Tape Reader

The goal of behavioral analysts is to predict market participant’s emotions (moods) and the intensity with which they will move (control) market price movements from current market price action. They ignore traditional fundamental analysis that exposes valuation inefficiencies and mispricing in favor of the more empirical proof of intention through action displayed directly in market price movement. Technical analysis is used only to help predict potential market velocity as opposed to price reversals.

Market reversals are an inevitable result of excessively bullish or bearish sentiment (greed or fear) and it’s that “emotion” that causes the majority of traders to enter positions on the same side of a market at roughly the same point in time—which in turn leads to a price reversal.

Analyst use clues created by today’s emotional responses to greed and fear thresholds, which is measurable, and through these measurements, tops and bottoms are tracked as waves of optimism (greed) and pessimism (fear) that drive price; it can be predicted in repeatable reactions hours, days, weeks, months, years, and even decades before actual trading takes place.

Tuesday, June 3, 2014

VALUING PRICE/EARNINGS (P/E) RATIO

While Market Cap (share price multiplied by the number of outstanding shares) represents the company's Price Tag, Enterprise Value (Acquisition Worth) is calculated by adding total debt (including long- and short-term debt reported in the balance sheet) and subtracting cash and investments (also reported in the balance sheet) to Market Cap.

Two companies with equal market caps of $250M and no debt; one has negligible cash and cash equivalents on hand, and the other has $100M in cash. If you bought the first company for $250M, you will have a company worth, presumably, $250M. But if you bought the second company for $250M, it would have cost you just $150M, since you instantly get $100M in cash.

Consider the price of two competitor’s stocks: Air Morton and Cramer Airlines. At $45 per share, Morton had a market cap of $13.5 billion and P/E (market cap/earnings) ratio of 10. But its balance sheet was burdened with nearly $30 billion in net debt. So Morton's EV was $43.5 billion, or about 14 its $3.4 billion in EBIT.

By contrast, Air Cramer enjoyed a share price of $23 per share and a market cap of $6.1 billion and P/E ratio of 20, twice that of Air Morton. But because Cramer owed a lot less - its net debt stood at $3.5 billion, its EV was $9.6 billion and its EV/EBIT ratio was only 10, compared to Morton's EV/EBIT of 14.

By market cap (P/E) alone, Air Morton looked like it was half the price of Cramer Airlines. But on the basis of EV, which takes into account important things like debt and cash levels, Cramer Airlines was priced much less per share. As the market gradually discovered, Cramer represented a better buy, offering more value for its price.

Consider using a Price/Earnings (P/E) value check …

ENTERPRISE VALUE/MARKET CAP x P/E (Market Cap/earnings)

Sunday, March 30, 2014

CANNABIS

Cannabis is a popular recreational /medicinal drug around the world, only behind alcohol, caffeine and tobacco. In the United States alone, it is believed that over 160 million Americans have tried Cannabis, with 25 million Americans having used it within the past year.

Medical cannabis (or medical marijuana) refers to the use of cannabis and its constituent cannabinoids, such as tetrahydrocannabinol (THC), as medical therapy to treat disease or alleviate symptoms.

The name Cannabis indica was listed in various Pharmacopoeias, and was widely used to designate Cannabis suitable for the manufacture of medicinal preparations.

More than 20 states (Alaska, Arizona, California, Colorado, Connecticut, DC, Delaware, Hawaii, Illinois, Maine, Massachusetts, Michigan, Montana, Nevada, New Hampshire, New Jersey, New Mexico, Oregon, Rhode Island, Vermont, Washington) have approved marijuana use for medicinal purposes and Colorado and Washington are opening up the plant for recreational use.

Marijuana companies rose more than 50 percent in 2013 and opened 2014 with a bang, rising almost 150 percent in just three weeks.

A few that filed with the SEC at the time of this writing include CANN (currently halted pending SEC investigation), CANV, CBIS, FULL and GWPH and GWPRF trades on NASDAQ, MCIG, NVLX, PHOT, VAPE.

