An empirical review of the complimentary nature of fundamental and technical analysis techniques based on JSE-listed stocks

摘要

This study contributes to the debate on whether fundamental analysis and technical analysisudtechniques can be used jointly in making investment decisions. Extant literature onudfundamental and technical analysis techniques has frequently focused on analysing each ofudthe valuation techniques independently of one another. In this study we construct a modeludthat integrates both fundamental and technical analysis variables (hybrid model) touddetermine whether the hybrid model can have a superior explanatory power to modelsudbased on each of the valuation techniques in isolation. This study is based on all ordinaryudshares that have been listed on the JSE main board between the 2002 and 2012 fiscal years.udTesting rejects the complimentary nature of fundamental and technical analysis techniquesudby showing that the technical analysis model has a superior explanatory power to both theudhybrid model and the fundamental analysis model. We also demonstrate that JSE-listedudstocks do not exhibit momentum or contrarian effects with respect to return performancesudand that the fundamental analysis variables that play a significant role in explaining stockudprice movements of JSE-listed stocks are the book value per share, cash flow per share,udearnings per share and dividends per share.