《IS TECHNICAL ANALYSIS USEFUL FOR STOCK TRADERS IN CHINA 2016》.pdf

Pacific Economic Review, 11: 4 (2006) pp. 477–488 doi: 10.1111/j.1468-0106.2006.00329.x Authors running head: k.-j. chen and x.-m. li SHORT TITLE RUNNING HEAD : XXXX IS TECHNICAL ANALYSIS USEFUL FOR STOCK TRADERS IN CHINA? EVIDENCE FROM THE SZSE COMPONENT A-SHARE INDEX KONG-JUN CHEN Guangdong University of Finance, China X -M L * Department of Commerce, Massey University, New Zealand IAO ING I Abstract. This paper uses daily stock prices and the trading volume of 39 constituent companies in the SZSE Component A-Share Index on the Shenzhen Stock Exchange to examine the usefulness of technical analysis. It finds very weak evidence to support the view that traders and/or technical analysts can learn more about the future pattern of returns by actively using volume in conjunction with returns than those who only watch price movements. 1.  In China’s stock markets, technical analysis is a more pervasive activity not only than fundamental analysis, but also than in other nations’ stock markets. Various media are congested with comments on, and predictions of, the future price movements for the market as a whole and for individual stocks. Nearly every evening and in every place, radio and television programmes invite chartists and technical analysts to answer questions from individual stock investors and even give them advice on which stock to buy or sell. These security analysts, as well as many other stock commentators and newsletter writers, base their recommendations on technical analysis. Since the mid-1990s, stock manipulation has been a prevalent phenomenon in China, and many investors have endeavoured to follow a handful of powerful stock manipulators. With such manipulators dominant