Technical Analysis
The 100-day moving average is a popular technical indicator which investors use to analyze price trends. It is simply a security's average closing price over the last 100 days. You can calculate the...
The 150-day moving average is a popular technical indicator which investors use to analyze price trends. It is simply a security's average closing price over the last 150 days. You can calculate the...
The 200-day moving average is a popular technical indicator which investors use to analyze price trends. It is simply a security's average closing price over the last 200 days. You can calculate the...
The 50-day moving average is a popular technical indicator which investors use to analyze price trends. It is simply a security's average closing price over the last 50 days. You can calculate the 5...
The Arms Index (Trin) uses the ratio of advancing issues to declining issues to signal when the market is deeply overbought or oversold. The Arms Index is named after its designer, Richard Arms. It...
The ascending triangle is marked by two significant technical features. At its top, there is a line of resistance. This is a supply line, or a price at which sellers step into the market and unload t...
Average true range (ATR) is a technical indicator that measures the volatility of an asset's average daily price movements. Average true range starts with the concept of "true range." True range (TR...
A bearish engulfing pattern occurs in the candlestick chart of a security when a large black candlestick fully engulfs the small white candlestick from the period before. This pattern usually occurs...
Bollinger Bands are used as a technical analysis indicator. They are formed by using a 20-day moving average as a centerline and then tracing two bands, each one standard deviation wide, on either si...
Breadth of market theory refers to a concept that the number of securities rising or falling in a market can predict the future strength of that market. The breadth of market theory is employed in t...
A bullish engulfing pattern occurs in the candlestick chart of a security when a large white candlestick fully engulfs the smaller black candlestick from the period before. This pattern usually occu...
Candlestick charts are often used in technical analysis to track price movements of securities, derivatives and currency over time. Each candlestick is made up of three parts: the upper shadow, the ...
A Chartered Market Technician (CMT) is an individual who has been certified by the Market Technicians Association. The Market Technicians Association (MTA) grants the Chartered Market Technician (CM...
Named after famous ballroom dancer Nicolas Darvas, the Darvas box theory is a trading technique based on 52-week highs and volumes. To implement a Darvas box technique, an investor simply looks at s...
Data smoothing is a statistical technique that involves removing outliers from a data set in order to make a pattern more visible. For example, let's say that a university is analyzing its crime dat...
A death cross is a technical indicator that occurs when a stock's short-term moving average falls below its long-term moving average. Market technicians believe moving averages define the trend and ...
The descending triangle is a pattern observed in technical analysis. It is the bearish counterpart of the bullish ascending triangle pattern. The trendline connecting peak price levels should be down...
A doji candlestick is a significant signal in the technical analysis of financially traded assets. If prices finish very close to the same level (so that no body or a very small real body is visib...
The double bottom -- one of the many charting patterns used in technical analysis -- is characterized by a fall in price, followed by a rebound, followed by another drop to a level roughly similar to...
Dow Theory is an analysis that explores the relationship between the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA). When one of these averages climbs to an inter...
A dragonfly doji is the most uncommon candle of the four different types of doji candlesticks. As with any doji, the dragonfly depicts a situation in which supply and demand are in equilibrium, thus ...
The bearish evening star candlestick formation is a major reversal candlestick pattern. In many cases, only one candle is necessary to put a trader on high alert that a reversal may be happening. Fo...
An exponential moving average (EMA) is a moving average for time-series data which places greater weight on more recent data. An exponential moving average places exponentially greater weight on dat...
FactSet is a financial data and software company. FactSet's software platform offers real-time news, quotes and tools that help analysts screen for certain securities and test portfolio models. The ...
The flag formation is a technical analysis pattern that occurs when there is a straight upward move in a stock.  The flag formation movement is often nearly vertical, and at the very least is extr...
The hammer candlestick is a technical indicator that typically appears after a prolonged downtrend. Here is an example of a hammer candlestick: During the period of the hammer candlestick, the stoc...
The hangman candlestick has a very long shadow and a very small real body. Typically, it has no upper shadow (or at the very most, an extremely small one). To be an official hangman, the lower shadow...
The head and shoulders pattern consists of four distinct parts: The left shoulder, the head, the right shoulder, and the neckline. Each of these four must be present for the formation to exist. To b...
The high wave candlestick has a very small real body, and it typifies a stock or index plagued by uncertainty.  The spinning top has small upper and lower shadows, whereas in the high wave the shado...
