Category: Stock Research

The trendline helps not only to determine the extremities of the corrective phases, but tells us when the trend is changing. A up trendline provides a support boundary under the market that can be used as a buying area. A down trendline can be used as a resistance area for selling purposes. As long as…

Price patterns are pictures or formations, which appear on price charts of stocks or commodities, that can be classified into different categories, and that have predictive value. Two types of patterns There are two major categories of price patterns–reversal and continuation. Reversal patterns indicates that an important reversal in trend is taking place. On the…

The concept of trend is absolutely essential to the technical approach to market analysis. All of the tools used by the chartist-support and resistance levels, price patterns, moving averages, trendlines, etc. -have the sole purpose of helping to measure the trend of the market for the purpose of participating in that trend. Markets don’t generally…

Dow Theory forms the cornerstone of the study of technical analysis, even in the face of today’s sophisticated computer technology, and the proliferation of newer and supposedly better technical indicators. Basic Tenets 1. The averages discount everything. The sum and tendency of the transactions of the Stock Exchange represent the sum of all Wall Street’s…

There are three premises on which the technical approach is based: 1. Market action discounts everything. This is probably the cornerstone of technical analysis. The technician believes that anythig that can possibly affect the price–fundamentally, politically, psychologically, or otherwise–is actually reflected in the price of that market. It follows, therefore, that a study of price…

While technical analysis concentrates on the study of market action, fundamentals analysis focuses on the economic forces of supply and demand that cause prices to move higher, lower, or stay the same. The fudamental approach examines all of the relevant factors affecting the price of a market in order to determine the intrinsic value of…

An IPO ETF is an exchange-traded fund that tracks initial public stock offerings (IPOs) by a company. It attracted investors because it follows a large pool of initial public offerings, rather than exposing the investor to one or a few selected companies. This process serves two main purposes: 1. To create greater ease and familiarity…

The Relative Strength Index (RSI) is a financial technical analysis oscillator showing price strength by comparing upward and downward close-to-close movements. It was developed by J. Welles Wilder and published in Commodities magazine (now called Futures magazine) in June 1978, and in his New Concepts in Technical Trading Systems the same year. Calculation The standard…

When exchange-traded funds (ETFs) originated, they were widely viewed as a more liquid alternative to mutual funds. Not only could investors gain the same broad diversification that they could with indexed mutual funds but, unlike mutual funds, they could also trade them during market hours. Institutional investors could use them to quickly enter into and…

Volume not only measures the enthusiasm of buyers and sellers, but it is also a totally independent variable from price.There are three principal benefits from monitoring volume. First, when we look at indicators that measure both price and volume momentum, it is possible to see if they are in agreement. If so, the probabilities favor…