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How Do I Perform a Market Analysis?

Market analysis can be performed on the stock market as a whole, sectors, or individual stocks.
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  • Written By: Jim B.
  • Edited By: M. C. Hughes
  • Last Modified Date: 07 September 2014
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Performing market analysis on individual companies and the stock market as a whole requires a great amount of research and knowledge. Some investors try to analyze the market as a whole to find the best time to jump in with their investments. Another way to perform a market analysis is to narrow the focus down to a group of similar stocks known as a sector. If performing analysis on individual stocks, investors can choose either fundamental analysis, which takes a close look at the companies offering the stock, or technical analysis, which concentrates on numbers and statistics.

People who choose to invest in the stock market often so without a thorough knowledge of what they are doing. They may take the advice of others or they may just try their luck blindly, but when large sums of money are at stake, those approaches can be problematic. Luckily, there are techniques that even novice investors can use to narrow down their choices and make the best possible selections for their stocks. A thorough market analysis will certainly help any individual's chances for investment success.

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Many investors choose to perform their market analysis based on the actions of the entire stock market. For such investors, it is important to check out market indexes which track the movement of large groups of stocks. These indexes can give a good idea of where the market stands and in what direction it is headed. Some investors actually feel that the best time to invest is when the market is suffering a lull.

For those who feel that analyzing the whole stock market all at once can be a little overwhelming, market analysis that focuses on a specific sector of the market might be beneficial. The idea behind sector analysis is that a group of similar stocks will all perform in much the same manner. For example, if an investor feels like a boom is due in the technology market, it is a safe bet that individual technology stocks will perform well.

Investors who want to perform market analysis to take the measure of individual stocks have a couple of different choices for how to approach this. Fundamental analysis takes the company behind the stock and puts it under a microscope, attempting to determine its strengths and weaknesses in comparison to its market competitors. Technical analysis, on the other hand, takes much of the guesswork out of analysis by concentrating on the statistics, both in terms of a company's income reports and balance sheets and its market price trends.

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