Click a letter to view terms
A B C D E F G H I J K L M
N O P Q R S T U V W X Y Z

A
 

Accumulation is the act of buying more shares of a security without causing it to noticeably rise in price. During a base-building process, traders and investors may seek to establish or increase existing long positions. In such a case, the security is “under accumulation.” See “Basing andDistribution”.

The Accumulation/Distribution Line relates price changes with the associated volume by comparing the closing price to the range of prices for the period being studied. ((C-L)/H-L))*V is added to the cumulative total.

The Advance-Decline Line is perhaps the most popular indicator. Its purpose is to track the “breadth” of the stock market’s advance or decline. The a-d line is the cumulative net difference between advancing and declining issues. It is usually compared to a market index; a divergence from the index would be a possible sign of a pending change in trend.

The Advance/Decline Ratio is most commonly derived by dividing the number advancing issues by the number of declining issues. Another common calculation is to divide the number of advancing issues by the total of advancing and declining issues. In either case, the result is often smoothed with a moving average or is used to compute a ratio-based cumulative a/d line.

On an Arithmetic Scale chart, the distance between each point on the vertical scale (Y-axis) is identical. Thus, the vertical distance between 10 and 20 is the same as the vertical distance between 90 and 100. By contrast, see “Logarithmic Scale.

The Arms Index (TRIN) was developed by Richard Arms. It is the ratio between the average volume of declining stocks and the average volume of advancing stocks.  A TRIN (for Trading Index) above 1 indicates that the volume in declining stocks is outpacing the volume in advancing stocks; below 1 indicates that the volume in advancing stocks is outpacing the volume in declining stocks. The daily data is typically smoothed with a 10-day moving average.

An Ascending Trend Channel is derived by drawing an ascending trend line that connects the bottoms corrections during a chose time period and then drawing a parallel trend line that connect most of the tops during the same period. The resulting ascending channel forms borders for the uptrend being studied.

An Ascending Triangle is a sideways price pattern between two converging trend lines in which the lower line is rising while the upper line is flat. Triangles are continuation patterns within a larger trend, but this is triangle often has bullish implications.

The Average True Range (ATR) is as indicator that measures volatility. High ATR values indicate high volatility and may be an indication of panic selling or panic buying. Low ATR readings indicate sideways movement by the stock. We tend to use this indicator on Point and Figure charts more so than on more conventional charting styles.
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B
 

A Bar Chart displays high, low, close, and open price information in graphical form. A vertical bar encompasses the high and low price for the period. Two small horizontal ticks, representing the open (to the left) and the close (to the right), are attached to the vertical bar.

Basing is when a stock or market consolidates after a decline. It is characterized by a trading range, which is usually a horizontal or trendless pattern. It is common to see a basing period after a lengthy decline. It may be an indication of “Accumulation.”

A Bear is a person who believes prices will decline.

A Bear Market is a period of time when prices in the broad market are generally declining. It is often mechanically measured as a decline of 20% or more from the “Bull Market peak.

A Bear Trap occurs when prices break below a significant level and generate a sell signal, but then reverse course and invalidate the sell signal. This "traps" the bears that acted on the signal with losses. See “Bull Trap and “Whipsaw.

Bollinger Bands, developed by John Bollinger, permit users to compare relative price levels over a period of time. It consists of three bands designed to encompass the majority of a security's price action. Prices will often meet resistance at the upper band and support at the lower band.   The bands are calculated based on the standard deviation of the price movement. See “Price Channels.”

The Box Size on a Point and Figure chart is the price value of one "X" or "O". In other words, it represents the increments of the X-axis.  An X is shown when prices rise by the box size, and an O is shown when prices fall by the box size.

Breadth measures the number of issues advancing versus the number of issues declining on a given day or as a moving average. The calculation is most commonly done by comparing advances minus declines, but advances divided by declines is also frequently used.

A Breakaway Gap is a price gap that that typically forms on the completion of a consolidation or trading range. It usually signals the beginning of an acceleration and/or a trend reversal.  See “Gaps.

A Breakout occurs when the price of a security moves above the high (or below the low) of a previous trading pattern.

A Bull is a person who believes prices will advance.

The Bull/Bear Ratio shows the relationship between bullish and bearish advisors. It is interpreted as a contrary indicator, e.g., too many bulls is a negative, suggesting that the market is probably near a top.