Saturday, March 29, 2014

HIGH FREQUENCY TRADING (HFT) ALGO BOTS

A special class of algorithmic trading is "high-frequency trading" (HFT), in which computers make elaborate decisions to initiate orders based on information that is received electronically, before human traders are capable of processing the information they observe.

As of 2009, high frequency trading firms account for 73% of all US equity trading volume; about 20% of options volume expected to be computer generated by 2010.

As of October 2013, Eric Hunsader, founder of Nanex estimates that 90-95% of all orders placed come from high frequency machines.

Saturday, December 28, 2013

BIOTECH

A 2011 study notes the success rate in bringing new medicines to market in the past six years is only half of what it had been previously. Biotech drugs are twice more likely to gain approval than more traditional chemical drugs.

Moving from early stage Phase I clinical trials to FDA approval is roughly 10%, about half in earlier years.

Approval applications were filed for 55% of the drugs that made it to Phase III testing, and 80% of those gained eventual approval; though only half were approved on initial review.

SOURCE: BIOMEDTRACKER

In summary: 10% of biotechs move from early stage Phase I clinical trials to FDA approval, and only half of those are approved on initial review.

Sunday, November 10, 2013

BITCOIN

Gold is known as an alternative to paper currencies, can be traded anywhere in the world, and has a limited supply; the same is true for bitcoin.

Bitcoin is minted in quantities determined by an algorithm. Currently there are 11 million in circulation and the pre-determined algorithm will determine additional mints until a finite supply about 21 million of them are created and no more.

This digital virtual currency trading under the symbol BTC or XBT, became operational in early 2009; it was created by an unknown person using the alias Satoshi Nakamoto. In 2011 the value of one Bitcoin rapidly rose from about $0.30 to $32, before falling back down $2; at the time of this writing, bitcoin equals roughly $300 USD. Bitcoins have acquired a reputation for use by criminals to purchase drugs, launder money, and gamble. Since its inception, Bitcoin exchanges and transaction processors have been hacked routinely with losses totaling millions of USD.

Bitcoin uses cryptography, it does not do so to protect the privacy of individuals; all transactions are logged in a public file called the blockchain. It is possible, although difficult, to associate bitcoin transactions with real-life identities.

To use bitcoins one is assigned one or more bitcoin addresses, and wallets allow a user to complete transactions between addresses by requesting an update to the blockchain, the public transaction log instrumental to Bitcoin. Wallets come in a variety of forms: apps for mobile devices and computers, hardware devices, and paper tokens.

Link to realtime chart: http://bitcoinwisdom.com/

Saturday, November 2, 2013

DARK POOLS

Dark pools of liquidity (dark liquidity, dark pools or black pools) is trading volume or liquidity not openly available to the retail investor. They are commonly traded with large block trades (at least 10,000 shares/block) by financial institutions with algorithms using quantitative strategies throughout the day or at scheduled times.

The main advantage in using dark pools is to avoid market impact from the transparency of a large block trade. Dark pools are run by private brokerages (Barclays, Citi, Credit Suisse, Fidelity, Goldman Sachs, Deutsche Bank, UBS to name a few) which operate under fewer regulatory and public disclosure requirements than public exchanges. Trading on the dark pools accounts for 32% of trades in 2012 versus 26% in 2008.

Sunday, August 4, 2013

RECOVERING FINANCIAL SECTOR

Banks, brokers and insurance companies make up almost 17% of the S&P 500, almost twice the level from 2009 and closing in on technology companies at 17.6% as of the end of July 2013.

Banks were the biggest American industry during the bull market that began in 2002, when the S&P 500 more than doubled and the economy expanded as much as 3.5% annually. In the late 1990s, financial firms grew to almost 19% of the index, coinciding with the largest stock rally in U.S. history and more than 4% average annual growth in gross domestic product (GDP).

