# An AI-Enabled Stock Prediction Platform Combining News and Social Sensing with Financial Statements
## 3 Materials and Methods
### Signals Generators
#### 3.7.3 Technical Analysis  
Technical Analysis is an investment and trading tool that spots investing opportunities and produces trading signals by analyzing statistics that come from the traders and markets' activity such as the price action and the trading volume. Technical Analysis focuses mainly on the study of the price and the volume of a trading asset.Additionally, the Technical Analysis is based on the Efficient Market Hypothesis, a hypothesis that states that the prices of stock market products reflect all the information that concerns them. Technical analysis also assumes that values move in iterative patterns and that these patterns are often repeated. The main problem that Technical Analysis faces is that it often contains subjectivity. Indicators, oscillators and other objective tools should be used; all technical analysts should see the same indicator and the same values, without being dependent on them. The portfolio optimization presents various challenges such as the fact that too many transactions are proposed. This is addressed by properly configuring the system and selecting low-cost changes. Minimal variation portfolios without the expected returns can also be proposed. This can be resolved by minimizing the tracking error in the portfolio. At the same time, the mean variance optimization is restrictive. In this case, an optimization algorithm can be selected with a few limitations. As many times one of the products participating in the portfolio takes too much weight in the portfolio,, the selection of products should be based on specific rules to avoid this. The tools of Technical Analysis thoroughly study the ways of supply and demand of a trading asset and how these factors affect the price, trading volume and volatility. Technical Analysis is also used for the production of short-term trading signals through charting tools as well as a tool for the evaluation of certain trading assets regarding the relative markets or relative sectors [53; 54]. Recently, many new developments have appeared in the Technical Analysis field including methodologies, algorithms, indicators, oscillators, etc. [55], but they are all based on three very simple assumptions [56]:  
1. Prices reflect anything: Most technical analysts believe that any factor that is correlated to a trading asset, which is tradable in the global markets, from the fundamentals up to the market psychology, is already reflected in its price. This assumption is aligned with the famous Efficient Market Hypothesis (EMH), which comes to the same conclusions regarding the prices. Therefore, what technical analysts suggest is price analysis, which, according to the aforementioned assumption, contains all of the information of the asset such as the supply and demand of a stock or a commodity. 2. Price movements are trending: Technical analysts expect that the asset prices, even in random market movements, come out in trends, no matter what the observation timeframe is. The price of a stock, most likely, will continue following the trend, instead of moving randomly or erratically. Most Technical Analysis strategies contain trend as a basic feature. 3. History tends to repeat itself: Technical analysts believe that history repeats itself. The repetition of price movements is often attributed to market psychology that tends to be quite predictable as it is based on emotions such as fear, over-optimism, panic, etc. Technical analysts use chart patterns to analyze emotions and possible subsequent movements in the markets to understand trends. In recent decades, countless trend-setting techniques have been developed, with different approaches and tools. Regarding the current project, to extract trading signals, we used the following Technical Analysis tools and indicators:  
* MACD Indicator (Moving Average Convergence-Divergence) to define the market trend. * ADX Indicator (Average Directional Index) to define the market trend strength.