Technical Analysis Glossary

[Justin]

This is an awesome site that offers a wealth of information on understanding technical indicators ranging from the very basic to the most advanced. The glossary includes a picture and a paragraph of nearly every technical indicator that I have even remotely heard of.

Prophet.net is directly associated with InvesTools. The graphs and charts on this website are the exact same as the InvesTools/BusinessWeek charts.

http://www.prophet.net/learn/taglossary.jsp?index=A

[michiganborn]

Simple Moving Average
Tracks price average during time period → market psychology
Smoothes out day-to-day price fluctuations = tracks trends > how asset is priced relative to past ten days
SMA is the average of a number of past data points > 10-day = closing prices for ten days added together/10 > it then plots the values on chart and connects
Called moving b/c oldest points dropped as soon as new available
Critics argue SMA usefulness limited b/c each point is weighted the same > exponential moving average (EMA) gives more weight to recent prices

Settings: Buying = 10-day MA gives early buy signal
Watching = 50-day

Strategy: Buy when price moves above SMA line



MACD
Indicates market trend of a stock
= combination of two moving averages (fast and slow) and how they interact
8-17-9 > first line is difference b/w 8 & 17 day moving averages (MACD); the second is the 9 day moving average
Crossover tells you whether there is a trend and how strong > the higher above the centerline the stronger the trend; if crossover occurs below center line, trend not nearly as strong

Settings: Buying = 8-17-9 (more responsive for detecting big price jumps)
Watching = 12-26-9 (longer term trends)

Strategy: Buy when MACD (red) crosses above 9 day moving average (blue) = buy at beginning of mountain and sell as mountain going down


Stochastic Indicator
Tracks overselling/buying of a stock = market momentum
First number covers # of periods (usually 14 days); second is trigger EMA (usually 5)
Oversell = too much supply = price goes down; overbuy = too many buyers = price up
When stochastic moves below 20th percentile stock is getting oversold; when it moves up through 20th percentile it shows instl investors starting to buy = price going to go up; when it moves up through 80th, stock is overbought; when it moves down from 80th instl investors are selling and price likely to drop
Stochastics plotted against 5 day EMA to provide trigger points: trigger = the crossing

Settings: Buying = 14-5-0
Watching = ignore (only short-term indicator)

Strategy: Buy when crosses up over 20th
Sell when crosses down through 80th
*these signals usually preceded by a crossing w/ EMA = early warning

[kosmo]

Is this type of technical analysis generally considered mutually exclusive to individual stocks or is there any carry-over that could be used when investigating mutual funds?

[nancy802]

Originally Posted by kosmo

Is this type of technical analysis generally considered mutually exclusive to individual stocks or is there any carry-over that could be used when investigating mutual funds?

I believe the mutual funds, along with hedge funds, pension funds, etc., make up the "big guys" whose purchases/sales tracks are revealed in the technical indicators for individual stocks.

Unless their is a reason for these other institutions to be buying into/out of specific mutual funds, I don't think the tools will work for fund prices. Their prices should fluctuate based on the value of their holdings and the addition of new money (or fund redemptions) by the fund investors.