The last time financial shares were the largest group in the S&P 500 was May 2008, four months before Lehman Brothers Holdings Inc. filed the largest bankruptcy in U.S. history. It took more than $2 trillion of credit-related losses and write downs, after risky trading and home lending led to the credit crisis. About $11 trillion vanished from U.S. equity market value in the following year and a half.

Sunday, June 30, 2013

VIX

VIX is a weighted average of the out-of-the-money SPX options in the first two expirations, and adjusted to simulate the volatility of an option with 30 days to expiration. It is never wrong since it is a calculation using actual bid/ask prices of these SPX options.

If the VIX is going up, then the out-of-the-money options in the calculation are rising from trader’s accumulation (demand); likewise, the VIX drops from trader’s distribution (supply).

If the market is moving lower, but traders are not bidding up the out-of-the-money options (VIX doesn’t rise), then traders are already hedged, or are less leveraged, and the extent of a sell-off is not perceived as intimidating to them.

Use the VIX to complement your trading strategies rather than to predict market direction. Compare the change to the past few weeks to gauge the overall fear or complacency in the market. If the VIX is rising above the past trend, then uncertainty is increasing in the market over what may happen in the near term future; likewise, if the VIX is falling below the past trend, then complacency is increasing and option premiums are relatively low.

Saturday, June 22, 2013

U.S. BANKRUPTCY

U.S. bankruptcy is imposed by a court order, often initiated by the debtor that cannot repay the debt it owes to creditors.

Corporations and other business forms file under Chapters 7 or 11. Complete loss of Equity holder's Investment results in Chapter 7 and can result in Chapter 11 proceedings.

The most common types of personal bankruptcy for individuals are Chapter 7 and Chapter 13. As much as 65% of all U.S. consumer bankruptcy filings are Chapter 7 cases.

There are six types (chapters) of bankruptcy under the Bankruptcy Code, located at Title 11 of the United States Code:

Chapter 7: basic liquidation for individuals and businesses; also known as straight bankruptcy; it is the simplest and quickest form of bankruptcy available.
Chapter 9: municipal bankruptcy; a federal mechanism for the resolution of municipal debts.
Chapter 11: rehabilitation or reorganization, used primarily by business debtors, but sometimes by individuals with substantial debts and assets; known as corporate bankruptcy, it is a form of corporate financial reorganization which typically allows companies to continue to function while they follow debt repayment plans.
Chapter 12: rehabilitation for family farmers and fishermen.
Chapter 13: rehabilitation with a payment plan for individuals with a regular source of income; enables individuals with regular income to develop a plan to repay all or part of their debts; also known as Wage Earner Bankruptcy.
Chapter 15: ancillary and other international cases; provides a mechanism for dealing with bankruptcy debtors and helps foreign debtors to clear debts.

Tuesday, June 4, 2013

PERMANENT OPEN MARKET OPERATIONS (POMO)

The Fed influences short term interest rates by controlling the interbank lending rate known as the Fed funds rate. Through its Open Market Operations (OMO), it purchases (adds reserves) and sells (drains reserves) short term repurchase agreements (RPs) with dealers in Treasuries by the Trading Desk of the Federal Reserve Bank of New York to maintain just enough reserves to the banking system to meet the target rate demand.

Permanent Fed reserve additions/drains (POMO) is just one of three tools used by the Federal Reserve to implement monetary policy. The other two are the discount rate and reserve requirements. Open market operations are conducted by the Federal Open Market Committee (FOMC), while the discount rate and reserve requirements are set by the Federal Reserve's board of governors.

Sunday, May 26, 2013

SECULAR TREND IMPACT BY BABY BOOMERS

A baby boomer is a person born during the 19 year post-World War II baby boom period between the years 1946 and 1964. This generation of baby boomers began celebrating 65+ years during 2010, and over the next 15 years, as a group, they are the wealthiest, most active, and most physically fit generation. They were also the generation that received peak levels of income, therefore they could reap the benefits of abundant levels of food, apparel, retirement programs, and sometimes even "midlife crisis" products.