A Bull Market is an extended period of time when most stocks and market indexes are generally rising.  See “Bear Market.”

A Bull Trap occurs when prices break above a significant level and generate a buy signal, but then reverse course and invalidate the buy signal. This “traps” the bulls that acted on the signal with losses. See “Bear Trap and “Whipsaw.

The Bullish Percent Index (BPI or BP) is a breadth/momentum indicator that is most commonly calculated by dividing the number of stocks that are trading on a Point and Figure (P&F) buy signal by the total number of stocks within the group being analyzed. Above 70% is nominally considered overbought, while below 30% is oversold.  Since it is a P&F indicator, the Bullish Percent Index is usually charted in P&F format, but we also use traditional charting techniques. See “Sector Sum.”

A Buy Signal is a trigger that indicates that it is a good time to buy a security. The parameters of the signal depend on the indicator being used.

A Buy Stop is an order that is placed above the current price. Thus, a security has to trade at the stop level before the buy order would be activated. See “Stop Loss.”

A Buying Climax occurs when the price of a security quickly rises but then falls. It is often characterized by high volume.
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C
 

A Call Option is the right to buy a stock or commodity future at a given price before a given date. The owner of the call option thinks that the price of the stock will go up. See “Put Option.”

Candlesticks is a form of Japanese charting. A narrow line (shadow) shows the day's price range. A wide box or ‘body’ defines the area within the range between the open and the close. If the close is above the open, the body is not filled (or often colored white or green); if the close is below the open, the body is often colored black or red.

A Channel is created when prices trend between two parallel trend lines.

A Continuation Gap occurs in the middle of a move and in the same direction as the current move. It signals a continuation of the preceding trend and can mark a good entry point. It is also called a measuring or runaway gap. See “Gaps.”

A Continuation Pattern occurs in the middle of an existing trend. An Elliott Wave triangle is an example of a continuation pattern.

The Coppock Curve is a momentum indicator created by E.S.C. (Sedge) Coppock. The indicator was originally only used on monthly data, but it is now often used on all time periods from hourly data to annual data. The Coppock Curve was originally created for stock market indexes, but is commonly used for individual stocks, sectors, and other asset classes. The indicator is calculated by adding a 14-period rate of change (RoC) and an 11-period (RoC), and then smoothing that sum with a 10-period weighted moving average (WMA). (Coppock asked an Episcopalian church bishop how long people grieved after the loss of a loved one. The reply was 11 to 14 months.) A “low risk” buy signal (a term originally coined by Ian Notley) is generated when the indicator is below zero and turns upwards from a trough. A “high risk” buy is signaled when the Coppock Curve turns up from above zero. Sedge Coppock did not use sell signals, but Notley and others have utilized such signals when the indicator turns down from levels both above (low risk sell) and below (high risk) zero.

A Correction is a decline/advance that retraces a portion of a previous advance/decline. Corrections typically retrace 1/3 to 2/3 (38.2%-61.8%) of the previous move. A correction of more than 2/3 (61.8%) of the previous move often signals a reversal of trend. See “Reversal.”

 A Corrective Wave  is a rally or decline that moves against a larger trend. Also known as “Counter Trend.” See “Impulse_Wave."

A Crossover is the point on where two lines on a chart (e.g., price, moving averages, signal lines) intersect. Crossovers are often used to define a buy or sell signal.

A Cup with Handle chart pattern is defined by a consolidation period that is followed by a breakout. The "cup" part of the pattern resembles a rounding bottom, and is followed by a "handle" that acts as a final consolidation before a breakout.   It is often part of a larger “Head and Shoulders” bottom.

A Cycle (or Market Cycle) is the movement from a period of increasing prices through a period of falling prices. A cycle is measured from low to low. Cycles have reasonably consistent time frames. Some of the more popular cycles measure 22-weeks, four years, and 10 years.
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D
 

A Descending Triangle is a trading range between two converging trend lines. The upper line is descending while the lower line is flat.  Triangles are continuation patterns within a larger trend, but this is triangle often has bearish implications.

A Dark Cross  occurs when a shorter moving average moves below a longer moving average. Usually, this is associated with the 50-day moving average crossing below the 200-day moving average.  This is considered a confirmation that the underlying trend has turned down.  The signal is especially important when the longer moving average is falling.  See "Golden Cross."

