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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