It is important for investors to Identify secular trends, over a long-term time frame, usually at least 10 years, not just short-term trends, if they want to succeed.

Examples of secular trends include Bull and Bear Market Cycles, an aging population (which will tend to have different spending and savings habits than a younger population), the expansion of a particular technology (such as the Internet) and heavy reliance on certain commodities (like oil).

Consumer spending makes up over 70% of Gross Domestic Product (GDP) which is a broad measure of U.S. economic activity. The aging generation of baby boomers has started to influence GDP spending habits and will impact the growth of specific sectors of GDP over the next 15 years.

Thursday, February 7, 2013

SMALL CAP MONTHLY PERFORMANCE

Below represents Small Caps average monthly performance the past 84 years

Wednesday, February 6, 2013

AVERAGE MONTHLY S&P 500 RETURNS

source:
http://www.moneychimp.com/features/monthly_returns.htm

Friday, January 4, 2013

TRADING CURBS, HALTS, AND PAUSES

A trading curb also known as a circuit breaker, is a point at which a stock market will stop trading for a period of time in response to substantial drops in value.

At the start of each quarter, the NYSE sets three circuit breaker levels at levels of 10%, 20%, and 30% of the average closing price of the Dow Jones Industrial Average for the month preceding the start of the quarter, rounded to the nearest 50-point interval. As of the fourth quarter of 2012, these levels are 1,350 points, 2,700 points, and 4,050 points respectively. Depending on the point drop that happens and the time of day when it happens, different actions occur automatically. A one hour halt is triggered at 10%, two hour halt at 20%, and market closes at 30%.

Trading halts usually occur when a publicly traded company is going to release significant news about itself. The halt in trading for the affected security gives investors time to review the news and assess its impact. Another situation in which a trading halt might occur is when the exchange is uncertain "whether the security continues to meet the market’s listing standards."

Also, there are "trading pauses", which are defined as, under NASDAQ, "if a security is subject to a Trading Pause, the Pause Threshold Price field will contain the reference threshold price that deviates 10% from a print on the Consolidated Tape that is last sale eligible as compared to every print in that security on a rolling five (5) minute basis".

http://www.nasdaqtrader.com/Trader.aspx?id=TradeHalts

Tuesday, December 4, 2012

TEN THOUSAND HOURS RULE

In essence, the 10,000 hour principle is a confirmation of the maxim made famous by Edison: genius is 1% inspiration, 99% perspiration.

Outliers by Malcolm Gladwell repeatedly mentions the "10,000-Hour Rule", claiming that the key to achieving world class success in any field is, to a large extent, a matter of practicing a specific task for a total of around 10,000 hours.

To find your success zone in trading at 5 hours per trading session equates to 8 years. During the practicing process, there are no failures, only feedback.

PSYCHOLOGICAL FORCES

THE TRADER

Nothing matches the opportunities, excitement, joy, fear, and defeats, associated with trading. To become successful in this market, merely sound knowledge about the market does not suffice. It requires out of the box psychological traits to emerge out as a winner. If you go by the rumors and follow what others are doing, chances are there that you may lose out in the end. Correctly gauging the market psychology will result in success. The more our minds model the market, the more in synch we get. If what you are doing is not working, re-evaluate your strategies and increase the level of our awareness rather than the intensity of trading. Our internal process dictates the action. The markets are messy, our information is imperfect, our systems will fail and we can still make money. Seek the practice rather than the result. There is no failure, just feedback.

The greatest fault of traders is being bullish at high prices and bearish at low prices. Fear, greed, hope and despair continue to be key elements in everything that we do including stock market trading. Overtrading causes anxiety, and following the market beyond a reasonable climax is unprofitable. Try to catch the trend of a sentiment even if against the fundamentals. Keep the mind clear and balanced so as to avoid acting hastily on sensational information, acting solely on your own judgment and common sense rather than emotions. The best approach would to be unbiased to all the stocks.

