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fundamental analysis and technical analysis -top 5 key parameters for picking a stock

  • 02-12-2010 10:54pm
    #1
    Registered Users, Registered Users 2 Posts: 1,454 ✭✭✭


    I would be interested to hear from more experienced investors/traders what are the top 5 key parameters you use when selecting a stock (ie. P/E ratio, PEG factor, etc etc for Fund. An. and things like moving averages, candlestick, etc etc in Tech.An.) - even better if you use both analysis for your picking if you could list top 5 for each, including what the "ideal" values should be......thank you ;)


Comments

  • Closed Accounts Posts: 12 Tomba


    For TA, start off with MACD and RSI. For MACD; a good explanation is here:

    http://stockcharts.com/help/doku.php?id=chart_school:technical_indicators:moving_average_conve

    For RSI, in general if a stock hits 70 it is entering overbought and if it hits 30 it is entering oversold territory.

    For candlestick, have a look at www.americanbulls.com ... It bases recommendations on candlesticks


  • Closed Accounts Posts: 12 Tomba


    A perfect example of a stock which hit all indicators I use is SOL. Last week was a strong buy for all of the above


  • Registered Users, Registered Users 2 Posts: 1,283 ✭✭✭aidanki


    Tomba wrote: »
    A perfect example of a stock which hit all indicators I use is SOL. Last week was a strong buy for all of the above

    probably seems like a stupid question whats SOL, new to this stock broking lark!


  • Registered Users, Registered Users 2 Posts: 1,559 ✭✭✭pocketdooz


    TripleAce wrote: »
    I would be interested to hear from more experienced investors/traders what are the top 5 key parameters you use when selecting a stock (ie. P/E ratio, PEG factor, etc etc for Fund. An. and things like moving averages, candlestick, etc etc in Tech.An.) - even better if you use both analysis for your picking if you could list top 5 for each, including what the "ideal" values should be......thank you ;)

    1) EV / forward looking Adjusted EBITDA vs. comps and the industry average,
    2) Leverage levels and cost of debt,
    3) FCF conversion,
    4) Revenue and Operating Income resiliance and trajectory,
    5) Sometimes 200 day moving average vs. 50 day.

    .


  • Registered Users, Registered Users 2 Posts: 2,876 ✭✭✭pirelli


    TripleAce wrote: »
    I would be interested to hear from more experienced investors/traders what are the top 5 key parameters you use when selecting a stock (ie. P/E ratio, PEG factor, etc etc for Fund. An. and things like moving averages, candlestick, etc etc in Tech.An.) - even better if you use both analysis for your picking if you could list top 5 for each, including what the "ideal" values should be......thank you ;)

    Investor: Former Lehman's boss, on his deathbed, gives five steps to investing securely

    http://www.independent.ie/business/stocks-markets/investor-former-lehmans-boss-on-his-deathbed-gives-five-steps-to-investing-securely-2444817.html


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  • Closed Accounts Posts: 12 Tomba


    SOL or Renesola is a chinese solar stock that trades on the NYSE. It is considered high risk but for the purposes of this thread, I think it is a good example of a stock which looked to become oversold last week. Last week it bounced off it's 200dma, touched off 30 in RSI, had a homing pigeon candlestick which is bullish reversal and selling also looked to be exhausted from MACD.

    http://stockcharts.com/h-sc/ui?s=sol


  • Registered Users, Registered Users 2 Posts: 2,876 ✭✭✭pirelli


    Tomba wrote: »
    SOL or Renesola is a chinese solar stock that trades on the NYSE. It is considered high risk but for the purposes of this thread, I think it is a good example of a stock which looked to become oversold last week. Last week it bounced off it's 200dma, touched off 30 in RSI, had a homing pigeon candlestick which is bullish reversal and selling also looked to be exhausted from MACD.

    http://stockcharts.com/h-sc/ui?s=sol

    There was major news in this sector from the chinese goverment indicating a 50% subsidy is on the cards for solar.

    JASO - Bought at 7.13 but sold 7.30 and just today they released news that they would be taking a 34.2 milllion gain in their next quarter from leham bros notes, that were previously written off with a 100 milion face value in a previous quarter; that have now been sold for 34 million creating a sizeable profit for next quarter.


    WFC could not have downgraded them at a better time.

    However I think what you must look for as the ideal situation is a good technical and fundamental set up along with good sector or even better company news. News is a powerful ally as it provides volume and of course buying or selling in line with the quality of the news.

    Solar was downgraded and described as over supplied etc.. hence the stronger than usual sell off and depressed proces but the chinses subsidy has reversed that news / analysis and you can see chinese solar moving back into positive territory.

