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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