The key to good stock market analysis is to conduct in-depth fundamental and technical analysis to buy the best stocks at the best time, according to MarketSmith. Fundamental analysis highlights stocks with the highest potential, while technical analysis helps determine the optimal time to make buy or sell calls.
Fundamental stock analysis enables investors to understand the companies behind the securities in the stock market, sas MarketSmith explains. Good stock market analysis assesses the products or services that listed companies offer, their customers, and the advantages that they possess over their competitors. Growth investors look for companies with compelling new products or services, creative management ideas, and positive industry trends. Informed stock analysis also focuses on the earning history of companies of interest. Investors generally look for companies that report subsequent increments of 25 percent and above in sales as well as annual earnings over the last three years.
Technical analysis is crucial in stock market analysis because it enables investors to determine the precise moment that the prices of stocks increase or decrease. Analyzing charts for indicators such as double bottoms, saucers and flat bases enables analysts to generate timely buy and sell signals, as MarketSmith reports. Good stock market analysis also assesses the institutional sponsorship of stocks and favors stocks with an increasing ownership.