Social proof is human nature to look to others to determine the best course of action for ourselves. If we see others getting rich by buying stocks, then it must be a good time to buy. Likewise, the same goes for when everyone else is selling.

Competition is the cornerstone of the stock market. Scarcity is a natural tendency to want things in limited supply; we rush in and buy stocks at $5 because we are afraid that in a short time they will only be available for $7, $10, or much more. We must buy it now, because this price may not be available for much longer. We appreciate something most after losing it. That’s why when there is a large drop in the stock market and we have lost a lot of money, we are timid about buying more. Once we have lost, we want to hold on to what we have for fear of losing more. This influences us to buy when prices are high and sell when prices are low.

When you are engulfed by the powerful forces of scarcity, you can fall back on your strategy. Before making a stock trade, simply ask yourself this - Does this trade fit into my long-term stock trading strategy and have I heard the best arguments against it?

THE MARKET

A stock chart is nothing more than a graph of human emotions in the market place; printed on price and time axis are the emotions of greed, fear, hope, and euphoria. As a disciplined trader, you capitalize on the psychological demons that plague other traders.

Should I buy?
Should I sell?
Should I take profits?
Should I take a loss?

These are some of the questions that empty trading accounts because the novice traders asking these questions do not have a plan. So what ends up happening? They get excited and buy at the worst possible time. Then the stock reverses. Fear creeps in and then the stock goes lower... and lower... and lower. Finally the pain becomes too much to bear so they sell taking a huge loss.

Likewise, when a stock does go in the desired direction: Excitement! Euphoria! I'm making money! "I had better sell to lock in these profits since I have had several losing trades in a row." The trader then ends up selling too soon!

"Keep your losses small and let your winners run.” The un-disciplined trader has just done the opposite! They have let their losses get big and they have limited their winners!

This mental anguish can be eliminated by having a trading strategy and the mental discipline to stick with it. Write down a plan for the trade before you trade the stock. Then trade it according to the plan that you have written. Remember that you have devised a plan before you got into the trade when your emotions were stable. Now you can trade your plan with confidence.

Learning to trade stocks and applying technical analysis to charts is mostly about human psychology - not chart patterns and candlestick patterns themselves. You must understand the psychology behind these patterns.

Here is a breakdown of what happens:

Breakout Traders - These traders bought the breakout. They operate under the "greater fool theory". They are just praying that other traders come along and buy higher than they did.

Novice Traders - These traders just have no idea what they are doing. They are buying shares of stock that the breakout traders are now selling to them.

Momentum Traders - These traders are buying the pullback and tend to buy near the 10 MA. They are likely going to put their stop below the low of the hammer.

Swing Traders - This is where we come in. The stock falls below that hammer and the momentum traders get stopped out. By now most of the novice traders and momentum traders have sold. See how the volume has tapered off? Previous resistance now becomes support.

Novice Traders - Once again, the novice traders are buying at the worst possible time. We need these traders so that we can sell our shares to them and make a profit.

Thursday, November 22, 2012

TECHNICAL ANALYSIS

At the turn of the century, the Dow Theory laid the foundations for what was later to become modern technical analysis. Dow Theory was not presented as one complete amalgamation, but rather pieced together from the writings of Charles Dow over several years. Of the many theorems put forth by Dow, three stand out:
·         Price Discounts Everything
·         Price Movements Are Not Totally Random
·         "What" Is More Important than "Why"

One very popular form of technical analysis until the mid-1960s was "tape reading". It consisted in reading the market information as price, volume, orders size, speed, conditions, bids for buying and selling, etc.; printed in a paper strip which ran through a machine called a stock ticker.

