Beginner's Guide: How To Analyze Stock Charts With Finviz

Finviz.com is a powerful, free tool that provides a wealth of information for stock market analysis. While it might seem overwhelming at first, understanding how to use Finviz to analyze stock charts can significantly improve your investment decisions. This guide will walk you through the essential features for chart analysis, helping you identify potential opportunities and manage risk. We'll focus on the key areas that beginners should prioritize to gain a solid foundation.

This isn't about becoming a technical analysis guru overnight. It's about learning how to quickly and effectively use Finviz to get a visual overview of a stock's performance, identify trends, and make more informed choices. Let's dive in!

1. Accessing Stock Charts on Finviz

The first step is, of course, finding the chart you want to analyze. Here's how:

  • Ticker Search: The most direct method is to simply enter the stock ticker symbol (e.g., AAPL for Apple) in the search bar located at the top of the Finviz homepage.
  • Homepage Heatmaps: Finviz’s homepage displays heatmaps showing the performance of different sectors and industries. Clicking on a sector or industry will lead you to a list of stocks within that category, allowing you to then select a specific ticker.
  • Screener Results: If you're using the Finviz stock screener (which we won't cover in depth here, but is a great tool for finding stocks meeting specific criteria), clicking on a ticker from the screener results will take you to its chart.

Once you've selected a stock, you'll be taken to its quote page. The chart is prominently displayed in the upper-left corner.

2. Understanding the Basic Chart Elements

Before you start interpreting the chart, it's crucial to understand its basic components:

  • Price Bars/Candlesticks: These represent the price movement over a specific period (e.g., a day, week, or month). Candlesticks are generally preferred as they provide more information. A green or white candlestick indicates that the closing price was higher than the opening price (an up day), while a red or black candlestick means the closing price was lower (a down day).
  • Volume: The volume bars at the bottom of the chart represent the number of shares traded during a specific period. Higher volume can indicate stronger conviction behind a price move.
  • Timeframe: You can adjust the timeframe of the chart (e.g., daily, weekly, monthly) using the buttons above the chart. For beginners, starting with a daily or weekly chart is recommended.
  • Price Scale: The vertical axis shows the price of the stock.

3. Identifying Trends

One of the primary goals of chart analysis is to identify trends. Trends can be your friend, helping you understand the general direction a stock is heading. Here's how Finviz can help:

  • Visual Inspection: Look for patterns of higher highs and higher lows (uptrend) or lower highs and lower lows (downtrend). A sideways trend shows prices moving within a range.
  • Moving Averages (SMA/EMA): Finviz allows you to overlay moving averages on the chart. Common moving averages include the 50-day and 200-day moving averages. To add these, click on the "SMA" or "EMA" buttons above the chart and select the period (e.g., "SMA 50").
    • Uptrend Confirmation: If the price is consistently above the moving average, it can suggest an uptrend.
    • Downtrend Confirmation: If the price is consistently below the moving average, it can suggest a downtrend.
    • Crossovers: A "golden cross" (50-day SMA crossing above the 200-day SMA) is often seen as a bullish signal, while a "death cross" (50-day SMA crossing below the 200-day SMA) is often seen as a bearish signal. However, remember that these are lagging indicators and should be used in conjunction with other analysis.

4. Support and Resistance Levels

Support and resistance levels are key areas on a chart where the price has historically tended to bounce (support) or reverse (resistance). Identifying these levels can help you determine potential entry and exit points.

  • Visual Inspection: Look for areas where the price has repeatedly bounced off a certain level (support) or struggled to break through a certain level (resistance).
  • Horizontal Lines: You can draw horizontal lines on the chart (mentally or using charting software) to mark these levels. Finviz doesn't have built-in drawing tools, so you'll need to do this visually or use another platform alongside Finviz.
  • Breakouts and Breakdowns: A breakout occurs when the price breaks above a resistance level, potentially signaling a continuation of the uptrend. A breakdown occurs when the price breaks below a support level, potentially signaling a continuation of the downtrend.

5. Key Indicators Available on Finviz

Finviz offers several indicators that can be overlaid on the chart. While it's easy to get overwhelmed, here are a few useful ones for beginners:

  • Simple Moving Average (SMA) & Exponential Moving Average (EMA): As mentioned earlier, these smooth out price data and help identify trends. Experiment with different periods (e.g., 20-day, 50-day, 200-day). EMA gives more weight to recent prices.
  • Relative Strength Index (RSI): The RSI is a momentum indicator that measures the magnitude of recent price changes to evaluate overbought or oversold conditions in the price of a stock. RSI values above 70 are often considered overbought, while values below 30 are often considered oversold.
  • Moving Average Convergence Divergence (MACD): The MACD is a trend-following momentum indicator that shows the relationship between two moving averages of prices. It can help identify potential buy and sell signals. Look for crossovers of the MACD line and the signal line.

To add these indicators, click on the corresponding buttons above the chart. Remember to research how each indicator works before relying on it for investment decisions.

6. Using Finviz's News and Fundamentals Data

While this guide focuses on chart analysis, it's important to remember that charts are just one piece of the puzzle. Finviz also provides valuable fundamental data and news related to the stock.

  • News Section: Below the chart, you'll find a news feed related to the stock. Pay attention to any significant news events that could impact the price.
  • Financial Data: The left-hand side of the quote page provides key financial data, such as earnings per share (EPS), price-to-earnings ratio (P/E), and market capitalization. While a deep dive into fundamental analysis is beyond the scope of this guide, these metrics can provide valuable context for your chart analysis.

7. Limitations and Cautions

Finviz is a great tool, but it's not a crystal ball. Here are some important limitations to keep in mind:

  • No Drawing Tools: Finviz lacks built-in drawing tools, making it harder to mark support and resistance levels directly on the chart.
  • Lagging Indicators: Many indicators, such as moving averages, are lagging indicators. They confirm trends that have already started, but they don't necessarily predict future price movements.
  • False Signals: No indicator is perfect, and all indicators can generate false signals.
  • Only One Tool: Chart analysis should be used in conjunction with other forms of analysis, such as fundamental analysis and macroeconomic analysis. Don't rely solely on charts to make investment decisions.

Conclusion

Finviz provides a fantastic starting point for analyzing stock charts and gathering essential information. By understanding the basic chart elements, identifying trends, recognizing support and resistance levels, and using key indicators, you can significantly improve your ability to make informed investment decisions. Remember to practice consistently, combine chart analysis with other forms of research, and always manage your risk. Happy analyzing!