Distinguish between the technical analysis and fundamental approaches of valuation of common stock

What will be an ideal response?

Answer: Technical analysis takes a number of forms, including the interpretation of computer programs, charts, graphs, and mathematical calculations of tracking patterns, all aimed at spotting some trend or direction for stocks. This is no longer a useful approach because it encourages moving in and out of the market rather than buying and holding stocks.
A fundamental analysis determines the value of a share of stock by focusing on such factors as future earnings and dividends, expected levels of interest rates, and the firm's risk. An example is the Price/Earnings Ratio which is a measure of a stock's relative value, found by dividing the price per share by the earnings per share. The higher the ratio the better.