Distribution is the orderly selling of a security without significantly affecting the price. After an advance, a stock may form a top and trade sideways for an extended period.  See “Accumulation.”

A Divergence occurs when two lines do not move in unison. It is usually price action measured in relation to various indicators. There are two kinds of divergences: positive and negative. A positive divergence occurs when the indicator makes higher highs while the stock does not or when the stock makes lower lows and the indicator does not.  A negative divergence occurs when the indicator makes lower lows while the stock is does not or when the stock makes a higher high and the indicator does not.

A Double Bottom is a bullish chart pattern that involves a decline, then a rebound, another drop to the same (or similar) level as the original drop, and finally another rally which breaks out through resistance.

A Double Top is a bearish chart pattern that involves a rally, then a pullback or test, another rally to the same (or similar) level as the original rally peak, and finally another decline involving a break of support.

Dow Theory is one of the oldest technical disciplines. A Dow Theory buy signal is given when both the Dow Industrial and Transportation averages close above a prior intermediate rally peak. A sell signal is given when both averages close below a prior intermediate reaction low.

A Downtrend Line is a line drawn down and to the right above successive rally peaks. The longer the trend line remains in effect and the more times it has been touched or tested, the more dominant it becomes. A violation indicates a trend reversal. See “Uptrend Line.”
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E
 

The Elliott Wave Principle is a classification of rules for defining and interpreting a relatively small number of patterns in the major stock indexes. The Elliott analyst’s basic objective is to ultimately (and correctly) count a complete stock market cycle of five waves up, followed by three waves down. In the 1930s, Ralph Nelson Elliott stated that this constant “five waves up, followed by three waves down” was a form or pattern that occurred in the market, regardless of time. Thus, a five-wave rally, followed by a three-wave decline, would be classified as the first and second waves of a five-wave pattern of one larger wave degree. See “Fibonacci Numbers.”

An Exchange Traded Fund (ETF) is a group of stocks that are bought and sold as a package on an exchange (e.g., the ASE, NYSE, CBOE, and NASDAQ).

An Exhaustion Gap occurs at the end of a trend, and is a signal that the trend is ending. An exhaustion gap is confirmed when prices reverse and move above or below (i.e., "close") the gap.

An Exponential Moving Average (EMA) gives greater weight to more recent data in an attempt to reduce the lagging properties of the moving average.  EMA = PreviousEMA + ((price-PreviousEMA)* (2 / period)).

A
n Extension occurs when a stock that has risen or declined well past its previous resistance or a support point. Such a development suggests that a trend reversal is imminent.  In Elliott Wave terms, an extension is composed of more than five subwaves (e.g., nine or even 13 waves).  See Low Pole.”
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F
 

A Failure occurs when a trend fails to penetrate a previous high or low by a small margin.  A failure is considered to be the final move in an existing trend, not the first reaction in a new trend.

A Falling Wedge is a contracting trading range with a downward bias. The pattern begins with a wide price range, while the latter stages are characterized by tighter price action within converging trend lines. See “Rising Wedge.”

The Fibonacci Number Sequence (0,1,1,2,3,5,8,13,21,34…) is constructed by adding the first two numbers to arrive at the third. The ratio of any number to the next number is 61.8 percent. The inverse of 61.8 percent is 161.8. These percentages are popular retracement levels, especially with Elliott Wave analysts. The square and square roots of these ratios are also widely used.

Fundamental Analysis
utilizes on economic and company information. This is in contrast to technical analysis, which focuses on charts and market indicators.

Futures Contracts
represent a pledge to make a certain transaction at a future date. They require the delivery of a stock, bond, currency, or commodity index at a pre-determined price on a specified future date.
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G
 

Gaps form when opening price movements create a space on the chart. This occurs when the high of the day is below the low of the previous day or when the low of the day is above the high of the previous day. Gaps are particularly important when accompanied by an increase in volume. See: “Breakaway”, “Continuation”, and “Exhaustion” Gap.

