# Analysis

- Analysis: Pope's own PR team resurrects 'Hitler Youth' uproar - CNN
- By John L. Allen Jr. John L. Allen Jr. is the senior correspondent for the National Catholic Reporter and senior Vatican analyst for CNN. Pope Benedict leaves the Church of Nativity in his pope mobile after celebrating Mass Wednesday in Bethlehem....
- analysis: Blast from the past —Rasul Bakhsh Rais - Daily Times
- Public opinion has turned against the Taliban both in the insurgency-hit areas and in rest of the country. Another positive sign is that the major political parties are on the same page What is happening in the borderlands of Pakistan is blowback from...
- Analysis: Intel PC market control under threat - EETimes.com
- The European Commission fine against Intel Corp. was $1.5 billion but the issue is not about money for the chip maker. It's about influence. The antitrust action Wednesday (May 13) by the European Commission—and the potential for the US government to...
- Washington County quickly changes flawed population growth analysis - OregonLive.com
- Washington County leaders relied on a flawed analysis this week to justify studying a substantial swath of rural land for future suburban homes and businesses. On Monday, about two dozen elected officials and planners didn't catch fundamental problems...
- Stimulus Aid Trickles Out, but States Seek Quicker Relief - New York Times
- By MICHAEL COOPER Nearly three months after President Obama approved a $787 billion economic stimulus package, intended to create or save jobs, the federal government has paid out less than 6 percent of the money, largely in the form of social service...
- IBM offers real time analysis software - Inquirer
- By Sylvie Barak IBM SAYS it will soon launch software able to analyse real time data in, er... real time. The tech giant has turned increasingly towards the lucrative software and services sector as hardware margins have tightened....
- 2009 Preakness Stakes Post Positions Draw analysis - TheOnlinewire
- This is going to be the in depth analysis on which post positions are going to be ideal for each of the Preakness horses taking part in the 134 th running of this race. The results are based on previous starting post positions double with success at...
- Unstrung News Analysis Clearwire Considering WiMax Polygamy - Unstrung
- Clearwire LLC (Nasdaq: CLWR) made it clear that it considers itself to be in the driving seat when picking vendors for its WiMax radio access network and that it will likely take on more partners as it deploys mobile broadband in the US over the next...
- Analysis: Will health care savings add up? - The Associated Press
- WASHINGTON (AP) — The White House trumpeted the news: health care providers taking a $2 trillion scalpel to their costs and pushing the US toward Barack Obama's vision of health coverage for all. But don't line up yet for those insurance cards....
- Analysis: Iran moves to explore offshore Caspian - United Press International
- By JOHN CK DALY, UPI International Correspondent WASHINGTON, May 13 (UPI) -- The biggest diplomatic Gordian knot left over from the 1991 demise of the Soviet Union is how equitably to divide the Caspian Sea, until then partitioned between the Soviet...

## Analysis

Analysis (from Greek ἀνάλυσις, "a breaking up") is the process of breaking a complex topic or substance into smaller parts to gain a better understanding of it. The technique has been applied in the study of mathematics and logic since before Aristotle, though analysis as a formal concept is a relatively recent development.

As a formal concept, the method has variously been ascribed to Ibn al-Haytham, René Descartes (Discourse on the Method) and Galileo Galilei. It has also been ascribed to Isaac Newton, in the form of a practical method of physical discovery (which he did not name or formally describe).

The field of chemistry uses analysis to break down chemical processes and examine chemical reactions between elements of matter. For example, analysis of the concentration of elements is important in managing a nuclear reactor, so nuclear scientists will analyze neutron activation to develop discrete measurements within vast samples. A matrix can have a considerable effect on the way a chemical analysis is conducted and the quality of its results. Analysis can be done manually or with a device. Chemical analysis is an important element of national security among the major world powers with Materials Measurement and Signature Intelligence (MASINT) capabilities.

Chemists can use isotopes to assist analysts with issues in anthropology, archeology, food chemistry, forensics, geology, and a host of other questions of physical science. Analysts can diecsrn the origins of natural and man-made isotopes in the study of environmental radioactivity.

