Chapter 6 Flashcards
The following 3 assumptions are the bases of ____
- All influences on market action are automatically accounted for or discounted in price activity.
- Prices move in trends and those trends tend to persist for relatively long periods of time.
- The future can be found in the past.
Technical analysis
Technical Analysis is practiced under 4 disciplines. What are they?
- Chart Analysis
- Statistical Analysis
- Sentiment Analysis
- Intramarket Analysis
If a stock trades below an uptrend or below a down trend it is referred to as a ____ or ____.
Break or Violation
A _____ is the price at which the majority of investors sense value.
Support level
A ____ is the price at which investors believe the stock is fully valued.
Resistance level
Getting ____ means taking a certain position in anticipation of the market moving in a certain direction, only to have it go the opposite way.
whipsawed
This form of technical analysis is made possible by the increased sophistication of computers.
Statistical Analysis
An ____ is an indicator that moves between two values.
Oscillator
The ____ indicator the difference between a short term and longer term exponential moving average (EMA).
MACD
The _____ indicator is a good tool for assessing the quality of market moves. It indicates whether the market is closing near its highs and lows.
Stochastic
The ___ measures momentum by comparing the ____ of prices gains on days that a stock closes up to the strength of price declines on days that stocks closes own.
Relative Strength Indicator (RSI)
____ indicators are focused on investor expectations, or their degree of bullishness or bearishness about a particular stock or stock index.
Sentiment
There are 3 basic relationships that inter market analysts follow. Name them
- Stocks verses bonds
- Bonds vs commodities
- Commodities versus currencies
____uses one of the oldest known charting techniques, which originates in Japan in the early 17th century.
Candlestick
The most common support and resistance levels are the highs and lows of trading ranges. These levels are known as ___ and ___ levels.
Horizontal support and horizontal resistance
Some reversal formations take ____ or even ____ to develop.
Weeks or months
When a head and shoulder formation appears at the end of the bull market it is called a head and shoulders ____. When it takes place at the end of a bear market it is called a head and shoulders ____ or a ____ head and shoulders.
Top
Bottom
Inverse
The _____ triangle usually indicates a continuation but may occasionally indicate a reversal. In this triangle h support and resistance lines are equal in length and slope.
Symmetrical
____ are bullish patterns that hav a horizontal resistance line and a positively sloped trend line acting as support.
Ascending triangles
____ consists of a horizontal support line and a negatively sloped trend line.
Descending triangle
The RSI is considered a down trend if the value is below what value for an extended period?
50
What put/call value is considered a buy signal?
80
The current dividend of LSB stock is $3.17. Its growth rate is 2% and the discount rate is 4%. Calculate the intrinsic value of LSB.
$161.67
Calculate the sustainable growth rate for XYZ Corp which has a return on equity of 15%, dividend payout ratio of 45%, and fully diluted earnings per share of $5.26.
g = (1 - dividend payout ratio) x return on equity
g = (1 - 0.45) x 15% = 8.25%.
Which formation looks most similar to the capital letter “M”?
Double Top
Which types of industries display the greatest sensitivity to changes in the economy?
Cyclical
Financial statements are more comparable across industries in what form of accounting?
Principal based accounting
In the Bank of Canada bought 5 year treasury bonds in the open market would this be inflationary of deflationary?
Inflationary
A ___ is a line connecting a series of ascending lows or descending highs. Although it can be drawn by connecting just two points, a third point is needed to confirm that it is valid.
Trendline
What maximum amount of time could a trader need to wait before a reversal breaks the current trend?
Years