A Golden Cross  occurs when a shorter moving average moves above a longer moving average. Usually, this is associated with the 50-day moving average crossing above the 200-day moving average.  This is considered a confirmation that the underlying trend has turned up.  The signal is especially constructive when the longer moving average is rising.  See "Dark Cross."
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H
 

A Head and Shoulders Bottom is a bullish reversal pattern that is ideally marked by three prominent lows where the middle trough (the head) is lower than the other two (the shoulders). When the trend line (neckline) connecting the peaks at the top of the pattern is broken, the pattern is complete.

A Head and Shoulders Top is a bearish reversal pattern that is ideally marked by three prominent highs where the middle peak (the head) that is higher than the other two (the shoulders). When the trend line (neckline) connecting the lows at the bottom of the pattern is broken, the pattern is complete.

A High Pole Warning is a Point and Figure term that occurs when an up column exceeds a previous column of X’s by at least three boxes then retraces at least 50% of that up thrust. The “warning” alerts traders to a potential reversal.

A Horizontal Line is straight line placed on a chart at a specific price level.
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I
 

An Impulse Wave is a term used in the Elliott Wave Principle to describe the move in a security’s price coinciding with the main direction of the underlying trend. See “Corrective_Wave."

An Indicator is value, usually computed from a stock's price or volume that an investor uses to try to anticipate future price movements. Lagging indicators, such as a moving average) are useful with trending stocks. Leading momentum indicators (e.g., Coppock Curve, MACD, or RSI) are oscillators that are designed to anticipate future price action and many come in the form of oscillators.

An Industry is a group of companies in the same line of business. See “Sector,” which is a broader group of industries.

Intermarket Analysis
compares the price action of other financial asset categories to one another. This analysis is based on the idea that all markets (e.g., stocks, bonds, foreign exchange, and commodities) are interrelated, influence each other, and can be used as to anticipate a move in another market.
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K
 

A Key Reversal Day is apparent when prices extend a trend, then sharply reverse. In an uptrend, prices open in new highs and then close below the previous day's closing price. In a downtrend, the reverse occurs. The larger the price range on the key reversal day (and the heavier the volume), the greater the probability for a key reversal.
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L
 

A Laggard is a security that is underperforming its benchmark.

A Leader is a security that is outperforming its benchmark.

A Line Chart connects the closing prices of a security or index.

On a Linear (Arithmetic) Scale Chart, the distance between each point on the vertical (X) axis is equal. Thus, 20 is to 30 as 30 is to 40. Linear scaling is typically not used on charts with large vertical ranges or with very long time spans.

A highly Liquid stock typically trades on large volume and a large number of buyers and sellers. This is also known as “liquidity.”

On a Logarithmic (Percentage) Scale the vertical (X) axis between two points represents the percentage change between those numbers. Thus, 20 is to 30 as 30 is to 45. These charts are also called "semi-log" because only the X-axis is scaled logarithmically. The Y-axis is usually defined by dates.

A Low Pole Warning is a Point and Figure term that occurs when a down column exceeds a previous column of O’s by at least three boxes then retraces at least 50% of that down thrust. The “warning” alerts traders to a potential reversal.
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M
 

MACD (Moving Average Convergence/Divergence) is a popular indicator (developed by Gerald Appel) that is conventionally calculated by subtracting the 26-period exponential moving average (EMA) of a given security from its 12-period EMA. The moving averages themselves are an indication of trend, while the difference works as an oscillator.

The MACD Histogram. Usually a nine-day EMA of MACD is plotted along side to act as a signal line. A bullish crossover occurs when MACD moves above its signal line, and a bearish crossover occurs when MACD moves below its signal.  The histogram is a visual representation of the difference between the MACD line and the MACD signal line.

Market Cap(italization) is the total market value of a company (number of shares outstanding multiplied by the price of the stock).

The McClellan Oscillator, which was developed by Sherman and Marion McClella, is a breadth momentum indicator derived from the number of advancing issues less the number of declining issues.  When the 19-day exponential moving average (EMA) moves above the 390day EMA , the number of afvancing stocks is outperforming the number of declining issues; by definition, the opposite is also true.

The McClellan Summation Index is the ongoing cumulative total of the daily McClellan Oscillator reading.
 
Measuring Gap. See “Continuation Gap.”

Momentum is an indicator which measures rate-of-change. The ongoing calculation typically forms an oscillator that moves above and below a neutral or center line. Bullish and bearish readings are determined by looking for divergences, extremes, and centerline crossovers.