The field of intelligence employs analysts to break down and understand a wide array of questions. intelligence agencies may use heuristics, inductive and deductive reasoning, social network analysis, dynamic network analysis, link analysis, and brainstorming to sort through problems they face. Military intelligence may explore issues through the use of game theory, Red Teaming, and wargaming. Signals intelligence applies cryptanalysis and frequency analysis to break codes and ciphers. Business intelligence applies theories of competitive intelligence analysis and competitor analysis to resolve questions in the marketplace. Law enforcement intelligence applies a number of theories in crime analysis.

Linguistics began with the analysis of Sanskrit and Tamil; today it looks at individual languages and language in general. It breaks language down and analyses its component parts: theory, sounds and their meaning, utterance usage, word origins, the history of words, the meaning of words and word combinations, sentence construction, basic construction beyond the sentence level, stylistics, and conversation. It examines the above using statistics and modeling, and semantics. It analyses language in context of anthropology, biology, evolution, geography, history, neurology, psychology, and sociology. It also takes the applied approach, looking at individual language development and clinical issues.

Literary theory is the analysis of literature. Some say that literary criticism is a subset of literary theory. The focus can be as diverse as the analysis of Homer or Freud. This is mainly to do with the breaking up of a topic to make it easier to understand.

Mathematical analysis can be applied in the study of classical concepts of real numbers, such as the complex variables, trigonometric functions, and algorithms, or of non-classical concepts like constructivism, harmonics, infinity, and vectors.

## Technical analysis

Technical analysis is a security analysis technique that claims the ability to forecast the future direction of prices through the study of past market data, primarily price and volume. In its purest form, technical analysis considers only the actual price and volume behavior of the market or instrument. Technical analysts, sometimes called "chartists", may employ models and trading rules based on price and volume transformations, such as the relative strength index, moving averages, regressions, inter-market and intra-market price correlations, cycles or, classically, through recognition of chart patterns.

Technical analysis stands in distinction to fundamental analysis. Technical analysis "ignores" the actual nature of the company, market, currency or commodity and is based solely on "the charts," that is to say price and volume information, whereas fundamental analysis does look at the actual facts of the company, market, currency or commodity. For example, any large brokerage, trading group, or financial institution will typically have both a technical analysis and fundamental analysis team.

Technical analysis is widely used among traders and financial professionals, and is very often used by active day traders, market makers, and pit traders. In the 1960s and 1970s it was widely discredited by academic mathematics. In a recent review, Irwin and Park reported that 56 of 95 modern studies found it produces positive results, but noted that many of the positive results were rendered dubious by issues such as data snooping so that the evidence in support of technical analysis was inconclusive; it is still considered by many academics to be pseudoscience. Academics such as Eugene Fama say the evidence for technical analysis is sparse and is inconsistent with the weak form of the efficient market hypothesis. Users hold that even if technical analysis cannot predict the future, it helps to identify trading opportunities.

In the foreign exchange markets, its use may be more widespread than fundamental analysis. While some isolated studies have indicated that technical trading rules might lead to consistent returns in the period prior to 1987, most academic work has focused on the nature of the anomalous position of the foreign exchange market. It is speculated that this anomaly is due to central bank intervention.

Technical analysts (or technicians) seek to identify price patterns and trends in financial markets and attempt to exploit those patterns. While technicians use various methods and tools, the study of price charts is primary.

Technicians especially search for archetypal patterns, such as the well-known head and shoulders or double top reversal patterns, study indicators such as moving averages, and look for forms such as lines of support, resistance, channels, and more obscure formations such as flags, pennants or balance days.

Critics argue that these 'patterns' are simply random effects on which humans impose causation. Critics state that humans see patterns that aren't there and then ascribe value to them.

Technical analysts also extensively use indicators, which are typically mathematical transformations of price or volume. These indicators are used to help determine whether an asset is trending, and if it is, its price direction. Technicians also look for relationships between price, volume and, in the case of futures, open interest. Examples include the relative strength index, and MACD. Other avenues of study include correlations between changes in options (implied volatility) and put/call ratios with price. Other technicians include sentiment indicators, such as Put/Call ratios and Implied Volatility in their analysis.

Technicians seek to forecast price movements such that large gains from successful trades exceed more numerous but smaller losing trades, producing positive returns in the long run through proper risk control and money management.

There are several schools of technical analysis. Adherents of different schools (for example, candlestick charting, Dow Theory, and Elliott wave theory) may ignore the other approaches, yet many traders combine elements from more than one school. Technical analysts use judgment gained from experience to decide which pattern a particular instrument reflects at a given time, and what the interpretation of that pattern should be.