Technical analysts do not attempt to measure a security's intrinsic value, but instead use charts and other tools to identify patterns that can suggest future performance. Technical analysts consider the market to be 80% psychological and 20% logical. Technical analysts believe that the current price fully reflects all information. Because all information is already reflected in the price, it represents the fair value, and should form the basis for analysis. After all, the market price reflects the sum knowledge of all participants, including traders, investors, portfolio managers, buy-side analysts, sell-side analysts, market strategist, technical analysts, fundamental analysts and many others.

Since a market's price reflects all relevant information, their analysis looks at the history of a security's trading pattern rather than external drivers such as economic, fundamental and news events. Therefore, price action would also tend to repeat itself due many investors collectively tend toward patterned behavior – hence technicians' focus on identifiable trends and conditions.

So based on the premise that all relevant information is already reflected by prices, technical analysts believe it is important to understand what investors think of that information, known and perceived. Technical analysts examine what investors fear or think about those developments and whether or not investors have the wherewithal to back up their opinions; these two concepts are called psych (psychology) and supply/demand. Technicians employ many techniques, one of which is the use of charts. Using charts, technical analysts seek to identify price patterns and market trends in financial markets and attempt to exploit those patterns. Technicians use various methods and tools, the study of price charts is but one.

Many technicians employ a top-down approach that begins with broad-based macro analysis. The larger parts are then broken down to base the final step on a more focused/micro perspective. Such an analysis might involve three steps:

Broad market analysis through the major indices such as the S&P 500, Dow Industrials, NASDAQ and NYSE Composite.
Sector analysis to identify the strongest and weakest groups within the broader market.
Individual stock analysis to identify the strongest and weakest stocks within select groups.

Technical analysis is not limited to charting, but it always considers price trends. For example, many technicians monitor surveys of investor sentiment. These surveys gauge the attitude of market participants, specifically whether they are bearish or bullish. Technicians use these surveys to help determine whether a trend will continue or if a reversal could develop; they are most likely to anticipate a change when the surveys report extreme investor sentiment. Surveys that show overwhelming bullishness, for example, are evidence that an uptrend may reverse; the premise being that if most investors are bullish they have already bought the market (anticipating higher prices). And because most investors are bullish and invested, one assumes that few buyers remain. This leaves more potential sellers than buyers, despite the bullish sentiment. This suggests that prices will trend down, and is an example of contrarian trading.

The beauty of technical analysis lies in its versatility. Because the principles of technical analysis are universally applicable, each of the analysis steps above can be performed using the same theoretical background. You don't need an economics degree to analyze a market index chart. You don't need to be a CPA to analyze a stock chart. Charts are charts. It does not matter if the time frame is 2 days or 2 years. It does not matter if it is a stock, market index or commodity. The technical principles of support, resistance, trend, trading range and other aspects can be applied to any chart.

Technical analysts believe that investors collectively repeat the behavior of the investors that preceded them. To a technician, the emotions in the market may be irrational, but they exist. Because investor behavior repeats itself so often, technicians believe that recognizable (and predictable) price patterns will develop on a chart.

Technicians using charts search for archetypal price chart patterns, such as the well-known head and shoulders or double top/bottom reversal patterns, study technical indicators, moving averages, and look for forms such as lines of support, resistance, channels, and more obscure formations such as flags, pennants, balance days and cup and handle patterns.

Technical analysts also widely use market indicators of many sorts, some of which are mathematical transformations of price, often including up and down volume, advance/decline data and other inputs. These indicators are used to help assess whether an asset is trending, and if it is, the probability of its direction and of continuation. Technicians also look for relationships between price/volume indices and market indicators. Examples include the relative strength index, and MACD. Other avenues of study include correlations between changes in Options (implied volatility) and put/call ratios with price. Also important are sentiment indicators such as Put/Call ratios, bull/bear ratios, short interest, Implied Volatility, etc.

