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GitmanJoeh 238702 Im09
Chapter 9
Market Price Behavior
.1  Outline
Learning Goals
I. Technical Analysis
A) Principles of Market Analysis
B) Using Technical Analysis
C) Measuring the Market
1. The Big Picture
a. Dow theory
b. Trading actions
c. Confidence index
2. Technical Conditions Within the Market
a. Market volume
b. Breadth of the market
c. Short interest
d. Odd-lot trading
3. Trading Rules and Measures
a. Advance-Decline line
b. New highs-New lows
c. The Arms index
d. Mutual fund cash ratio
e. On balance volume
f. Investment newsletter sentiment index
4. Charting
a. Bar charts
b. Point-and-figure charts
c. Chart formations
d. Moving averages
Concepts in Review
II. Random Walks and Efficient Markets
A) A Brief Historical Overview
1. Random Walks
2. Efficient Markets
B) Why Should Markets Be Efficient?
C) Levels of Market Efficiency
1. Weak Form
2. Semi-Strong Form
3. Strong Form
4. Market Anomalies
a. Calendar effects
b. Small firm effect
c. Earnings announcements
b. P/E effect
D) Possible Implications
1. Implications for Technical Analysis
2. Implications for Fundamental Analysis
E) So Who Is Right?
Concepts in Review
III. Behavioral Finance: A Challenge to The Efficient Markets Hypothesis
A) Investor Behavior and Security Prices
1. Overconfidence
2. Biased-Self Attribution
3. Loss Aversion
4. Representativeness
5. Narrow Framing
6. Belief Perseverance
B) Behavioral Finance at Work in the Markets
1. Stock Return Predictability
2. Investor Behavior
3. Analyst Behavior
C) Implications for Security Analysis
D) Your Behavior as an Investor: It Does Matter
Concepts in Review
Summary
Putting Your Investment Know-How to the Test
Discussion Questions
Problems
Case Problems
9.1 Rhett Runs Some Technical Measures on a Stock
9.2 Deb Takes Measure of the Market
Excel with Spreadsheets
Trading Online with OTIS
.2  Key Concepts
1. Technical analysis, its role in its role in the security analysis and stock selection process, and the various measures of market performance that make up
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