Investing Terminology/Glossary
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Ever been confused about terminology used in the Oxen Picks or throughout the site? Here are some of
the most frequent words used with definitions and explanations to help you understand the technicals of
the market and become a better investor.
Bollinger Bands - The bollinger bands are 3 bands that include the SMA of a stock, an upper band, and a lower
band. The upper and lower band are shifted from the SMA by standard deviations based on volatility. Bollinger bands
can be used to help show a range within where a stock should be operating. When a stock moves outside of a lower or
upper bollinger band it signals that is stock is either ready to move, technically, back up or down, respectively.
The blue solid lines are the upper and lower bands. The
dotted line indicares the moving average.
EPS - EPS is Earnings Per Share, which is a measure of the earnings a company reports versus the number of
outstanding shares the company has. It takes profit and divides it by shares to configure EPS. EPS is an important
indicator because it was analyst's use to predict profits. If a company reports higher than expected EPS than the
company has a had a better than expected quarter, signalling a bullish movement for the stock. In reverse, if EPS
estimates are not met, it is a bearish signal.
Fast Stochastics - Indicator which compares a stock's closing prices compared to a price range over a certain set
number of days. The slow stochastic indicator helps to signal whether a stock is oversold or overbought. As the
indicator trends upward, that signals a stock is being bought. When, the indicator moves past 80 up to 100, the stock
is way overbought and cannot maintain that momentum and should see selling. As the indicator trends lower, the stock
is being sold off, and if the indicator hits 20 to 0, the stock is too oversold and cannot hold that momentum as more
buyers will enter the market. The fast stochastic is much more sensitive than the slow stochastic, and it will move much
more quickly up and down with the change in a stock's price.
Gap Up/Down - A gap is when a stock makes a gap from the closing price the prior day to the next day. A gap up
would be if a stock opens at a higher price from the previous close. A gap down is when a stock opens at a lower price
from the previous close. A gap up or down signals something fundamental or technical that has caused quick
movement up or down. Typically, a gap up will be followed with light selling down.
MACD - "A trend-following momentum indicator that shows the relationship between two moving averages of prices.
The MACD is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. A
nine-day EMA of the MACD, called the "signal line", is then plotted on top of the MACD, functioning as a trigger for buy
and sell signals." - Investopedia.com
Relative Strength Index (RSI) - The RSI tries to compare recent gains and losses in order to figure if a stock is
oversold or overbought. The RSI moves in a range of 1 - 100. When a stock is at 50, it is neither over or undervalued.
As a stock moves towards 0 and reaches 30, the stock is undervalued, signaling an overselling. As a stock moves
towards 100 and reaches 70, the stock is overvalued, signaling an overbuying period. RSI is configured by taking 100
- [100 / 1 - (average of a certain number of days up closes / average of same number of days down closes)].
Simple Moving Average - A simple moving average is the average closing price for a set number of closing prices in
a given time period. Shorter SMAs are more quick to respond to changes in price, while longer SMAs are less affected.
The SMA is a key indicator because if a stock is below its SMA, then one can believe the stock i sundervalued,
whereas if it is above its SMA then it is overvalued.
Slow Stochastics - Indicator which compares a stock's closing prices compared to a price range over a certain set
number of days. The slow stochastic indicator helps to signal whether a stock is oversold or overbought. As the
indicator trends upward, that signals a stock is being bought. When, the indicator moves past 80 up to 100, the stock
is way overbought and cannot maintain that momentum and should see selling. As the indicator trends lower, the stock
is being sold off, and if the indicator hits 20 to 0, the stock is too oversold and cannot hold that momentum as more
buyers will enter the market.
Volume - Volume is the number of shares that traded hands on a given market day. A stock that is increasing volume
tends to move more quickly in either direction. Lower volume shows less interest in a stock.
* Don't see the word you are looking for, contact us at contact@theoxengroup.com, and we will gladly tell you about
any investing word. Plus, we will then add it to the growing dictionary.
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