There are many techniques in technical analysis. Adherents of different techniques (for example, candlestick charting, Dow Theory, and Elliott wave theory) may ignore the other approaches, yet many traders combine elements from more than one technique. Some technical analysts use subjective judgment to decide which pattern(s) a particular instrument reflects at a given time and what the interpretation of that pattern should be. Others employ a strictly mechanical or systematic approach to pattern identification and interpretation.

Technical analysis employs models and trading rules based on price and volume transformations, such as the relative strength index, moving averages, regressions, inter-market and intra-market price correlations, business cycles, stock market cycles or, classically, through recognition of chart patterns.

Charting Terms and Indicators

Concepts:

Resistance – a price level that may prompt a net increase of selling activity
Support – a price level that may prompt a net increase of buying activity
Breakout – the concept whereby prices forcefully penetrate an area of prior support or resistance, usually, but not always, accompanied by an increase in volume.
Trending – the phenomenon by which price movement tends to persist in one direction for an extended period of time
Average true range – averaged daily trading range, adjusted for price gaps
Chart pattern – distinctive pattern created by the movement of security prices on a chart
Dead cat bounce – the phenomenon whereby a spectacular decline in the price of a stock is immediately followed by a moderate and temporary rise before resuming its downward movement
Elliott wave principle and the golden ratio to calculate successive price movements and retracements
Fibonacci ratios – used as a guide to determine support and resistance
Momentum – the rate of price change
Point and figure analysis – A priced-based analytical approach employing numerical filters which may incorporate time references, though ignores time entirely in its construction.
Cycles – time targets for potential change in price action (price only moves up, down, or sideways)

Types of charts:

Open-high-low-close chart – OHLC charts, also known as bar charts, plot the span between the high and low prices of a trading period as a vertical line segment at the trading time, and the open and close prices with horizontal tick marks on the range line, usually a tick to the left for the open price and a tick to the right for the closing price.
Candlestick chart – Of Japanese origin and similar to OHLC, candlesticks widen and fill the interval between the open and close prices to emphasize the open/close relationship. In the West, often black or red candle bodies represent a close lower than the open, while white, green or blue candles represent a close higher than the open price.
Line chart – Connects the closing price values with line segments.
Point and figure chart – a chart type employing numerical filters with only passing references to time, and which ignores time entirely in its construction.

Overlays:

Overlays are generally superimposed over the main price chart.

Resistance – a price level that may act as a ceiling above price
Support – a price level that may act as a floor below price
Trend line – a sloping line described by at least two peaks or two troughs
Channel – a pair of parallel trend lines
Moving average – the last n-bars of price divided by "n" -- where "n" is the number of bars specified by the length of the average. A moving average can be thought of as a kind of dynamic trend-line.
Bollinger bands – a range of price volatility
Parabolic SAR – Wilder's trailing stop based on prices tending to stay within a parabolic curve during a strong trend
Pivot point – derived by calculating the numerical average of a particular currency's or stock's high, low and closing prices
Ichimoku kinko hyo – a moving average-based system that factors in time and the average point between a candle's high and low

Price-based indicators:

These indicators are generally shown below or above the main price chart.

Average directional index – a widely used indicator of trend strength
Commodity Channel Index – identifies cyclical trends
MACD – moving average convergence/divergence
Momentum – the rate of price change
Relative strength index (RSI) – oscillator showing price strength
Stochastic oscillator – close position within recent trading range
Trix – an oscillator showing the slope of a triple-smoothed exponential moving average
%C – denotes current market environment as range expansion or a range contraction, it also forecast when extremes in trend or choppiness are being reached, so the trader can expect change.

Breadth Indicators

These indicators are based on statistics derived from the broad market

Advance–decline line – a popular indicator of market breadth
McClellan Oscillator - a popular closed-form indicator of breadth
McClellan Summation Index - a popular open-form indicator of breadth

Volume-based indicators

Accumulation/distribution index – based on the close within the day's range
Money Flow – the amount of stock traded on days the price went up
On-balance volume – the momentum of buying and selling stocks

Sunday, February 28, 2016

Sunday, July 6, 2014