FIN 402 MASTER 1 Predictable World / fin402master.com FIN 402 MASTER 1 Predictable World / fin402master. | Page 41

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FIN 402 Week 3 AssignmentCase Problem 9.2 Deb Takes
Measure of the Market
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Case Problem 9.2 Deb Takes Measure of the Market Several months
ago, Deb Forrester received a substantial sum of money from the
estate of her late aunt. Deb initially placed the money in a savings
account because she was not sure what to do with it. Since then,
however, she has taken a course in investments at the local university.
The textbook for the course was, in fact, this one, and the class just
completed this chapter. Excited about what she has learned in class,
Deb has decided that she definitely wants to invest in stocks. But
before she does, she wants to use her newfound knowledge in
technical analysis to determine whether now would be a good time to
enter the market. Deb has decided to use all of the following measures
to help her determine if now is, indeed, a good time to start putting
money into the stock market: • Advance-decline line •
New
highs-new lows indicator (Assume the current 10-day moving average
is 0 and the last 10 periods were each 0.) • Arms index • Mutual
fund cash ratio Deb goes to the Internet and, after considerable effort,
is able to put together the accompanying table of data. Questions a.
Based on the data presented in the table, calculate a value
(where appropriate) for periods 1 through 5, for each of the four
measures listed above. Chart your results, where applicable. b.
Discuss each measure individually and note what it indicates for
the market, as it now stands. Taken collectively, what do these four
measures indicate about the current state of the market? According to