that every financial “roller-coaster-ride” leaves us with UNFOCUSED energy in our Mental, Emotional, Spiritual and Physical “ways of being”.

For every time you are “unfocused” on the things you want, you get “more” focused on the things you don’t want…and guess what happens next? ~ That’s right! ~ You get MORE of what YOU don’t want. ~~~Have you ever heard people say to you: “I don’t know what I want, but… I do know What I Don’t Want! ? ~ This mode of thinking, is already attracting more of the very thing they don’t want, simply because, that’s where their thoughts reside!

Five Tips to Help You Get More of What You Want:

1. Focus on what you want more of.

2. Write it down as if it is already happening.

3. Imagine what it would feel like if you were already enjoying the outcomes.

4. For every worry that comes into your mind, change it into something you want to have that is positive to you.

5. Find “support” to help you transform the ” I Don’t Wants” into the ” I Do Wants”. I can help you do just that.

Practice makes Perfect. In a world of Uncertainty, practicing and using “focus” as your Mainstream, life- line, will not only Win You the Day but your entire future, in a safe, securely way!

• Focus fullfills your Life’s purpose and calling.

• Distractions will take it away.

• Identify distractions and time bandits.

• Understand the Power of Investing Your Time, Your Space, Your Energy and Your Money!

Allow me the privilege of helping you stay focused and on track to achievement and success irregardless of “The Rollercoaster Ride”. ~ I’m here to help. Don’t go at it alone. I bring clarity to where there’s confusion, guidance when a new direction needs to be pursued, and changes when old mistaken beliefs need to be transformed.

Ali R. Rodriguez

Business Coach Specialist

and Passionista Expert

“Turning Passions into Profits, one client at a time.”

Ali R. Rodriguez is the creator of “The Power of Five” (TM) Coaching Systems designed to help you achieve success and fulfillment on things that matter the most to you.

Website: www.VisionForSuccess.biz

Cool Line of Products: www.AliRodriguez.com

Networking Site: www.MySpace.com/Ali4Coach

www.informedtrades.com - A video meant to explain how individuals can buy and “short sell” (ie profit when the price goes down) stocks. Part of a free introductory course on stock trading from InformedTrades.com.

I’ve been thinking about starting a stock market prediction business. Clearly, there is a huge market for timely and accurate information of this type, and just as clearly, predicting the future is much easier than dealing with the realities of whatever is actually happening at the moment. If investors could know what’s going to happen next, they could develop a plan to deal with it in the present. Maybe Wall Street could help me get this new business up and running!

What’s that? Wall Street institutions already spend billions predicting future price movements of the stock market, individual issues & indices, commodities, and hemlines. Really? Is that right also? Economists have been analyzing and charting world economies for decades, showing clearly the repetitive cyclical changes and their upward bias. Funny then, or strange would be more accurate, that the advice generated by the oracles of Wall Street seems to assume that the current environment, good or bad, will be everlasting. Isn’t it this kind of thinking and advising that prolongs the downturns and “bubbles” the advances—in all markets?

If it were true that our favorite pinstriped product pushers can actually predict the future, why would investors do what they do in response to the predictions? Why would financial professionals of every shape and size holler: “sell” at lower prices, and “buy at any price” when market valuations surge upward? Shouldn’t lower prices be the call to the mall? Most Wall Street soothsaying has a short-term focus that dwells upon today’s market conditions; most Wall Street glossies emphasize the long-term nature of investment programs, and encourage investors to apply patience to the program they decide to use for goal achievement. Why is the advice so out of sinc?

The reason for the emphasis confusion is simple: it’s easier to play to the emotion of the moment than it is to look beyond— even though we all know that a directional change will be along eventually. Regardless of the direction, Wall Street advice will always fuel the operative emotion: greed or fear! Wall Street’s retail representatives never go against the grain of the consensus opinion— particularly the one projected to them by their superiors. You cannot obtain independent thinking from a Wall Street salesperson; it doesn’t fill up the “Beemer”.

Here’s some global advice that you will not hear on the street of dreams: Sell into rallies. Buy on bad news. Buy slowly; sell quickly. Always sell too soon. Always buy too soon. And by the way, who do you think is buying and selling the securities you have been told to dump or to hoard?

No self respecting guru would ever refute the basic truths that the market indices, individual issue prices, the economy, and interest rates will continue to move in both directions, unpredictably, forever. Hmmm, this is where you need to focus your attention if you want to get through the investment process with your sanity. You need to expect and plan for directional changes and learn to use them to your advantage. Tranquilizers may be necessary to get you through the first few cycles, but if you have minimized your risk properly, you can actually thrive on the long-term predictability of the markets.

