Category: Money tips Release Date: 2006-06-24
All along, the fundamental analysis and technical analysis is the two magic weapons in the hands of stock market investors. I do not know since when the value investment philosophy prevail in the domestic stock market, company performance, business prospects for such terms as fund managers of the mantra, while technical analysis is reduced to seems to be that only individual investors, stock investors have used the "indecent" trick. In fact, there is reason, technical analysis has its own vitality.
Moderator: During this time, Shanghai and Shenzhen cities can be described as wind and water, the Shanghai Composite rose in 3 weeks, 18%, which in the past two years, the stock market is rare. It was found that the Shanghai Composite closed at 1150 points, the top of the straight-yang, do not care about RSI indicators into overbought territory facts. Some readers asked why the RSI indicator not working? This issue we have invited senior members of Mr. Zhang Hongji Securities shareholders to answer to these queries.
â–?Beijing's Daxing District, shareholders Chen: value investing philosophy deeply rooted among the past few years, technical analysis is not complete its historic mission, the mission accomplished it?
Zhang note: This is a wrong concept. As far as I know, even in the United States and other developed country capital markets, technical analysis is still the major market researchers judged that one of the tools. The two analysis methods in the use of the process has its own focus, fundamental analysis focuses on the stock's long-term trend, not only we often say "potential", which is concerned listed company's share price 3 to 5 years trend.
Technical analysis is more focused on the timing of the stock's run is not a straight line, there have been peaks and troughs. If for bullish a stock rather than options to buy immediately, if the timing is likely to buy at the crest above, this is obviously not a smart analyst should do. Therefore, the tool itself is not good or bad, it is important is that in a suitable place to use the most appropriate analytical tools.
â–?shareholders Haidian District, Beijing Mr. Zhao: Why RSI these days, when analyzing the market's movements are not allowed out?
Zhang note: This is the method of calculating the formula from the start with RSI. RSI is also called the relative strength index, and its basic principle is that in a normal stock market, long-short buyers and sellers must obtain a balanced strength, stock prices can be stable, the stable region in the RSI is 50% of the line. If the RSI value above 80%, when the stock market is overbought, and is the time to sell, if the RSI values below 20% of the stock market is oversold, is the time to buy.
However, no tool has its own flaws, its principle is to first aim at calculating the value of the relative strength: N days, the sum of the closing price rises / fall combined, and then find the value of RSI line :100-100 / (1 + Relative Strength value). There is a problem, the relative strength index rose in absolute value and has nothing to do, we assume that, if within 20 days, stock index rose a total of 1,000 points, while the total fall of 800 points, the actual rose 200 points, its RSI values 56%; if these 20 days, the sum of stock index rises 100 points, down a comprehensive range of 20 points, actually rose 80 points, its RSI value of 83.3%.
It can be seen from the, although the second case less than the first case up 120 points, but the RSI is over 80% of the value into overbought territory. This shows that, in some special cases, RSI failure, so that investors should be well aware of their own technical indicators used in the application scope, they can better master this tool.
