# 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)

![](https://4277250916-files.gitbook.io/~/files/v0/b/gitbook-legacy-files/o/assets%2F-Maxuhjj-BF64fFR5J_n%2F-MbCgpaGmGv4zD9V-72G%2F-MbChAxB1Er8iL8Hrzdo%2Fimage-18.png?alt=media\&token=5185d03e-ca6b-4fe4-bace-c18013f48e94)

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

![](https://4277250916-files.gitbook.io/~/files/v0/b/gitbook-legacy-files/o/assets%2F-Maxuhjj-BF64fFR5J_n%2F-MbCgpaGmGv4zD9V-72G%2F-MbChLHKzwaQxge98MGs%2Fimage-19.png?alt=media\&token=f5e4bf12-7d92-4e0c-baa4-5eec17f2a8dc)

Trend patterns

![](https://4277250916-files.gitbook.io/~/files/v0/b/gitbook-legacy-files/o/assets%2F-Maxuhjj-BF64fFR5J_n%2F-MbCgpaGmGv4zD9V-72G%2F-MbChOI2grqKhl0BWJa7%2Fimage-20.png?alt=media\&token=03693c99-e363-4d67-bb5a-2b1e6b5f62d9)

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 

![](https://4277250916-files.gitbook.io/~/files/v0/b/gitbook-legacy-files/o/assets%2F-Maxuhjj-BF64fFR5J_n%2F-MbCgpaGmGv4zD9V-72G%2F-MbChRBrOsTwXB-un4ou%2Fimage-21.png?alt=media\&token=eababf8e-4aa1-4eaa-8c5e-d569f75490cb)