The Hindenburg Omen is a technical indictor that attempts to predict market crashes. The Hindenburg Omen is triggered when three complex conditions are met: 1) The number of new daily 52-week highs ...
A key reversal is a one-day trading pattern that may signal the reversal of a trend. Other frequently-used names for key reversal include "one-day reversal" and "reversal day." Depending on which wa...
Long-legged doji candlesticks are one of four types of dojis -- common, long-legged, dragonfly and gravestone. All dojis are marked by the fact that prices opened and closed at the same level. If pri...
A major downtrend, or bear market, is when financial assets and markets -- as with the broader economy -- fall steadily for an extended period of time. A major downtrend is when each successive decl...
A major uptrend, or bull market, is when financial assets and markets -- as with the broader economy -- move in an upward direction for extended periods of time. A major uptrend is when each...
The Market Technicians Association (MTA) is a professional association for technical analysts. The MTA is a nonprofit association that fosters an environment of ethics and professionalism among Char...
The McClellan Oscillator was first designed by Sherman and Marian McClellan in 1969. It is an excellent tool for determining the overbought or oversold condition of the stock market. The McClellan O...
The measuring principle allows traders to set a specific minimum price target when trading a stock. This technique works with any well-defined technical analysis pattern, such as a head and shoulders...
A minor downtrend is a corrective movement in the market -- lasting less than three weeks -- that goes against the direction of a secondary uptrend. The minor trend is the last of the three trend ty...
A minor uptrend is a corrective movement in the market -- lasting less than three weeks – that goes against the direction of a secondary downtrend. The minor trend is the last of the three trend t...
The moving average is a popular technical indicator which investors use to analyze price trends. It is simply a security's average closing price over the last specified number of days. Some of the m...
Moving Average Convergence Divergence, or MACD (pronounced "Mack-Dee") is a technical analysis indicator developed by famous market technician Gerald Appel.  The MACD is used by traders to determin...
Negative correlation describes a relationship in which changes in one variable are associated with opposite changes in another variable. For example, many economists have discovered that people tend...
A negative directional indicator (known as negative DI) is a technical measure of a downtrend's momentum. Mathematically speaking, a negative directional indicator exists when the difference in a s...
Net present value (NPV) reflects a company’s estimate of the possible profit (or loss) from an investment in a project. Companies must weigh the benefits of adding projects versus the benefits of h...
As the name implies, new highs/new lows represents the number of all stocks making new 52-week highs or lows. The result is graphed, and the aggregate number of new highs and new lows is used as a ma...
On Balance Volume (OBV) was designed by Joseph Granville to track the flow of volume in and out of a stock or index. Essentially, OBV is a running total of volume. An OBV line typically takes the for...
A point-and-figure chart is a graph which records discrete price changes without accounting for an associated period of time. They are often used in technical analysis as a means of predicting future...
Price action is a term often used in technical analysis to interpret and describe price movements of securities.  Technical trading revolves around chart and pattern analysis, and when patterns cha...
A price by volume (PBV) chart is a horizontal histogram that shows a cumulative total of how many shares of a stock traded at a given price. Mechanically speaking, a PBV chart is simply price, plott...
In technical analysis, a price channel is an upper limit (called the resistance) and a lower limit (called the support) in which a security's price tends to stay. Price channels can slope up (indica...
Also called relative strength, price persistence is the tendency of a security's price to stay on trend relative to a market index such as the S&P 500. It is a measure of momentum. For example, ...
The price rate of change is simply the percentage change in a security's price between two periods.  The formula for the price rate of change is: Price Rate of Change = (Price at Time B - Price at ...
Qualitative analysis is the use of non-quantifiable methods to evaluate investment or business opportunities and make decisions. This is different from quantitative analysis, which relies on a compan...
Quantitative analysis is the use of math and statistical methods to evaluate investment or business opportunities and make decisions. In portfolio management, quantitative analysis is often used to ...
R-squared, usually represented as R2, is a technique that evaluates the statistical relationship between two series of events. It is commonly used to describe the portion of a security's movement in ...
Rate of Change (ROC), is the percentage change in price over a specified time frame. It is one of the most basic ways to measure momentum. To calculate ROC, you divide the current price by an earlie...
A rectangle formation describes a price pattern where supply and demand are in approximate balance for an extended period of time. In such a scenario, the shares tend to move in a narrow range, hitti...
