COLLEGE OF BUSINESS
FINA4315: SEC. ANALYSIS & PORTFOLIO MGMT
Sec.: 201
Case 2: ExxonMobil
Heba AL-Owayeed
200900569
Fatima Abdulqader
200801340
Instructor: Dr. Shah Saeed Hassan Chowdhury
Fall 2012
Q1: What are the benefits of technical analysis?
Technical analysis involves the use of charts and technical indicators to predict the price
movement of a currency. Technical analysis focuses on price movement means the primary focus
of technical analysis is on the movement of prices. Charts show how prices are moving (or not
moving), when prices are trending, and the strength of those trends. Another benefit is that trends
are easily found. Taking a look at a moving average line quickly displays a price that is trending
or stuck in a range, whether it is up, down, or sideways, a chart can quickly display a currency
that is exhibiting a trend. The last benefit is Technical analysis is less time consuming and less
costly than fundamental analysis. It can be performed in less than five minutes and the services
are very often offered for free or at a nominal cost.
Q2: Excel attachment.
Q3: breadth of the market
A technique used in technical analysis that attempts to gauge the direction of the overall
market by analyzing the number of companies advancing relative to the number declining.
Positive market breadth occurs when more companies are moving higher than are moving lower,
and it is used to suggest that the bulls are in control of the momentum.
Figure 1 Market breadth of s&p for 12 months-2012, Source: http://www.theglobeandmail.com/globeinvestor/markets/indexes/
Figure 2: Market breadth of s&p for 12 months-2012, Source: http://www.theglobeandmail.com/globeinvestor/markets/indexes/
Q4: 100-day moving average + Excel attachment.
Moving averages help technical traders smooth out some of the noise that is found in day-today price movements, giving traders a clearer view of the price trend. So far we have been
focused on price movement, through charts and averages. In the next section, we'll look at some
other techniques used to confirm price movement and patterns. For our company Exxon mobile,
the graph shows that its closing prices most of the time went under MA line which indicate a
signal of selling, but in the last data it shows that closing prices went above the MA line which is
a buy signal. For S&P 500, most of the time closing prices crossed the MA and went under it
which is a sell signal.
Q5: the major trend, intermediate trend and short-run movements. Excel attachment.
The most important concepts in technical analysis are that of trend. The meaning in finance
isn't all that different from the general definition of the term - a trend is really nothing more than
the general direction in which a security or market is headed. The major trend of the market,
which makes it the most important one to determine. This is because the overriding trend is the
one that affects the movements in stock prices. The primary trend will also impact the secondary
and minor trends within the market. Intermediate within all primary trends are intermediate
trends, which keep the business journalists and market analysts constantly searching for the
answers for why an issue or a market suddenly turns and heads in the direction opposite to that of
yesterday or last week. Sudden rallies and directional turnarounds make up the intermediate
trends and, for the most part, are the results of some kind of economic or political action and its
subsequent reaction.
For S&P index, prices were continuously rising all the time slightly, there are no major trends
from the last three years –as shown in the graph attached in Excel Q2-. For Exxon company
prices were fluctuate during the same last three years–as shown in the graph attached in Excel
Q2-. The last year as a short term went down and in the end of that year it increased, Exxon
prices reached the lowest price at $ 53.65 in the middle of 2010. In the end of 2012 Exxon
recovered its decreasing by reaching the highest price during that period which was $82.21.
Q6: Relative strength.
Relative strength defined as stock's price change over a period of time relative to that of a market
index, such as the S&P 500. The relative strength of a stock is calculated by taking the
percentage price change of a stock over a set period of time and ranking it on a scale of 1 to 100
against all other stocks on the market, with 1 being worst and 100 being best.
Figure 3http: Relevant strength, Source://www.financialsense.com/contributors/chris-puplava/what-technology-andfinancials-are-saying-about-the-market
Q7. Exxon mobil has a good history of prices and return, according to the relevant strength
results, 82% of the S&P 500 stocks are in uptrend which is a good and high percentage of such
index as S&P. It is a good time to sell because it is indicated as a high overvalued and its closing
prices went above the MA line which is a buy signal
References:
http://finance.yahoo.com/
http://financialsense.com/contributors/chris-puplava/what-technology-and-financials-are-sayingabout-the-market
www.theglobeandmail.com/globe-investor/markets/indexes/