Technical analysis is frequently contrasted with fundamental analysis, the study of economic factors that influence prices in financial markets. Technical analysis holds that prices already reflect all such influences before investors are aware of them, hence the study of price action alone. Some traders use technical or fundamental analysis exclusively, while others use both types to make trading decisions.

The principles of technical analysis derive from the observation of financial markets over hundreds of years. The oldest known example of technical analysis was a method developed by Homma Munehisa during early 18th century which evolved into the use of candlestick techniques, and is today a main charting tool.

Dow Theory is based on the collected writings of Dow Jones co-founder and editor Charles Dow, and inspired the use and development of modern technical analysis from the end of the 19th century. Other pioneers of analysis techniques include Ralph Nelson Elliott and William Delbert Gann who developed their respective techniques in the early 20th century.

Many more technical tools and theories have been developed and enhanced in recent decades, with an increasing emphasis on computer-assisted techniques.

Technicians say that a market's price reflects all relevant information, so their analysis looks more at "internals" than at "externals" such as news events. Price action also tends to repeat itself because investors collectively tend toward patterned behavior – hence technicians' focus on identifiable trends and conditions.

On most of the sizable return days ...the information that the press cites as the cause of the market move is not particularly important. Press reports on adjacent days also fail to reveal any convincing accounts of why future profits or discount rates might have changed. Our inability to identify the fundamental shocks that accounted for these significant market moves is difficult to reconcile with the view that such shocks account for most of the variation in stock returns.

Technical analysts believe that prices trend. Technicians say that markets trend up, down, or sideways (flat). This basic definition of price trends is the one put forward by Dow Theory.

An example of a security that had an apparent trend is AOL from November 2001 through August 2002. A technical analyst or trend follower recognizing this trend would look for opportunities to sell this security. AOL consistently moves downward in price. Each time the stock rose, sellers would enter the market and sell the stock; hence the "zig-zag" movement in the price. The series of "lower highs" and "lower lows" is a tell tale sign of a stock in a down trend. In other words, each time the stock edged lower, it fell below its previous relative low price. Each time the stock moved higher, it could not reach the level of its previous relative high price.

Note that the sequence of lower lows and lower highs did not begin until August. Then AOL makes a low price that doesn't pierce the relative low set earlier in the month. Later in the same month, the stock makes a relative high equal to the most recent relative high. In this a technician sees strong indications that the down trend is at least pausing and possibly ending, and would likely stop actively selling the stock at that point.

Technical analysts believe that investors collectively repeat the behavior of the investors that preceded them. "Everyone wants in on the next Microsoft," "If this stock ever gets to $50 again, I will buy it," "This company's technology will revolutionize its industry, therefore this stock will skyrocket" – these are all examples of investor sentiment repeating itself. To a technician, the emotions in the market may be irrational, but they exist. Because investor behavior repeats itself so often, technicians believe that recognizable (and predictable) price patterns will develop on a chart.

Technical analysis is not limited to charting, but it always considers price trends. For example, many technicians monitor surveys of investor sentiment. These surveys gauge the attitude of market participants, specifically whether they are bearish or bullish. Technicians use these surveys to help determine whether a trend will continue or if a reversal could develop; they are most likely to anticipate a change when the surveys report extreme investor sentiment. Surveys that show overwhelming bullishness, for example, are evidence that an uptrend may reverse – the premise being that if most investors are bullish they have already bought the market (anticipating higher prices). And because most investors are bullish and invested, one assumes that few buyers remain. This leaves more potential sellers than buyers, despite the bullish sentiment. This suggests that prices will trend down, and is an example of contrarian trading.

Globally, the industry is represented by The International Federation of Technical Analysts (IFTA). In the United States, there are two national organizations: the Market Technicians Association (MTA), and the American Association of Professional Technical Analysts (AAPTA). The United States is also represented by the Technical Security Analysts Association of San Francisco TSAASF. In Great Britain, the industry is represented by the Society of Technical analysts STA. The In Canada the industry is represented by the Canadian Society of Technical Analysts. Additional major professional technical analysis organizations are noted in the External Links section below.

