Technical analysis uses indicators to analyze market trends and identify reversals. Volume is an important indicator, with higher volume on uptrends and lower volume on downtrends signaling a strong trend. The Dow theory examines primary, secondary, and minor trends in the market over different time periods. Support and resistance levels and moving averages are also used to identify trends. Indicators like short interest, breadth of the market advances vs declines, and odd lot trading can provide additional signals about market strength and upcoming trend changes.

1. TECHNICAL ANALYSIS
TEAM 1
INTRODUCTION
ASSUMPTION
DOW THEORY
INDICATORS
ODD LOT TRADING
AISHWARIYA.G
ASHWINI
INDUMATHI
MEGHA
PUJHA JHA
SUMAN

2. INTRODUCTION
It is a process of identifying trend reversals at
an earlier stage to formulate the buying and
selling strategy. With the help of several
indicators they analyze the relationship
between price- volume and supply-demand for
the overall market and the individual stock.
Volume is favorable on the upswing i.e. The
number of shares traded is greater than before
and on the downside the number of shares
traded dwindles. If it is the other way round,
trend reversals can be expected.

3. ASSUMPTIONS
• The market value of the scrip is determined by
the interaction of supply and demand.
• The market discounts everything. The price of the
security quoted represents the hopes, fears and
inside information received by the market
players.
• The market always moves in trend. Except for
minor deviations, the stock prices move in trends.
• The price may create definite patterns too.

4. • The trend may be either increasing or decreasing.
• Any layman knows the fact that history repeats
itself. It is true to the stock market also. In the rising
market investors’ psychology have up beats and they
purchase the shares in greater volumes.
• The market technician assume that past prices
predict the future.

5. DOW THEORY
• ORGINATED BY CHARLES DOW.
ACCORDING TO DOW “MARKET IS CONSIDERED AS HAVING 3 MOVEMENTS “
 DAY TO DAY
 TWO WEEKS TO A FEW MONTH
 MAIN MOVEMENT COVERING THE LAST 4 YEARS.

6. THESE MOVEMENTS ARE CALLED
 DAILY FLUCTUATIONS – MINOR TRENDS
 SECONDARY MOVEMENTS/ TRENDS
 PRIMARY TRENDS
 THE 3 TRENDS ARE COMPARED TO THE RIPPLES, WAVE AND
TIDES RESPECTIVELY.

7. • THE MARKET WILL EITHER GO UP HIGH [PEAK] OR FALL DOWN
[ TROUGH].
• REPRESENTS THE BEARISH AND BULLISH TREND.

8. THEORY IS
BASED ON THE
HYPOTHESIS
1. NO INDIVIDUAL OR BUYER CAN INFLUENCE THE MAJOR TREND
OF THE MARKET, BUT CAN AFFECT THE DAILY PRICE MOVEMENT BY BUYING
OR SELLING HUGE QUANTUM OF SHARES.
2. MARKET DISCOUNTS EVERYTHING. EVEN THE NATURAL CALAMITIES SUCH AS
DEMONITIZATION, EARTHQUAKES, FIRE , PLAGUES GET’S QUICKLY DICOUNTED
IN THE MARKET.
3. NOT INFALLIBLE.

9. WHAT IS AN UPWARD TREND? FOR A MARKET EACH PEAK AND TROUGH MUST BE
HIGHER THAN THE PREVIOUS POSITION RESPECTIVELY.

10. WHAT IS A DOWNWARD TREND? EACH NEW PEAK AND TROUGH IS LOWER THAN
THE PREVIOUS POSITION RESPECTIVELY

11. PRIMARY TREND
• PRIMARY TREND IS A LONG TERM TREND SHOWING UPWARD OR
DOWNWARD MOVEMENT.
• BULL MARKET SHOWS 3 PEAKS, EACH HIGHER THAN THE PREVIOUS

12. • BEAR MARKET SHOWS 3 TROUGHS, EACH LOWER THAN THE OTHER

13. SECONDARY / INTERMEDIATE TREND
• REPRESENTS THE CORRECTION TO THE PRIMARY MARKET
• IS OF SHORT DURATION -- FEW WEEKS TO A FEW MONTHS.
• MOVES IN THE OPPOSITE DIRECTION.

