Charting and Technical Analysis

Yahoo! Finance (http://finance.yahoo.com) offers significant capabilities in charting and other technical indicators. Under the charting function, you can specify comparisons between companies by choosing the technical analysis tab. Short interest ratios are found under the Company Profile Report. Prepare charts of moving averages and obtain short interest ratios for GE and SWY. Prepare a 1-year chart of the 50- and 200-day average price of GE, SWY, and the S&P 500 index.

1. Which, if either, of the companies is priced above its 50- and 200-day averages?
2. Would you consider their charts as bullish or bearish? Why?
3. What are the short interest ratios for the two companies?
4. Has short interest displayed any significant trend?

Technical Analysis versus Market Efficiency

Go to http://bigcharts.marketwatch.com and search the internet for other charting and technical analysis sites.

1. Is there a consensus among technical analysts concerning a specific technique that works best to generate excess returns?
2. Is there verifiable evidence to suggest that this method works in practice? If you can identify a rule that seems to work, try it out on real historical data that can be found at many sites such as http://finance.yahoo.com.