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October 14, 2002
Basic Technical Analysis Terminology
Technical Analysis is the art of keeping your job on wall street when stock prices make no sense. The claim is that stocks (not companies) trade within certain 'technical' parameters.
Support: - the price below which the demand for the stock will prop the price up
Resistance: - the price at which the supply will increase, keeping the stock price constrained
Short Interest ratio: ratio of total short sales positions to average daily exchange volume. It ranges from 2.0 (bearish) to 5.0 (bullish).
Contrary Opinion rule: Whenever 60% or more of the recommendations are bearish then expect the stock to go up. Whenever 15% or less are bearish then expect the stock to go down. This is the anti-portfolio!
Breadth indicator: NetAdvanceorDeclines/Number of issues traded gives you an idea of if the market overall is moving upward or downwards
Posted at October 14, 2002 10:52 AM