14. MINOR TRENDS/ TERTIARY MOVES
• MINOR TREND MAY BE IN EITHER DIRECTION ON A DAILY PRICE FLUCTUATIONS.
• TRIES TO CORRECT THE SECONDARY TREND MOVEMENT ,
• BUT POINTING TO THE UNDERLYING PRIMARY TREND

15. SUPPORT AND RESISTANCE LEVEL
• STOCK REACHES DOWN TO A CERTAIN LEVEL AND THEN RISES – SUPPORT LEVEL.
• IN THE SUPPORT LEVEL DEMAND FOR STOCK IS EXPECTED TO PREVENT
FURTHER FALL IN THE PRICE LEVEL.
• STOCK TOUCHES A CERTAIN LEVEL AND THEN DROPS – RESISTANCE LEVEL.
• IN THE RESISTANCE LEVEL SUPPLY OF SHARES WILL BE HIGH AND FURTHER RISE
IN PRICE IS PREVENTED.

16. CRITICISIM OF DOW THEORY
 IT IS NOT A THEORY BUT AN INTERPRETATION OF KNOWN DATA.
 IT IS BASED ON HISTORICAL INTERPRETATION.
 FALLIBLE, AS IT DEPENDS ON THE INTERPRETATIVE ABILITY OF THE
ANALYST.

17. INDICATORS

18. INDICATORS
• Technical indicators are used to find out the direction
of the overall market. The overall market movements
affect the individual share price. aggregate
forecasting is considered to be more reliable than the
individual forecasting. The indicators are price and
volume of trade.

19. VOLUME INDICATORS
• Dow gave special emphasis on volume, volume expands along
with the bull market and narrows down in the bear market. If
the volume falls with rise in price or vice-versa, it is a matter
of concern for the investor and the trend may not persist for a
longer time. technical analyst used volume as an excellent
method of confirming the trend. The market is said to be
bullish when small volume of trade and large volume of trade
follow the fall in price and the rise in price.

20. INDICATORS
SHORT SALES
Short selling is a technical indicator known as short interest.
Short sales refer to the selling of shares that are not owned.
The bears are the short seller who sell now in the hope of
purchasing at a lower price in the future to make profits. The
short seller have to cover up their positions. Short positions of
scrip's are published in the business newspapers. When the
demand for a particular share increases, the outstanding short
positions also increase and it indicates future raise of prices.
These indications cannot be exactly correct, but they show the
general situations.

21. cont...
THE BREADTH OF THE MARKET
The breadth of market is the term often used to study the advances and
decline that have occurred in the stock market. Advances means the
number of shares whose prices have increased from the previous day’s
trading. Declines indicates the number of shares whose prices have fallen
from the previous day’s trading.
The net difference between the number of stock advanced and declined
during the same period is the breadth of the market.
Harvey A .Krow has computed advances and declines as a ratio. He
divided the advances by the declines. Any number greater than 1.00
indicates advances are exceeding decline. Value below 0.99 indicate
declines are more than the advances, a ratio of 0.75 signals short term
buying opportunity. In the later stage of bear market the ratio declines
below 0.5. Except in the first phase of bull market a rise above 1.25
indicates selling opportunities.

22. shares are sold in lot of hundred, shares sold in
smaller lots, fewer than 100 are called odd-lot.
Such buyers are called odd lotters. Odd lot
purchases to odd lot sales( purchase %sales) is
the lot index.
The increase in the odd lot purchase results in
an increase in the index.
Relatively more selling leads to fall in the index.
ODD-LOT TRADING

23. It is generally considered that the professional
investor is more informed and stronger than the
odd lotters.
When the professional investors dominate the
market, the stock market is technically strong. If
odd lotters dominate the market, the market is
considered to be technically weak.
The notion behind is that odd lot purchase is
concentrated at the top of the market cycle and
selling at the bottom. High odd lot purchase
forecasts fall in the market price and low
purchases/sales ratios are presumed to occur
towards the end of the bear market.

24. THANK YOU