The risk of loss cannot be eliminated. A simple change in a security’s market value is not a loss of principal just as certainly as a change in the market value of your home is not evidence of termite damage. Markets are complicated; emotions about one’s assets are even more so. Cyclical changes in all markets are just as predictable conceptually as knowing approximately where you are within a cycle is knowable actually. The key is to understand what your securities are expected to do within the cyclical framework. Now there’s a knowledge business with no Wall Street practitioners!

Predicting individual stock prices is a totally different ball game that requires a more powerful crystal ball and an array of semi legal and illegal relationships that are unavailable to most investors. There are just too many variables. Prediction is impossible, but probability assessment has enormous potential. Investing in individual issues has to be done differently, with rules, guidelines, and judgment. It has to be done unemotionally and rationally, monitored regularly, and analyzed with performance evaluation tools that are portfolio specific.

This is not nearly as difficult as it sounds, and if you are a shopper, looking for bargains elsewhere in your life, you should have no trouble understanding the workings of the stock market. There are only three decision-making scenarios that investors need to master if they want to predict long-term success for their portfolios.

The “Buy” decision has two important steps: Step one allocates the available investment assets, by purpose, between Equity and Income securities, based on the goals of the investment program. It is done best using The Working Capital Model. Step two establishes strict selection quality measures and diversifies properly within each security class. Investment Grade Value Stocks are the low-risk equity champions; long-term, non-gimmick, managed CEFs produce the best income/diversification mix available in readily tradeable form.

The “Sell” decision involves setting reasonable targets for profit taking for all securities in the portfolio. Loss taking decisions must not be undertaken out of fear, and must be avoided during severe market downturns. Understanding the forces causing market value shrinkage is important and a highly disciplined hand at the emotion control button is essential. There is no such thing as a good loss of capital.

The “Hold” decision is most common, and it regulates and moderates the process, keeping it less than frantic. Continue to hold onto fundamentally strong equities and income securities that are providing their normal cash flow. Hold weaker positions until the appropriate cycle (market, interest, economy) changes direction, and then consider whether to sell or to buy more.

Wall Street spins reality in whatever manner it can to make most investors unhappy, thus increasing new product sales. Your confusion, fear, greed, impatience, and need for a quick panacea fuels their profit engines, not yours. Learn how to deal unemotionally with Wall Street events and shun the herd mentality… that’ll fix ‘em.

Did you ever wonder how the market comes up with the price of a stock? To the average investor, it might seem like an exercise in voodoo, and quite honestly, I believe that would not be that far from the truth. Let’s start with the theory behind stock market valuation. One of the most widely held techniques for valuing stocks is known as the discounted cash flow (DCF) methodology. It states that the value of the company can be derived from taking the current cash or accounting value based on the most recent balance sheet and adding the expected present value of net cash coming into the company in each successive period. For those without a finance background, the present value refers to the practice of discounting future periods by a required rate of return. For example if I required a rate of return of 10% a year from now, the present value of $10,000 cash flow would be $9,090, etc. The more uncertain one is of the cash flows, the higher the required rate of return.

It is not my purpose in this article to go into the intricacies of a proper DCF analysis. In fact, after spending many years on Wall Street I can tell you that I doubt the majority of analysts and portfolio managers are in the practice of performing such analysis. The biggest reason is that a proper DCF calculation is time consuming and difficult, but more importantly there are significant practical problems. Other than the fundamental problems of dealing with uncertainty years into the future, the choice of the discount rate for a given equity is one of the biggest problems with discounted cash flow analysis. While there are many quantitative methods for determining this rate based on volatility, correlation with the general market, or more sophisticated methods, the big problem is that the valuation is highly sensitive to small changes in this rate. Estimating the sustainable growth rate in out years is also difficult and highly effects the valuation. Arguably one can pick a wide range of values by just tweaking one’s analysis because of the highly nonlinear aspect of the calculation. Obviously this is problematic for someone trying to invest and thus most investors either skimp on a very simplistic DCF type of analysis or utilize something more expedient. I would argue that absent very sophisticated algorithms, virtually no one on Wall Street really knows what the value of these stocks are, and this is something that I believe every investor should be aware of when listening to TV pundits.

I’m looking for stocks that pay a dividend in excess of 15% (I’ve had them as high as 24%, so I know they exist). Of course, I want this dividend to be paid from profit, instead of the business taking out a loan for it.

I am NOT INTERESTED in buying a stock with the intention of selling it. My interest is income. I want to buy the stock, and be able to retire on the dividends… with enough shares, that is.

Got any ideas?