FUNDAMENTAL ANALYSIS

Security analysis that seeks to detect misvalued securities through an analysis of the firm's business prospects. Research analysis often focuses on earnings , dividend prospects, expectations for future interest rates , and risk evaluation of the firm. Used in the context of general equities. Antithesis of technical analysis . In macroeconomic analysis, information such as interest rates, G.N.P. , inflation, unemployment, and inventories are used to predict the direction of the economy, and henceforth the Stock market . In microeconomic analysis, information such as balance sheet, income statement, products, management and other market items are used to forecast a company's imminent success or failure, and hence the future price action of the stock.