Terms & Notes for Technical Analysis

Chinese explanations for beginner at Yam

To Value:

P/E Ratio price/earning ratio
本益比 每股股價/ 每股稅後純益

P/B Ration price/book ratio
股價淨值比 每股市價/每股淨值

P/E Growth Ratio price/earning/growth ration
最近一季本益比/最近一季預估成長率

P/S Ration price/sale ratio
股價營收比

Edwards, Tracey. (2006). Shopping for Shares: The Everyday Woman's Guide to Profiting from the Australian Stock Market. John Wiley & Sons Australia Ltd: Queensland.

p. 74
Candlestick chart:
A technical analysis chart that shows the price of the share for each period as a box (or candle) shape with vertical lines to the top and bottom.  The top and bottom of the box represent the opening and closing price of the share and the lines above and below the boxes represent the high and low prices that the share reached for the specified period.  If the box (or candlestick) is blank (or green) the closing price was higher than the opening price and if the box is filled (or red) the closing price was lower than the opening price.

p. 78
Simple moving average:
Takes the price of the share prices over a given time period and gives you the average price, which you can then plot on the current share chart to see if the current price is above or below the average for that share.

Exponential moving average:
Similar to the SMA in that it averages out the share price over a required time period, but it places more emphasis on recent prices so that your moving average is weighted closer to current share price movements.

Moving averages are most useful for determining if a trend is slowing down or speeding up as at a glance you can see whether the peaks and falls of the moving average line are increasing or decreasing in pitch.

p. 80
Golden cross:
When a shorter term moving average crosses up above a longer term moving average.  Considered very bullish.

Dead cross:
When a shorter term moving average crosses down below a longer term moving average.  Considered very bearish.

p. 82
Rule 1: Find sectors that are outperforming the rest of the market.
Rule 2: Choose the top stocks within that sector.
Rule 3: Determine which stocks are in an uptrend.
Rule 4: Buy the stock that seems consistently increasing in price.
Rule 5: Set my sell rules immediately.

p. 95
Normally once the company announces they are going to pay a dividend on a certain date, there is increased buying in that share.  Very often the share price will increase (especially if the dividend is fully franked) up until the ex dividend date when it falls by approximately one and a half time the value of the dividend.  Then over the next two or three weeks it will increase again until it is at the level it was before the fall.

If your stock does show this characteristic behaviour you could take advantage of it by:
1. Buying the shares once the company announces the ex dividend date and hold until a few days before the ex dividend date when you sell (hopefully making a nice profit).

2. Realising that you won't actually get the dividend as you were't holding at the right time, but accepting that isn't your plan here.

3. Buying into the stock again after the share price falls (usually the day the share goes ex dividend but sometimes the following few days) and waiting for it to increase in price to the level it was at before the ex dividend date, again making a small profit.

p. 98
There is no doubt that investing for the short term can be risky, even if you do have your stop loss plan in place.

The three main ways to invest using short-term methods are:
1. analying stocks that are increasing in price
2. using dividend strategies
3. buying into takeover bids.

Never say never, even though so far all the investments I have done are long terms, it won't hurt to learn something new every now and then.  Who knows when it might become handy?