A Moving Average (MA) calculates the average value of data for a pre-defined number of time periods.
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N
 

Net New Highs is calculated by subtracting the number of new lows from the number of new highs. It is a breadth or participation indicator.

New 52-Week Highs and Lows. This refers to the number of stocks recording their highest or lowest price level in 52-weeks. The results are often shown as 10-day moving averages to smooth the volatility.
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O
 

On Balance Volume (OBV) was created by Joe Granville. The concept behind the indicator is that volume leads price. OBV adds a period's volume when the close is up and subtracts the period's volume when the close is down. A cumulative total results in the OBV line, which is then compared with the price chart of the underlying security or index to look for divergences and confirmation. OBV has been adapted to us up/down volume and other measures of volume.

Open Interest is the number of options or futures contracts that are still uncovered at the end of a trading day. A rise or fall in open interest shows that money is flowing into or out of a futures contract or an option. It is also a measure of liquidity.

An Oscillator helps determine when a security or index is in overbought or oversold.

An Overbought condition occurs when prices are considered too high or have moved too fast and are at risk of a decline. Overbought conditions are most often determined by oscillators/indicators such as the Coppock Curve, MACD, Stochastic Oscillator and Relative Strength Index (RSI).

An Oversold condition occurs when prices are considered too low and/or have moved too fast and are positioned to rally. Oversold conditions are most often determined by oscillators/indicators such as the Coppock Curve, MACD, Stochastic Oscillator and Relative Strength Index (RSI).

An Outside Day occurs when the high of the day is above the previous day's high and the low is below the previous day's low. This, plus the net gain or loss from the prior day helps determine the health of the underlying trend.
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P
 

The Percent Investment Advisors Bullish is a measure of stock market bullish sentiment that is published weekly by Investor's Intelligence. II also published similar data for bearish advisors and those looking for a correction.

The Pivot Point is the level at which the stock price begins to rise past the prior resistance level.

A Point and Figure Chart consists of columns of X's (showing rallies) and O's (for declines).

Point and Figure Buy and Sell Signals. A buy signal occurs when the last breakout was a column of Xs going higher than the previous column of Xs, with no intervening sell signal. A sell signal occurs when the last column of Os goes below the previous column of Os, with no intervening buy signal. The P&F Buy signal is used to calculate the “Bullish Percent Index.”

The Point and Figure Price Objective is the price that a stock should reach based on recent P&F chart patterns and counts.

Price Channels
are boundaries above and below the price line and can be used as indicators of volatility. Price channels are created by specifying the number of periods that will form the high and low envelope around the price line.  For example, a 10-day price channel will chart the level of the highest high and the lowest low over the previous 10 days. See “Bollinger Bands” (which use moving averages instead of price values as boundaries).

Price Patterns generally fall into two categories, i.e., reversal and continuation patterns. Such patterns are used to help calculate the magnitude of a subsequent move.

The Price/Earnings Ratio (P/E) ratio is calculated by dividing the price of a stock by the company earnings per share.  It is more properly a fundamental indicator, but is used by technicians as a measure of valuation or overbought/oversold conditions.

A Put Option is the right to sell a stock or commodity future at a given price before a given date. The owner of the put option thinks that the price of the stock will decline. See “Call Option.”

The Put/Call Ratio is derived from data published by the CBOE. It is the total number of puts divided by the total number of calls.   It is a sentiment indicator. A level well below 1.0 means that call volume is high relative to put volume, suggesting that traders are excessively bullish. Conversely, a level well above indicates that put volume is high relative to call volume and that traders are excessively bearish. Typically, the daily data is smoothed with a 10- or 25-day moving average.
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R
 

The R Squared is a statistical measure of correlation between a security and its benchmark or between individual securities/indexes. The benchmark has an R Squared of 100%, so another index or security with an R Squared of 90% contains 90% of the benchmark’s risk. Put another way, the benchmark explains 90% of the security’s volatility or price movements. The remaining 10% is unique to the fund manager's actions. This is a useful tool for diversification strategies.

The Range is the distance between the high price and the low price over a specific time period.

A Rate-of-Change typically measures the percent change in price from one period to the next. The result is a momentum oscillator that crosses above and below the zero line. In addition to the crossovers, the oscillator is monitored for divergences.

