# Introduction to Stocks and Technical Analysis

Introduction to Stocks and Technical Analysis

Major Indices

S&P 500 – Large Cap (SPX~SPY)

Dow Jones 30 – Industrial Average (DJX~DIA)

NASDAQ 100 – Electronic Trading (NDX~QQQ)

RUT 2000 – Small Cap (RUT~IWM)

Symbol nomenclature

4 character symbols correspond to the NASDAQ

3 or less character symbols correspond to the NYSE and AMEX

Symbol nomenclature

the character in any symbol:

D – New

E – Delinquent in required filings with SEC

F – Foreign

J – Voting

K – Nonvoting

Q – Bankruptcy Proceedings

Chart types

Line charts (graphs the close of each bar)

Candlestick charts

OHLC charts (Open, high, Low, Close)

Simple moving averages are calculated by dividing the sum of the close N days back and dividing by the number of data points Most widely used Moving Averages by Professionals are

____day

____day

____day

Exponential moving averages put more weight on recent days than previous days

Bollinger Bands are used to gauge conditions of overbought and oversold, most widely used settings are 20,2 which means we will use a 20 day simple moving average as the center and go 2 standard deviations to either side from the center to create the Bollinger Bands

Oscillators are also used to gauge oversold/overbought situations they include

RSI

Stochastic Oscillators (Slow)

The MACD (Moving Average Convergence/Divergence) measures the separation between exponential moving averages, giving us a good idea of the trend and it’s strength

Volume .It gives us an idea of sentiment, ideally volume will go up on up days in an uptrend and vice versa on downtrends

Example of stochastic + macd + volume

Trend patterns

More examples

Where do they bounce back to do a pull-in? They usually bounce where they have bounced before – blue circles What are the target prices? Targets are parallel to support or resistance, loser than support or resistance – yellow lines

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