Glossary

This is a work in progress that I will try update from time to time.

Above the Market

A limit order to buy or sell a security for a specified price that is higher than the current market price. If the market does not reach the specified price, the order will go unfilled.

Absolute Breadth Index

This indicator is equal to the absolute value of the difference between the advancing issues and the declining issues. It shows activity and volatility levels on the New York Stock Exchange regardless of the price direction.

Advance Decline Line

The Advance-Decline Line (AD Line) is one of the most widely used breadth indicators. It is based on Net Advances, which is the number of advancing stocks less the number of declining stocks.

Bear

A person who thinks stock prices will decline. They may also be described as having a ‘bearish’.

Bear Market

A period of time when prices in the prices are generally declining, usually defined as a decline of more than 20%. Bear markets often occur when approximately 80% of all stocks decline over the same period of time.

Bear Trap

A situation that occurs when price breaks below a significant level, generating a sell signal, but then quickly reverses direction to cancel the sell signal. It can be thought of price moving in a whipsaw like fashion. This often catches out, or traps, those who acted on the sell signal.

Breadth Indicator

A type of indicator that generally shows the amount of participation in the movement of a stock market.

Breadth Thrust Indicator

Momentum indicator that signals a long term buy signal. A buy signal is generated when, during a 10 day trading period, the average number of stocks that are advancing goes from below 40% to above 61.5%.

Bull

A person who believes price will advance and may be described as having a ‘bullish’ outlook.

Bull Market

A period of time when prices in the market are generally increasing. Bull markets often occur when approximately 80% of all stocks advance over an extended period of time.

Bull Trap

A situation that occurs when price breaks above a significant level, generating a buy signal, but then quickly reverses direction to cancel the buy signal. It can be thought of price moving in a whipsaw like fashion. This often catches out, or traps, those who acted on the buy signal.

Gold To Oil Ratio

The ratio of gold to oil shows how many oil barrels can be bought with 1 ounce of gold. Used as a gauge to determine market stress and signal a potential crisis.

Hyperinflation

Hyperinflation is a situation where the price increases are so completely out of control that the word ‘inflation’ no longer has meaning.

Inflation

Inflation is a sustained increase in the general price of goods and services over time. When the price level rises, each unit of currency buys fewer goods and services.

Money Flow Index (MIF)

A momentum indicator that shows the strength of money flowing in and out of a security.

Negative Interest Rate Policy (NIRP)

An unconventional monetary policy tool whereby interest rates are set with a negative value i.e. below zero.

Zero Interest Rate Policy(ZIRP)

ZIRP is a method of stimulating growth while keeping interest rates close to zero.

OPEC (Organization of the Petroleum Exporting Countries)

The aim of the organisation is to coordinate and unify the petroleum policies of its Member Countries and ensure the stabilization of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital for those investing in the petroleum industry.

Percentage Price Oscillator (PPO)

A momentum oscillator for price, similar to the moving average convergence divergence (MACD) it measures the difference between two volume based moving averages as a percentage of the larger moving average.

Percentage Volume Oscillator (PVO)

A momentum oscillator for volume, it measures the difference between two volume based moving averages as a percentage of the larger moving average.

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