The point on a stock chart when a security and an indicator intersect. Crossovers are used by technical analysts to aid in forecasting the future movements in the price of a stock. In most technical analysis models, a crossover is a signal to either buy or sell. Below we have a stock that falls below its 20-day moving average - a bearish sign. An example of a crossover would be when the security line breaks through its 25-day moving average which may be a signal to buy the stock. Some of the indicators that use crossovers are "moving average" and "Bollinger bands".
The movement of a security's price against the current trend. A countermove occurs soon after the original trend and in the opposite direction, but by a lesser amount. Countermoves allow investors to try to "buy low, sell high," by taking advantage of the price retreating along the current trend to obtain a better entrance.Also known as a retracement. Gains had by trading on countermoves are usually smaller because the full market swings are not recognized. Risk of loss is also high because traders often mistake a reversal for a countermove or retracement. For this reason, having a stop-loss in place is imperative.For example, if the stock price moves up $15 and stays around the new level, it is just considered a move. But if the stock price moves up $15 then quickly moves down $11, it could be considered a countermove.
A type of analysis an investor, analyst or portfolio manager may conduct on a company in relation to that company's industry or industry peers. The analysis compares one company against the industry it operates within, or directly against certain competitors within the same industry, in an attempt to discover the best of the breed. When conducting a cross-sectional analysis, the analyst seeks to identify, by using comparative metrics, the valuation, debt-load, future outlook and/or operational efficiency of the target company. This allows the analyst to evaluate the target company's efficiency in these areas, and to make the best investment choice among a group of competitors or the industry as a whole.When comparing the target firm to competitors, the analyst must be careful to consider the unique operating characteristics of each company and how that will affect any comparative metrics used.
A trend analysis using point and figure charts to estimate the vertical movement of prices. Count calculations are based upon past sideways price movements and are used to gauge the probability that a price target will be reached. This is used by traders to ascertain whether certain positions are profitable.
A trading strategy where an investor attempts to make small gains through a series of trades against the current trend. It is also known as "counter-trend trading". Contrarian investors perform counter-trend trading strategies - purchasing shares when prices are low and selling when they're high. The investor receives smaller gains since the full market swing is not recognized. Many counter-trend investors use momentum indicators to determine the best times to execute their trades.
A schematic tree-shaped diagram used to determine a course of action or show a statistical probability. Each branch of the decision tree represents a possible decision or occurrence. The tree structure shows how one choice leads to the next, and the use of branches indicates that each option is mutually exclusive. A decision tree can be used to clarify and find an answer to a complex problem. The structure allows users to take a problem with multiple possible solutions and display it in a simple, easy-to-understand format that shows the relationship between different events or decisions. The furthest branches on the tree represent possible end results.
A trading strategy that was developed in 1956 by former ballroom dancer Nicolas Darvas. Darvas' trading technique involved buying into stocks that were trading at new 52-week highs with correspondingly high volumes.A Darvas box is created when the price of a stock rises above the previous 52-week high, but then falls back to a price not far from that high. If the price falls too much, it can be a signal of a false breakout, otherwise the lower price is used as the bottom of the box and the high as the top. In 1956, Darvas was able to turn an investment of $10,000 into $2 million over an 18-month period. While traveling for his dancing, Darvas would obtain copies of The Wall Street Journal and Barron's, but he would only look at the stock prices to make his decisions. It has been said that Darvas was less happy about the profits that he made than he was about the ease and peace of mind that he got from implementing his system.Skeptics of Darvas' technique attribute his success to the fact that he was trading in a very bullish market. They also say that returns comparable to the ones he saw can't be attained if this technique is used in a bear market.
In candlestick charting, a pattern where a black candlestick follows a long white candlestick. It can be an indication of a future bearish trend. Essentially, the large black candle is forming a "dark cloud" over the preceding bullish trend. The dark cloud must have a closing price that is: 1) within the price range of the previous day, but 2) below the mid-point between open and closing prices of the previous day.