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want to pay more for that stock. Technical analysis could help investor to time the entry
or exit point.
A study by Hester (2004) about the relationship between earnings and stock prices has
been weakening tells that the quality of earning has been dropping. There are several
factors that causes the earning quality has been dropping which are the increases of
losses reported by individual company, then the “special items” has been increased such
as assets write downs, merger and acquisition. The accounting rules that become more
conservative can also be the one factor that makes the earning becomes less reliable.
Also, there is an issue that the increase of earning management influences the drop of
earning quality.
This study has benefits to different groups such as:
1 The author
The author will get a lot of knowledge about the PE ratio, moving average as the
indicator to buy or sell the stocks
2. Investors
This study will help investors to get more understanding about the PE ratio and moving
average so they can make a right decision before buying or selling the stock
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