lecture 1 Flashcards
BASIC ASSUMPTIONS IN TECHNICAL ANALYSIS
- The market discounts everything
- Price moves in trends
- History tends to repeat itself
The first price traded for the period.
Open
An important consensus as all interested parties
were able to “sleep on it”.
Open
The point where there were more sellers than
buyers.
High
The highest price traded for the period.
High
The point where there were more buyers that sellers.
Low
The lowest price traded for the period.
Low
The last price traded for the period. Most
often used price for analysis.
Close
The relationship of the open and close prices is considered most significant
by technicians.
Close
The number of shares traded during
the period.
Volume
The price a buyer is willing to pay
Bid
The price a seller is willing to accept
Ask
It tells the quantity of the company’s profit assigned to individual shares of stock and
calculated as net income (after deducting dividends on selected stock) divided by the number
of outstanding shares of the company
Earnings Per Share (EPS)
This ratio can be measured by dividing the price of the shares (current sale price) in the market
to the earnings per share.
Price-to-earnings ratio (P/E)
It predicts the earnings growth rate per year of the stock and gives a good picture of the growth projects of the company.
Projected earnings growth(PEG)
It recognizes the price of the stock as related to the revenues, and sometimes known as the
PSR, Revenue Multiple, or Sales Multiple.
Price-to-sales ratio(P/S)
It compares the book value of a stock to its market value, where a book value is the value of an asset as it reflects in the company’s book
Price-to-book ratio(P/B)
To compare the dividends paid out to the stakeholders out of the total net income (profit) of the company.
Dividend payout ratio
It is the ratio that provides annually dividends in comparison to share price and expressed in percentage.
Dividend yield
It is measured by dividing the net income of the company by stakeholders’ equity and provides the return made on the equity of the company, also expressed as company’s return on the net worth.
Return on equity
is a general direction of prices on a
particular time.
Trend
describes the price movement of a financial asset when the overall direction is upward
Uptrend
is a gradual reduction in the price or value of a stock or commodity, or the activity of a financial market.
Downtrend
occurs when the price of a security trades within a fairly stable range without forming any distinct trends over some period of time.
Sideways trend
