Definition: What is Stock Market Analysis?


Stock market analysis refers to all the activities you might undertake – research, assessments, comparisons, predictions and forecasts – to determine whether a particular stock is worth investing in. 

However, as the term implies, stock market analysis is not necessarily restricted to the study of an individual stock – its scope is often much broader. 



Scope and Objective

As part of their analysis, stock market analysts often study the nature and behavior of the entire stock market.

They may focus on specific sectors of the market, or may hone in on a specific investment instrument – Bond, ETF, Stock, etc. 

Stock Market Analysis

Image Source: Stock Market Analysis

The objective of conducting stock market analysis is to ensure that you know as much as possible about a specific investment instrument BEFORE putting money into it. 

Additionally, such analysis continues throughout the duration of the investment so that as an investor, you know when to pull out of an investment.  



Types of Stock Market Analysis

Stock market analysis may be done on two levels. 

  1. Technical Analysis focuses on analyzing trends, patterns and signals, mainly from trading data that is related to the target investment opportunity. 
  2. Fundamental Stock Market Analysis on the other hand uses investment specific data to judge the soundness of the investment. For example: Industry performance data, company financial data, or sector economic outlook.


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