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Mining online data

Mining online data

With the proliferation of new internet users worldwide, investors in the financial markets have access to a number of financial information websites that provide business news and market data on stocks, bonds, commodities, currencies and mutual funds.

The most prominent are:
marketwatch.com, bloomberg.com, finance.yahoo.com, and cnbc.com.

The latest business and financial news headlines are boldly posted and most display a “breaking news” section. Movements in main stock indexes are provided either real time or are frequently updated.  

Stock indexes of national markets are generally representative of how the overall market is performing.  The Dow Jones Industrial Average of the United States is perhaps the most widely watched index in the
world. It is a price-weighted average of what is considered to be 30 large-cap stocks which are leaders of the economy. A price-weighted index is the sum of all the prices of the stocks in the index, divided by the number of stocks in the index. A divisor is calculated instead of just dividing by the number of stocks to account for stock splits and dividends.

The other main index in the US is the S&P 500.The S&P 500 is a free-float market capitalisation-weighted index of 500 of the largest traded companies on the New York Stock Exchange and the NASDAQ.

Companies with higher market capitalisation, the share price times the number of “free float” shares outstanding, have a greater weighting and thus effect on the index than smaller cap shares. Other relevant international indexes include the FTSE 100, the 100 most highly capitalised companies on the London Stock Exchange, and the Nikkei 225, which comprises the top 225 blue chip stocks on the Tokyo Stock Exchange.

If an investor is interested in pricing, market and analytical data for a particular stock, they simply need input the stock symbol in the “search” section. The webpage for the stock will display the current market price, the day’s change in price, the high and low price for the day, and the 52 week high. This is relevant information as the investor can assess where the stock is trading within the day and year and if it is an appropriate entry point to trade. A line chart typically is provided, plotting price data for the day and allowing the investor to view historical data since the stock began trading.

The company’s market capitalisation, which is equal to the share price times the number of shares outstanding, is also provided. This is important as it represents the market’s consensus of the company’s value. This is different than book value which is the company’s net asset accounting value (asset-minus liabilities).

The trading volume for the day is noted as is the average trading volume. Volume is the number of shares traded. It is very important in technical analysis as it is used to confirm trends and chart patterns. If the stock is in a bullish trend, volume generally expands on rallies and contracts on declines. If in a bearish phase, volume generally expands on declines and contracts on rallies. Other data such on dividend yield, earnings per share, and price-earnings ratio are also displayed.

Next week we will look at chart patterns and interpreting their meaning.

Anthony Galliano is the chief executive officer at Cambodian Investment Management.
[email protected]

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