Types of prices-Market Vocabulary

In this blog we have made our effort to explain few terms that are routinely used in the market. They are the technical terms used in the market to mention the price movements of the traded financial asset. We are going to brief about the various types of prices used in the market and its implications.

OPENING PRICE

The opening price is the price at which a security trades first at once the exchange opens on a specific trading day. The opening price is an important indicator for the particular day's trading activity, especially for short-term day traders. The securities with very large intra-day price variations will have those fluctuations measured in relation to the opening price for the day.

CLOSING PRICE

Most financial instruments are traded after hours, so the closing price of a security may not equal its after-hours price. Still, closing prices provide a useful indicator for investors to evaluate changes in stock prices over time - the closing price of one day can be compared to the previous closing price in order to measure market sentiment for a given security over a trading day.

A security's closing price on the previous day of trading. Previous close can refer to the previous day's value of a stock, commodity, bond, futures or option contract, market index, or any other security. By comparing a security's closing price from one day to the next, investors can see how the security's price has changed over time.

The closing price is the final price at which a security trades during the closing time of the exchange on a given trading day. The closing price represents the most up-to-date valuation of a security until trading starts again on the next trading day.

ADJUSTED CLOSING PRICE

A stock's closing price on any given trading day that has been adjusted to include the distributions and corporate actions that happened preceding the next day's open. The adjusted closing price is frequently used when examining historical returns or performing a detailed analysis on historical returns.

PREVIOUS CLOSING PRICE:

A security's closing price on the previous day of trading. Previous close can refer to the previous day's value of a stock, commodity, bond, futures or option contract, market index, or any other security. By comparing a security's closing price from one day to the next, investors can see how the security's price has changed over time.

                                                                                                                                           by,

                                                                                                                 Global Market Astro

Three Major Economic Indicator

In this blog, we have made an attempt to brief about the primary and essential indicators to watch for during the market. An economic indicator in simple is a tool used to predict the future economic trends. The economic indicators are calculated at regular intervals of time to represent the economic performance of a country or a particular sector. These economic indicators surely will have a higher impact on the market movements and they become an inevitable tool for a trader to watch out during the live market.

The economic indicators are categorized into three types

1. Leading indicators
2. Lagging indicators
3. Coincident indicators

(1)Leading Economic Indicators:

The leading economic indicator generally signals the future events. The leading indicators have the prospective to forecast the direction in which the future economy is headed. They are subject to frequent changes ahead of the upcoming economic adjustments.

Some examples of leading indicators are stock market, manufacturing activities, inventory levels, retail sales, building permits, level of new business start-ups, etc.,.

(2)Lagging Economic Indicators:

The lagging economic indicators are contrary to the leading indicators. They signal the economic events that have occurred in the past. They don’t give us a perspective to know where the economy is headed instead they indicate the economic changes over a period of time and are helpful in identifying the long term trends.

Some examples of lagging indicators are Gross Domestic Products (GDP), income and wages, unemployment rate, Inflation rate as Consumer Price Index (CPI) and Wholesale Price Index (WPI), currency rates, interest rates, balance of trade, etc.,.

(3)Coincident Economic Indicators:

The coincident economic indicators are on par with the economic events. They occur at the same time of economic changes and are significant in reflecting the current economic scenario.

Source : https://www.globalmarketastro.com/blog/three-major-economic-indicator/

Relative Strength Index (RSI) -Technical Indicator

In this blog Global Market Astro has tried to explain its readers a few important technical indicators used by the traders to forecast the market movements.

Relative Strength Index (RSI)

Relative Strength Index is a primary technical momentum indicator which compares the magnitude of recent gains to recent losses in an effort to conclude overbought and oversold situations of an asset.

RSI Formula:
                      RSI = 100 – 100/ (1 + RS*)

                      Where RS = Average of x days’ up closes / Average of x days’ down closes.

In this chart, the RSI ranges from 0 to 100. A financial asset is considered to be overbought once the RSI reaches the 70 level, meaning that it may be getting overvalued and is a good sign for a pullback. Likewise, if the RSI reaches the 30 mark, it is a signal that the asset may be getting oversold and hence likely to become undervalued.

Overbought

A financial asset that has gone through sharp upward movements over a very short period of time is considered to be overbought. Technicians use indicators such as the relative strength index, stochastic oscillator or money flow index to identify securities that are becoming overbought. It is a situation in which the demand for a particular asset excessively pushes the price of an underlying asset to levels that do not support the fundamentals. Overbought stocks may always experience a pullback.