Many non-arbitrage algorithmic trading systems rely on the idea of trend-following, as do many hedge funds. A relatively recent trend, both in research and industrial practice, has been the development of increasingly sophisticated automated trading strategies. These often rely on underlying technical analysis principles (see algorithmic trading article for an overview).

Since the early 1990s when the first practically usable types emerged, artificial neural networks (ANNs) have rapidly grown in popularity. They are artificial intelligence adaptive software systems that have been inspired by how biological neural networks work. They are used because they can learn to detect complex patterns in data. In mathematical terms, they are universal function approximators, meaning that given the right data and configured correctly, they can capture and model any input-output relationships. This not only removes the need for human interpretation of charts or the series of rules for generating entry/exit signals, but also provides a bridge to fundamental analysis, as the variables used in fundamental analysis can be used as input.

As ANNs are essentially non-linear statistical models, their accuracy and prediction capabilities can be both mathematically and empirically tested. In various studies, authors have claimed that neural networks used for generating trading signals given various technical and fundamental inputs have significantly outperformed buy-hold strategies as well as traditional linear technical analysis methods when combined with rule-based expert systems.

While the advanced mathematical nature of such adaptive systems has kept neural networks for financial analysis mostly within academic research circles, in recent years more user friendly neural network software has made the technology more accessible to traders. However, large-scale application is problematic because of the problem of matching the correct neural topology to the market being studied.

Rule-based trading is an approach intended to create trading plans using strict and clear-cut rules. Unlike some other technical methods and the approach of fundamental analysis, it defines a set of rules that determine all trades, leaving minimal discretion. The theory behind this approach is that by following a distinct set of trading rules you will reduce the number of poor decisions, which are often emotion based.

For instance, a trader might make a set of rules stating that he will take a long position whenever the price of a particular instrument closes above its 50-day moving average, and shorting it whenever it drops below.

John Murphy says that the principal sources of information available to technicians are price, volume and open interest. Other data, such as indicators and sentiment analysis, are considered secondary.

However, many technical analysts reach outside pure technical analysis, combining other market forecast methods with their technical work. One such approach, fusion analysis, overlays fundamental analysis with technical, in an attempt to improve portfolio manager performance. Another advocate for this approach is John Bollinger, who coined the term rational analysis for the intersection of technical analysis and fundamental analysis.

Technical analysis is also often combined with quantitative analysis and economics. For example, neural networks may be used to help identify intermarket relationships. A few market forecasters combine financial astrology with technical analysis. Chris Carolan's article "Autumn Panics and Calendar Phenomenon", which won the Market Technicians Association Dow Award for best technical analysis paper in 1998, demonstrates how technical analysis and lunar cycles can be combined. It is worth noting, however, that some of the calendar related phenomena, such as the January effect in the stock market, have been associated with tax and accounting related reasons.

Investor and newsletter polls, and magazine cover sentiment indicators, are also used by technical analysts.

Overlays are generally superimposed over the main price chart.

These indicators are generally shown below or above the main price chart.

An influential 1992 study by Brock et al. which appeared to find support for technical trading rules was tested for data snooping and other problems in 1999; the sample covered by Brock et al was robust to data snooping.

Subsequently, a comprehensive study of the question by Amsterdam economist Gerwin Griffioen concludes that: "for the U.S., Japanese and most Western European stock market indices the recursive out-of-sample forecasting procedure does not show to be profitable, after implementing little transaction costs. Moreover, for sufficiently high transaction costs it is found, by estimating CAPMs, that technical trading shows no statistically significant risk-corrected out-of-sample forecasting power for almost all of the stock market indices." Transaction costs are particularly applicable to "momentum strategies"; a comprehensive 1996 review of the data and studies concluded that even small transaction costs would lead to an inability to capture any excess from such strategies.

In 2008 Dr. Emanuele Canegrati, in his unpublished paper "A Non-random Walk Down Canary Wharf" conducted the largest econometric study ever made to demostrate the validity of technical analysis for the first biggest companies listed on the FTSE. By analysing more than 70 technical indicators, some of them almost unknown until then, the study demonstrated how market returns can be predicted, at least to a certain degree, by some technical indicators.

