Short-term Technical Predictive Ability in the Taipei Stock Market

Abstract

Based on the principle of supply and demand, the rules of marginal change, the hypothesis of log-normal distribution, and the two-dimensional rules of performance evaluation, an effective WINDEX can be created to determine the momentum behind the price or index movement. Accordingly, by using the Taipei stock market as an example, not only a simple bounded WINDEX approach can be practiced to generate significant performance for the sample stock, but also an early warning system can be effectively constructed in the market. The phenomenon of knowledge asymmetry is a natural outcome of professional cooperation. Constructing an appropriate WINDEX involves its own professional knowledge. It involves little regarding market efficiency in information and more regarding knowledge asymmetry. Once this type of professional knowledge begins to spill over, its effect must be marginally diminished." plane. The next task is merging both measures into the momentum of price movement, and this task must correspond to the method of evaluating stock performance. When changes in either E or  can be independent and possibly contradictive, a standard tool of evaluation must be applied to deliver a final conclusion. Two-dimensional Rules of DominanceBecause both  and E are heterogeneous products, the easiest way to merge them is to apply division (Yu, 2012).

Microeconomic Natural Law, Portfolio Principle and Economics Textbooks

“…In practice, when the asset to be analyzed is rational 10 , its WINDEX can be applied to create short-term technical predictive ability [4]. By contrast, fundamental analyses can have long-term predictive ability.…”