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CHART 6-2.
By superimposing any stock chart over the Nasdaq 100 index chart,
you can better evaluate any stock's performance relative to the Nasdaq 100 index. |
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Fundamental analysis is the use of economic data to forecast prices. Fundamental analysis includes a great deal of research into the business and affairs of a company and its relative standing and strengths when compared with its competition and future prospects for the sale of its goods and services. You would, at the very least, investigate a company's sales, cash position and cash needs, competitor's product lines, sensitivity to changes in interest rates, and annual financial and cash flow statements. |
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If one is trading with market-marker techniques, there are times when fundamental analysis may become important to Direct Access Electronic Traders. If one is positioning shares, even for a short period of time, having a basic knowledge of the company's business makes sense. If one is trading as a momentum trader, however, fundamental analysis may prove more harmful than beneficial, because if the trader develops an opinion about the company, either good or bad, it may |
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