A Reaction High/Low is a sporadic peak/trough that forms as a security/index fluctuates within a larger trend.

A Reaction Rally/Decline is an interruption of a larger downtrend/uptrend that does not surpass a previous high/low. Such a mover usually retraces 1/3-2/3 (or 38.2%-62.8%) of the preceding trend.

The Relative Strength Index (RSI) was developed by Welles Wilder, System. The RSI compares a security’s/index’s average gain over a specified period (typically 14 days) to it average loss. The ratio is then converted to values ranging from 0 to 100. Values above 70 are considered overbought and values below 30 are oversold.  The RSI is monitored for diverges from price action.

Resistance is the price level at which there is enough supply available to resist or stop a stock’s uptrend. See “Support.”

A Retracement is an advance that retraces a portion of a previous decline – or a decline that retraces a portion of a previous advance.  Retracements usually regain 1/3-2/3 of the previous move (or 38.2%-61.8% for Fibonacci buffs). A retracement of more than 2/3 (61.8%) often signals a full retracement of 100% or more.

A Reversal is a chart pattern that often occurs before an existing trend reverses direction. A “Head and Shoulders” or “Double Top/Bottom” is an example.

A Rising Wedge is a contracting trading range with an upward bias. The pattern begins with a wide price range, while the latter stages are characterized by tighter price action within converging trend lines. See “Falling Wedge.”

The Risk/Reward Ratio calculates the downside potential divided by the potential upside. The Reward/Risk ratio involves the opposite calculation.

A Rounding Bottom is a reversal pattern involving a drawn out consolidation period following a downtrend that ultimate lays the foundation for a new uptrend. Also known as a saucer bottom.

Runaway Gap. See “Continuation Gap.”
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S
 

A Sector is a group of industries or companies that generate revenue in similar ways, and tend to rise and fall in line with one another during an economic cycle. Sectors are subdivided into industries. The economic sectors defined by the S&P indexes are Consumer Discretionary, Consumer Staples, Energy, Finanicals, Healthcare, Industrials, Information Technology, Materials, Telecommunications, and Utilities.

The Sector Sum is a more sensitive version of the Bullish_Percent_Index”. The BPI is calculated by dividing the number of stocks that are trading on a Point and Figure (P&F) buy signal by the total number of stocks within the group. By contrast, the Sector Sum gives a value of 1 point to each stock that is on a buy signal and in a column if Xs, and a half point to those that are on a buy signal, but currently in a column of Os. Similarly, a value of -1 is given to each stock that is on a sell signal and in a column if Os, and a negative half point to those that are on a sell signal, but in a column of Xs.

Sentiment Indicators measure the degree of bullishness or bearishness in a market. These are contrary indicators. They tend to be trend following indicators, so their greatest value is when they reach bullish or bearish extremes.

A Shakeout occurs when a large number of nervous investors sell their positions, usually because of a surprise news event.

Short Selling is the process of selling a stock with the hope of buying it back at a lower price.

A Signal Line is a moving average of another indicator that is used to generate simple buy and sell signals generated by a crossover.  See “MACD Histogram” for an example.

A Simple Moving Average assigns equal weight to each period's data, e.g., price, volume, etc.

SPDRs or "spiders" are traded on the AMEX and are a convenient way means to buy and sell the S&P 500, S&P 400 and select S&P sectors.  The acronym stands for Standard & Poor's Depositary Receipt.

The Spread is the difference between the bid and the ask. More liquid stocks tend to have smaller spreads.

Standard Deviation is a statistical term that measures how widely data is dispersed around its mean. The larger the standard deviation, the higher the volatility.

The Stochastic Oscillator is a momentum indicator developed by George Lane that measures the price of a security relative to the high/low range over a period of time, usually 14 days/weeks, etc. The oscillator ranges between 0 and 100, with readings below 20 viewed as oversold and readings above 80 considered overbought.

Stocks Above Their n-day Moving Average is a market breadth indicator that represents the number or percentage of stocks in a given group that have closing prices that are currently above their n-day simple moving average.  As with other indicators, it is used to determine overbought/oversold levels and divergences.

A Stop Loss Order is an instruction to buy or sell stock when it trades beyond a specified price. The purpose is to either protect profits or limit losses.