Regression is a statistical method used in finance and other fields to make predictions based on observed values. It is a measure of how correlated a group of actual observations are to a model’s p...
Also called price persistence, relative strength is the tendency of a security's price to follow the trend of an index like the S&P 500. It is a measure of momentum. To illustrate, let's assume ...
The Relative Strength Index (RSI) was first developed by renowned technical analyst J. Welles Wilder. It is not to be confused with relative strength, which compares a stock's price performance to th...
The relative strength line compares a stock's price performance against that of the overall market, usually as measured by the S&P 500. However, if the trader desires, the comparison can be made ...
Also called systematic risk or non-diversifiable risk, relevant risk is the fluctuation of returns caused by the macroeconomic factors that affect all risky assets.  Diversifiable risk is the risk ...
In technical trading analysis, resistance is an upper limit in a price channel in which a security’s price tends to stay. Price channels can slope up (indicating bullish sentiment) or down (indica...
The RSI indicator mirrors and anticipates price patterns in the underlying stock or index chart. The indicator's designer, Welles Wilder, intended for the RSI Indicator to help traders spot chart for...
The "rule of 72" is a method of estimating how long it will take compounding interest to double an investment. The rule of 72 is a method used in finance to quickly estimate the doubling or halving ...
A runs test is a statistical procedure that can be used to decide if a data set is being generated randomly, or if there is some underlying variable that is driving results. If data points are rando...
The shooting star candlestick is a chart formation consisting of a candlestick with a small real body, and a large upper shadow. This pattern represents a potential reversal in an uptrend. It is also...
Spinning tops have small real bodies, and they portray a stock or index plagued by uncertainty. The spinning top has small upper and lower shadows. The spinning top candle looks like this: Spinnin...
Springs are false breakouts that can trap the unsuspecting trader. Spring patterns quickly reverse, with the stock or index then often testing the opposite end of the trading range. A spring is a fal...
Springs and upthrusts are false breakouts that can trap the unsuspecting trader. Both patterns quickly reverse, with the stock or index then often testing the opposite end of the trading range. A spr...
Standard deviation is a measure of how much an investment's returns can vary from its average return. It is a measure of volatility and, in turn, risk. Finding out the standard deviation as a measure...
The stochastics indicator is a momentum indicator that shows the location of the current closing price relative to the high/low range over a set number of periods. The stochastics indicator tries to...
Straight line basis refers to a method of calculating the depreciation of an asset.  Straight Line Basis calculates depreciation which is an accounting measure of the "loss" of value of an asset ov...
In technical trading analysis, support is a lower limit in a price channel in which a security’s price tends to stay. Price channels can slope up (indicating bullish sentiment) or down (indicating...
A support level is the price at which stock buyers jump in to purchase shares, establishing a floor beneath which it's difficult for the price to fall. Support, along with its cousin, resistance, ar...
A swap spread is the difference between the fixed rate component of a given swap and the yield on a Treasury item or other fixed-income investment with a similar maturity. Companies engage in swaps ...
Swing trading is a short-term strategy used by traders to buy and sell stocks whose technical indicators suggest an upward or downward trend in the near future -- generally one day to two weeks. Swi...
The symmetrical triangle is one of three important triangle patterns defined in classical technical analysis. The other two triangles are the bullish ascending triangle pattern and the bearish descen...
Technical analysis is a methodology that makes buy and sell decisions using market statistics. It primarily involves studying charts showing the trading history and statistics for whatever security i...
A technical rally is a price increase brought on by traders reacting to signals from technical analysis. A technical rally occurs after a security has experienced a substantial price decline and beg...
Trend analysis is a technical analysis of the movement of a stock based on past performance. A trend analysis is a method of analysis that allows traders to predict what will happen with a stock in ...
The tweezers candlestick pattern is a formation that always involves two candles. At a tweezers top, the high price of two nearby sessions are identical, or very nearly so. Conversely, a tweezers bot...
Variability is the degree to which a data series deviates from its mean (or in the accounting world, how much a budgeted value differs from an actual value). For example, let's say Company XYZ stock...
Weak longs are investors who buy a stock (known as being "long"), but who will sell it at the first sign of a price decline. Weak longs tend to be traders, not investors. Short-term traders typicall...
Weak shorts are investors who short sell a stock (known as being "short"), but who will buy it back at the first sign of a price increase. Short-term traders typically only enter a short position lo...