The efficient market hypothesis (EMH) contradicts the basic tenets of technical analysis by stating that past prices cannot be used to profitably predict future prices. Thus it holds that technical analysis cannot be effective. Economist Eugene Fama published the seminal paper on the EMH in the Journal of Finance in 1970, and said "In short, the evidence in support of the efficient markets model is extensive, and (somewhat uniquely in economics) contradictory evidence is sparse." EMH advocates say that if prices quickly reflect all relevant information, no method (including technical analysis) can "beat the market." Developments which influence prices occur randomly and are unknowable in advance. The vast majority of academic papers find that technical trading rules, after consideration for trading costs, are not profitable.

By considering the impact of emotions, cognitive errors, irrational preferences, and the dynamics of group behavior, behavioral finance offers succinct explanations of excess market volatility as well as the excess returns earned by stale information strategies.... cognitive errors may also explain the existence of market inefficiencies that spawn the systematic price movements that allow objective TA methods to work.

EMH advocates reply that while individual market participants do not always act rationally (or have complete information), their aggregate decisions balance each other, resulting in a rational outcome (optimists who buy stock and bid the price higher are countered by pessimists who sell their stock, which keeps the price in equilibrium). Likewise, complete information is reflected in the price because all market participants bring their own individual, but incomplete, knowledge together in the market.

The random walk hypothesis may be derived from the weak-form efficient markets hypothesis, which is based on the assumption that market participants take full account of any information contained in past price movements (but not necessarily other public information). In his book A Random Walk Down Wall Street, Princeton economist Burton Malkiel said that technical forecasting tools such as pattern analysis must ultimately be self-defeating: "The problem is that once such a regularity is known to market participants, people will act in such a way that prevents it from happening in the future." In a 1999 response to Malkiel, Andrew Lo and Craig McKinlay collected empirical papers that questioned the hypothesis' applicability that suggested a non-random and possibly predictive component to stock price movement, though they were careful to point out that rejecting random walk does not necessarily invalidate EMH.

Technicians say the EMH and random walk theories both ignore the realities of markets, in that participants are not completely rational and that current price moves are not independent of previous moves. Critics reply that one can find virtually any chart pattern after the fact, but that this does not prove that such patterns are predictable. Technicians maintain that both theories would also invalidate numerous other trading strategies such as index arbitrage, statistical arbitrage and many other trading systems.

## Real analysis

Real analysis, or theory of functions of a real variable is a branch of mathematical analysis dealing with the set of real numbers. In particular, it deals with the analytic properties of real functions and sequences, including convergence and limits of sequences of real numbers, the calculus of the real numbers, and continuity, smoothness and related properties of real-valued functions.

Real analysis is an area of analysis, which studies concepts such as sequences and their limits, continuity, differentiation, integration and sequences of functions. However, the scope of real analysis is restricted to the real numbers, and this defines the range of tools available. Real analysis is closely related to complex analysis, which studies broadly the same properties of complex numbers. In complex analysis, it is natural to define differentiation via holomorphic functions, which have a number of useful properties, such as repeated differentiability, expressability as power series, and satisfying the Cauchy integral formula.

However, in real analysis, it is usually more natural to consider differentiable, smooth, or harmonic functions, which are more widely applicable, but may lack some more powerful properties of holomorphic functions. Also results such as the fundamental theorem of algebra are simpler when expressed in terms of complex numbers. On the other hand, the real numbers have several important analytic properties of their own. They are totally ordered, and have the least upper bound property, and these properties lead to a number of important results in real analysis, such as the monotone convergence theorem, the intermediate value theorem and the mean value theorem.

However, while results in real analysis are generally stated for real numbers, they may still be used in other areas of mathematics - such as by considering real and imaginary parts of complex sequences, or by pointwise evaluation of operator sequences. Conversely, techniques from other areas are often used in real analysis - such as evaluation of real integrals by residue calculus.

The foundation of real analysis is the construction of the real numbers from the rational numbers, usually either by Dedekind cuts, or by completion of Cauchy sequences. Key concepts in real analysis are real sequences and their limits, continuity, differentiation, and integration. Real analysis is also used as a starting point for other areas of analysis, such as complex analysis, functional analysis, and harmonic analysis, as well as motivating the development of topology, and as a tool in other areas, such as applied mathematics.

Important results include the Bolzano-Weierstrass and Heine-Borel theorems, the intermediate value theorem and mean value theorem, the fundamental theorem of calculus, and the monotone convergence theorem.