Financial Management: Theory & Practice
16th Edition
ISBN: 9781337909730
Author: Brigham
Publisher: Cengage
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Business 123 Introduction to Investments
May I please have the solution for the following assigment?
Thank you so much!
Transcribed Image Text:There are many different technical indicators. In this assignment, we will concentrate on just one, the simple
moving average. However, feel free to investigate and use whatever technical indicators you find and desire to
use. When the 50-day moving average goes above the 200-day moving average, that is supposed to be a bullish
sign that the stock price is going to rise. Likewise, when the 50-day moving average goes below the 200-day
moving average, that supposedly means the stock price is going to fall. These events are called "crosses" or
"inflection points." The supposedly bullish event is called the "golden cross" and the supposedly bearish event
is called a "death cross."
Research Citigroup (C) at Yahoo or Marketwatch or any other website offering free charting and technical
analysis and research. See the Technical Analysis presentation for Yahoo. If you find another website that offers
free technical analysis and if you think it is far superior to Yahoo or Marketwatch, please contact me. Choose a
5-year (5y) chart and then add both a 50-day simple moving average and a 200-day simple moving average.
Sample Analyses: (Choose these or make up your own. Read the Disclaimer below.)
1) In June of 2020, the 50-day moving average went below the 200-day moving average. That is supposed to be
a sell signal. Was this a good time to sell?
2) In September of 2021, the 50-day moving average went above the 200-day moving average. Was this a good
time to buy?
3) In May of 2022, the 50-day moving average went below the 200-day moving average. Was this a good time
to sell?
4) Comment on the current relationship of the 50-day moving average and the 200-day moving average. What
about the past few weeks or months? What would you do now? Comment on whether the stock is a buy, sell, or
neutral.
5) Add the 15-day moving average. Compare the 15-day moving average with the 50-day moving average.
Look at the same time periods as #1, #2, and #3 above. Was the relationship of the 15-day moving average and
50-day moving average a better indicator of the near-term future price movements of the stock?
6) Do the same for a stock of your choice. (Other suggested stocks: BAC, K, KSS, HMC, PM, TM, VZ, X)
7) Comment on the effectiveness of the simple moving average technical indicators. Would you try buying and
selling stocks based on technical analysis? By the way, what do you think the D's across the bottom of the chart signify?
Disclaimer: Remember that with technical analysis, you do not have to actually know what you are doing. You just have to
convince others that you know what you are doing! So do your best to convince me that you know what you are doing even
though you don't. Since I also don't know what I am doing when it comes to technical analysis, it will be easy to convince
me. Who knows? You may find that you are good at convincing others that you know what you are doing, even though you
don't. And if this is true, you can make a whole lot of money in the Wonderful Wild World of Technical Analysis! Could
there be a $500,000 per year salary (plus bonuses!) waiting for you on Wall Street? Hmmm?
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