    Then you have what wall street think will happen in the future... Gold at 5000 and oil sky high again and lithium and fertilizer higher. In fact all metals are going to go sky high as mining is trudging along.


    LIT REMX GLD SVM and soon a copper ETF,


  • Registered Users, Registered Users 2 Posts: 1,454 ✭✭✭TripleAce


    Thank you all for the answers!!!

    Concerning technical analysis....I need some help. Along with building a long term portfolio (mainly picking stocks based on fundamental analysis), I am trying to learn more about Technical Analysis and short(ish) term trading. With this I don't mean day trading as I wouldn't have enough time, but more something along the line of buy a stock on hold it 1-3 months via spread betting (mainly to avoid paying capital gains and a lot of transaction fees). My starting capital for this will be 10k until I get more familiar with it.

    My problem is that I get a bit confused as a lot of the signals I get from the charts are mixed between buying and selling and I am not sure which ones to relay on :(

    I picked a random stock to analyse (at this very moment I don't care about making short-term wins but rather getting familiar with the whole process)....so I picked BP plc. After analysing the different indicators I get these conclusions:

    MACD: is above zero, but MACD line is crossing below the EMA (9) line (just slightly though), so I would think this is slighly bearish signal???

    EMA: 20 day EMA is above 50 EMA..there is no crossing so I don't take this as a relevant signal

    Bollinger Bands: touching upper part, so I guess this is bearish?

    Slow Stochastic: %K line is above %D line (buying signal correct?), however it is nearly reaching 80 and it usually turns down at that point (selling signal correct?) --- so overall I believe this is slightly more on the bearish side?

    ROC: close to 20, in this case I think it indicates overbought, which is also bearish, correct?

    RSI: close to 60, I guess this also indicates overbought?

    WILLIAMS % R around 20, which also means overbought, correct?

    so overall based on this analysis I would say this specific stock is more on the bearish side of things....am I missing some important indicator?

    Thank you so much for your help....


  • Registered Users, Registered Users 2 Posts: 288 ✭✭mono627


    pocketdooz wrote: »
    3) FCF conversion,

    FCFE and FCFF?


  • Registered Users, Registered Users 2 Posts: 1,454 ✭✭✭TripleAce


    TripleAce wrote: »
    Thank you all for the answers!!!

    Concerning technical analysis....I need some help. Along with building a long term portfolio (mainly picking stocks based on fundamental analysis), I am trying to learn more about Technical Analysis and short(ish) term trading. With this I don't mean day trading as I wouldn't have enough time, but more something along the line of buy a stock on hold it 1-3 months via spread betting (mainly to avoid paying capital gains and a lot of transaction fees). My starting capital for this will be 10k until I get more familiar with it.

    My problem is that I get a bit confused as a lot of the signals I get from the charts are mixed between buying and selling and I am not sure which ones to relay on :(

    I picked a random stock to analyse (at this very moment I don't care about making short-term wins but rather getting familiar with the whole process)....so I picked BP plc. After analysing the different indicators I get these conclusions:

    MACD: is above zero, but MACD line is crossing below the EMA (9) line (just slightly though), so I would think this is slighly bearish signal???

    EMA: 20 day EMA is above 50 EMA..there is no crossing so I don't take this as a relevant signal

    Bollinger Bands: touching upper part, so I guess this is bearish?

    Slow Stochastic: %K line is above %D line (buying signal correct?), however it is nearly reaching 80 and it usually turns down at that point (selling signal correct?) --- so overall I believe this is slightly more on the bearish side?

    ROC: close to 20, in this case I think it indicates overbought, which is also bearish, correct?

    RSI: close to 60, I guess this also indicates overbought?

    WILLIAMS % R around 20, which also means overbought, correct?

    so overall based on this analysis I would say this specific stock is more on the bearish side of things....am I missing some important indicator?

    Thank you so much for your help....

    any advice on this is more than welcome :)


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  • Registered Users, Registered Users 2 Posts: 1,454 ✭✭✭TripleAce


    Also, without open a separate forum I wonder if you would be able to point me to a forum for technical analyst, better if focus on UK market, but US market would also be good....thank you ;)


  • Closed Accounts Posts: 12 Tomba


    Tomba wrote: »
    SOL or Renesola is a chinese solar stock that trades on the NYSE. It is considered high risk but for the purposes of this thread, I think it is a good example of a stock which looked to become oversold last week. Last week it bounced off it's 200dma, touched off 30 in RSI, had a homing pigeon candlestick which is bullish reversal and selling also looked to be exhausted from MACD.

    http://stockcharts.com/h-sc/ui?s=sol


    Just following up on this previous post: SOL is up 20% since technicals above were indicating a strong buy back in Dec.


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