Stock Market - Technical Analysis

Technical analysis in stock market is a security analysis discipline for forecasting the future direction of stock prices through the study of historical market data, mainly price and volume. In its purest form, technical analysis takes into consideration only the actual price and volume behavior of the stock. Models and trading rules based on price and volume transformations are employed thanks to technical analysis. Examples of those rules and models include: relative strength index, moving averages, regressions, inter-market and intra-market price correlations, cycles.

Technical analysis should be distincted from fundamental analysis. Technical analysis "ignores" the current actual situation of the company and is based solely on "the charts," that is to say price and volume information, whereas fundamental analysis is based on actual facts concerning the company, such as earnings, revenue forecasts, etc . For example, most major financial institution will typically have both a technical analysis and fundamental analysis team.



Technical analysis is very often used by active day traders, market makers, and pit traders. In the 1960s and 1970s it was widely dismissed by academics as being not related to actual situation. In a recent review, Irwin and Park reported that 56 of 95 modern studies found it produces positive results, but noted that many of the positive results were rendered dubious by issues such as data snooping so that the evidence in support of technical analysis was inconclusive; it is still considered by many experts to be pseudoscience. Some academics claim the technical analysis can often suggest conflicting decisions, for instance some indicators suggest selling, while others suggest buying the stock at the same time - hence the inconsistency. Users hold that even if technical analysis cannot predict the future, it helps to identify trading opportunities.

How to make your money last?

Once you retire there's a question to be answered: how to spend those saved money so that it's enough for the rest of your life? One possible solution is to invest the money in a portfolio of stocks and bonds. Assuming you will withdraw 4% every year, you have a 77% chance (according to research) it will be enough for 30 years.

Another possible strategy is to invest in lifetime immediate annuity. This is a widely available finance product which enables you to guarantee steady payments for the rest of your life. You give all your saved money to a financial institution, and in return the institution guarantees monthly payments for the rest of your life. The major drawback is that the institution would usually give itself large premium for the risk connected with your living longer than expected :).