Stock Price History
By: Anne Durrell
Stocks that have performed better over the past year, for instance, attempted to actually hold the majority of the market's other top performing securities. By looking at the previous stock price history, we can better see the trends for a 3-month period, a 6-month period, and even a 12-month period.
When surveying stock price history, investors need to note the average prices at which particular stocks traded over the previous 50 and 200-day periods. These are called "moving averages."
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In surveying stock price history, these moving averages tend give a support or floor for all the stocks found trading greater than them, and also provide a ceiling, called a resistance, for all of the stocks that have been trading underneath them.
Thus stocks that have sunk below these supports or floors are a forewarning of further decline whereas stocks that rose above the ceiling or resistance are very capable of greater new highs.
Stock price history then allows the investor to arrange targets for most of their stock portfolio by using the history to estimate the future earnings for each of their shares then they can apply a P/E ratio, which stands for "multiple" or the price-to-earnings.
It stands to reason that the companies that have had the best consistent earnings or have shown strongest growth will be given the maximum P/E multiples.
From this application of a stock price history, the investor can calculate the price targets for the following fiscal year, and even the current year, by application of the stock's current multiple in relation to the average professional's estimates. As you can see, the numbers applied to the history can easily spell success to an average investor.
Should investors wish to calculate an alternating target price based on their feelings or beliefs, then that investor should then apply the average PE multiple to the common expert analyst's earnings educated guess for that particular company in those periods.
That's the beauty of analyzing a stock price history of any stock. History is the basis for all the growth as well as the downfall of all stocks. Investors can then estimate the level of agreement in regard to a stock's prospects among all the analysts by simply calculating the array between the most pessimistic and the most optimistic estimates.
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