Technical Analysis - A comparative study between a Moving average and a buy-and-hold strategy

Abstract

Background and research question: There are shared opinions about whether it is possible to forecast the direction of prices through studying previous of market data. According to the efficient market hypothesis, using technical analysis is not an efficient method to predict asset prices, implying that stock market prices are unpredictable. In the light of this and also because there is relatively little research on technical analysis, we find this research question relevant for stock market participants and other that find this interesting. Is it possible to accomplish positive return on the Swedish stock market by using the technical analysis and moving average method in particular as a trading strategy?

- Purpose: The purpose of this study is to determine the efficiency of using the moving average as a trading strategy when forecasting the direction of asset prices of companies listed on Nasdaq Stockholm to exceed the buy-and-hold strategy.

- Conclusion: The price development on OMXS30 suffer from serial correlation and are therefore not possible to predict with help of technical analysis.