Investing in Philippines: PSE Website part 9: Basic Charts

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Wednesday, August 18, 2010

PSE Website part 9: Basic Charts



Now that you know how valuable a chart is lets check out the PSE website for some charts. You can go to the Chart tab in the information link of stock you are looking at, for illustration purposes lets use FGEN:

 The basic charts are the Price chart of the high, low, open and last traded price of the stock. Each is represented by a color. Usually the PSE opens the charts at a annual chart range.

In the left side you can see the Chart options. You can change the date range which are 6 month, one year and two year. Chart type could be Line, Bar, Candle Stick, and OHLC(Open-High-Low-Close)
 You can also chose what indicator would you like to view. Below the Price chart is the  Volume chart which represents the number of traded stocks for that period or time frame.

Two famous indicators charts are also shown: MACD and Stochastic. I am not an expert in Technical analysis but got this info from www.ehow.com regarding these two well known indicator charts:

MACD analysis

Observe the interaction between the fast and slow lines. When the fast signal line(blue line) rises above and crosses the slow MACD line(red line), it means buyers are starting to dominate and a trader might consider buying that particular stock. When the fast line falls below and crosses the slow MACD line, it means sellers are starting to dominate and a trader might consider selling that particular stock.

Stochastic Analysis
Look at the instances where the %K line crosses and rises above the %D line. This indicates point when you should buy the stock. And if you look at the instances where the %K line dips under the %D line, then this is a signal to sell.

What is the rationale for this method of stochastic interpretation? The %K line is above the %D line when the price is on the rise, and it lies below the %D line when the price is falling. And because stock traders aim to buy low and sell high, these crossings signal the appropriate time to buy or sell.

For another way to interpret the stochastic oscillations, observe when the %K and %D lines rise above .8 = 80% and dip below .2 = 20%.

When the %K and %D lines rise above 80%, many stock analysts recommend selling as soon as the lines dip back down below 80%. And when the %K and %D lines dip below 20%, analysts advise stock traders to buy once the lines rise above 20%.

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