Assessment Task: carry out fundamental analysis and technical analysis and reflect on finance lab simulation and trading.
Section A: Fundamental Analysis (indicative word count: 1500)
Investment analysts often do not agree on the intrinsic value of a company’s stock. Select a stock, do research online and answer the following questions based on fundamental analysis of the company, its sector, and the economy.
What are the arguments in favour of higher share price for your chosen company’s stock?
What are the arguments for a bearish outlook?
Do you think your chosen company’s stock is currently overvalued, fairly valued, or undervalued? explain.
Open a free seeking alpha user account (https://seekingalpha.com/). No need for subscription.
Read recent articles about your chosen company and summarize arguments for both bullish (point a) and bearish (point b) predictions for the future performance of your chosen stock.
For point c, carry out SWOT analysis that include the analysis of the company, its sector and the economy and make your own judgement on whether its stock is currently overpriced, underpriced or fairly priced. Make good use of trailing P/E ratio and forward P/E ratio. (Teaching slides for session fourteen, fifteen, sixteen, and seventeen)
Section B: Technical Analysis (indicative word count: 500)
Choose a financial security/asset and make your prediction of its future price movement using technical analysis tools/techniques that are available to you, including price actions, candlestick analysis, chart patterns, moving averages and indicators.
Carry out technical analysis on a chart (e.g. draw support/resistance lines, indicate breakout/signals/divergences etc on the chart) to make your price forecast.
Provide descriptions/explanations of trading signals identified and make price prediction based on your technical analysis result.
You can choose your own stock for this task. Alternative, you can analyse the chart below.
Section C: Reflection on Finance Lab simulation and Trading (indicative word count: 1000)
In this section, you will reflect upon your experience of trading with globalinvestor simulation.
Use data available from simulation runs using Finance Lab to discuss
your trading performances (profits/losses, rankings, etc)
the potential impact of ‘human’ behavioural factors (that you have encountered/ fallen victim to) on decision making (website https://www.ig.com/uk/research/psychology-in-trading )
your strengths and weaknesses as a trader (Session thirteen Trading basics—Table:Differences between Successful and Unsuccessful Traders)
Word count
Your report should be 3,000 words (+/- 10%) and the word count, excluding the list of references, should be shown at the end.
