The financial markets are a number-driven arena. The health and status of a company and its stock is represented by numbers, which are constantly in motion.
Software programs track it all, and it stock analysis software upon which many investors rely.
The Two Flavors of Stock Research
There are two realms of analsysis, and thus, two types of stock analysis software. Both are basically screening devices, designed to identify stocks based on carefully established criteria.
Fundamental analysis looks a company’s financial health, including profits, margins, expenses, trending, and net capitalization, all of it in context to forecasts. The results help drive investor demand, which in turn is the primary influence on stock prices levels.
Technical analysis analyzes historical trading ranges in context to the market. Baring relevant news, a stock price remains within a range, one with upper and lower limits that history proves to be valid.
If investors sell a stock the price drops. Sooner or later investors will see the stock as a buy opportunity, which stabilizes the stock, sending it back into the trading range. The same is true, only in reverse, on the selling side.
The role of stock analysis software.
When a stock violates its trading limits on either side, it’s called a “breakout” stock. Performance is then harder to predict because of a lack of data. Literally, this is new territory, and no ranges yet exist.
At some point the very factors that created the old trading limits come to bear, as investors sense a buying or selling opportunity and begin to buy or sell against the current trend, thus stopping the breakout while establishing a new range.
Very little of this has much at all to do with the company whose name is on the stock certificate. The exception is when the breakout represents the markets response to some news, such as a forecast being exceeded or disappointing results, or even a change in management.
The are programs that track this price performance data in great detail is called stock analysis software.
These programs analyze buying and selling volumes, watching for stock that approach established trading ranges. There are also programs that compare the fundamental data between companies, such as price-earning ratio, both for current and projected profit levels.
Now even the little guy can compete.
Such programs come an online service, or you can purchase them yourself. They are a valuable tool for short term investors and traders, while longer term investors pay much less attention to trading ranges.
All of this used to be the exclusive province of a stockbroker. But with today’s online services and the power of the software that drives it, even the smallest investor can perform all kinds of analysis from their home office, all with the help of stock analysis software.