Support is the price level at which there is sufficient demand for a stock to stop or interrupt a downtrend. See “Resistance.”

A Swing Chart involves a filter. Once prices have moved by the distance specified by this filter, a new line is drawn. For example, if the filter is three days, a new uptrend is established when the current price goes above the highs of the previous three days, and a new downtrend is established when the price falls below the lows of the previous four days.

A Symmetrical Triangle is a sideways chart pattern between two converging trend lines in which the upper trend line is declining and the lower trend line is rising. Triangles are continuation patterns.
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T
 

T-Bills (Treasury Bills are short-term debt securities issued by the US government, with typical maturities of 13, 26 and 52 weeks.

Technical Analysis studies price through the use of charts, volume, and sentiment and/or momentum indicators.

The TED Spread is the difference between the three-month US Treasury rates and the three-month Euro Dollar contract.

A TICK represents the individual move from one stock trade to another. For example, an uptick means that the price moved up on the last trade. The closing tick is the net of all upticks minus all downticks at the end of the day.

The Top-Down Approach analyzes the market by first looking at the macro indicators of the overall market such as the major indexes. Then a more “micro” analysis is undertaken involving sectors or industries or individual stocks. The two types of analysis are then compared.

A Topping Process often involves a trading range after a rally. It may be a sign of “Distribution.”

A Trailing Stop is a “Stop Loss” level that adjusts as the price fluctuates. It can be used to either protect profits or limit losses.

A Treasury Bond is issued by the US government with maturities typically between 20 and 30 years.

A Treasury Note is issued by the US government with maturities typically in the area of 2, 5, and 10 years. The yield of the 10-year Treasury Note is commonly used as the benchmark interest rate.

Trend. An uptrend is a series of higher highs and higher lows. A downtrend is a series of lower highs and lower lows.  We tend to classify trends as near term (2-5 weeks), intermediate (3-5 months), and cyclical or long term (12-24 months).

A Trend Line is a straight line drawn below reaction lows (in an uptrend) or above reaction highs (in a downtrend). The more points a line touches, the more important or dominant it becomes. A trend line breach often signals a trend reversal

A Triangle is typically a continuation pattern within a larger trend. See “Symmetrical Triangle, “Ascending Triangle”, and the “Descending Triangle.”

TRIN.  See “Arms Index.”

A Triple Bottom is a price pattern with three approximately equal lows followed by a breakout above resistance.

A Triple Top is a price pattern with three approximately equal peaks followed by a breakdown through support.
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U
 

An Uptrend Line is a line drawn up and to the right below successive reaction lows. The longer the trend line remains in effect and the more times it has been touched or tested, the more dominant it becomes. A violation indicates a trend reversal. See “Downtrend Line.”
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V
 

VIX is the ticker symbol for the CBOE's Volatility Index.  It measures the implied volatility of the S&P 500.  Sometimes referred to as the "Fear Index," high values imply excessive bearishness while low values indicate excessive bullishness.

Volatility is a measure of change in price over a given period. It is usually expressed as a percentage change or standard deviation of the daily price.

Volume
is the number of shares or contract traded over a period of time. On a chart, volume is usually represented by vertical bars below the price chart.
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W
 

A Wedge is characterized by two converging trend lines that connect at an apex. The wedge is falling or rising, with bullish or bearish implications, respectively. See “Falling Wedge and Rising Wedge.

A Weighted Average is a moving average that uses a selected time span, but gives greater weight to the more recent price data. See “Simple Moving Average.”

A Whipsaw takes place when a buy or sell signal is reversed or negated in a short time.
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Y
 

The Yield Curve is a plot of treasury yields across the various maturities at a specific point in time. In a normal yield curve, yields rise as the maturities increase. An inverted yield curve, which occurs when the yield on shorter maturities is higher than those of longer maturities, is a sign of tight money.
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Z

The Zweig Breadth Thrust indicator was developed by Martin Zweig. It is computed by dividing the number of advancing issues in the NYSE (all issue) Composite by the total number of advancing and declining issues and then calculating a 10-day exponential moving average of the ratio. A breadth thrust is generated when the 10-day ema moves from a level of below 40% to above 61.5% within a 10-day period. (back to top)

 

 

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