Oversold

Assets that have experienced sharp downward movements over a short period of time are often deemed to be oversold. It is a condition in which the price of an underlying asset has dropped down sharply, and to a level below which its true value. This condition is usually a consequence of market overreaction or panic selling.A condition in technical analysis where the price of an asset has dropped to such a degree – usually on high volume – that an oscillator has reached a lower bound. This is usually understood as a sign that the price of the asset is becoming undervalued and may represent a buying opportunity for investors.Oversold is the contrary of overbought.

Source:https://www.globalmarketastro.com/blog/relative-strength-index-rsi-technical-indicator/

Share Market Vocabulary

Below is the precise compilation of some of the stock market related technical terms explained in simple vocabulary.

SUPPORT LEVEL

A chart point or range at which the stock price finds difficulty in falling below. Generally a lot of buyers enter the market at this level. It is the level at which the stock prices would be minimal.

RESISTANCE LEVEL

A chart point or range at which an increase in the level of a stock or index over a period of time is observed. An area of resistance or resistance level indicates that the stock or index is finding it tough to break through it, and may head lower in the near term. The more times that the stock or index has tried unsuccessfully to break through the resistance level, the more formidable that area of resistance becomes.

VOLUME

The number of shares or contracts traded in a security or an entire market during a given period of time. It is simply the amount of shares that trade hands from sellers to buyers as a measure of activity. If a buyer of a stock buys 100 shares from a seller, then the volume for that period increases by 100 shares based on that transaction.

BREAKOUT

It is a price fluctuation observed through a recognized level of support or resistance, which is usually followed by heavy volume and increased volatility. Traders will buy the underlying asset when the price breaks above a level of resistance and sell when it breaks below support.

Hope it will be useful for beginners who wants to analysis the share market forecasts.

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Technical Analysis terms explanation - Share Market

In this blog we have decided to explain our readers some basic technical analysis terms used daily in the market.

1)52-WEEK RANGE

 

The lowest and the highest prices at which a stock / share / scrip has been traded in the last 52 weeks. The 52-week range is provided in a stock's quote summary along with data such as today's change and year-to-date change. Stocks that have been trading for less than a year will still show a 52-week range even though data for the full range is not available. Technical analysts associate a stock's current traded price to its 52-week range to get a comprehensive sense of how the stock is performing, as well as how much the stock's value has varied. This information may indicate the probable future range of the stock and how volatile the stocks are. The stock quote explains the 52-week range for S&P 500 index.

2) ADVANCE/DECLINE INDEX

Advance/decline index is a technical trend analysis tool that represents the total difference between the number of advancing and declining stock prices. This index is considered one of the best indicators of market movements as a whole.It is a powerful stock trading signal which indicates the trends of the market. It explains the difference between the number of stocks advancing and declining in a stock index in terms of trading prices.

The Advance/Decline Index is calculated by accumulating the difference between the number of advancing issues and the number of declining issues over time.

In general, increasing values of the advance/decline can be used to confirm the chances that an upward/bullish trend will continue. If the market is up but there are more declining issues than advancing ones, it's usually a sign that the market is losing its breadth and may be getting ready to change direction.

Application of Advance/Decline Index

When more stocks are advancing than declining, the Advance Decline Index moves up indicating stock market strength.  Conversely, when more stocks are declining than advancing, the Advance Decline Index trends down, indicating stock market weakness.

Another way to use the Advance Decline Index is to look for a divergence between the stock market index and the Advance Decline Index.  Often, an end to a bull market occurs when the Advance Decline Index trends sideways or down while the stock market index is still making new highs as shown in the Yahoo Advance Decline table below. 

Source : https://www.globalmarketastro.com/blog/technical-analysis-terms-explanation-share-market/

How to Calculate Simple Moving Averages ?

Moving average is a preliminary technical indicator used by the traders for trend analysis. There are various types if moving averages, but their core purpose remains the same: to guide technical traders track the market trends of financial assets by smoothing out the day-to-day price fluctuations.


Amongst the most common technical indicators, moving averages are used to scale the direction of the current trend. Every type of moving average is a mathematical result that is calculated by averaging a number of past data points. Once determined, the resulting average is then plotted onto a chart in order to allow traders to look at smoothed data rather than focusing on the day-to-day price fluctuations that are inherent in all financial markets. 

Simple Moving Average 

Simple Moving Average (SMA), is calculated by taking the arithmetic mean of a given set of data values. For example, to calculate a basic 10-day moving average you would add up the closing prices from the past 10 days and then divide the result by 10. For a 50-day average, the same type of calculation would be made, but it would include the prices over the past 50 days and divide its sum by 50.

The reason why it is called a "moving" average and not just a regular arithmetic mean is because the new  latest values are taken in to account, the oldest data points must be dropped from the set and new data points must come in to replace them. The data set is constantly "moving" to account for new data as it becomes available.

Moving Average Charts 

Once the values of the Moving Average have been calculated, they are plotted on a chart and then connected to create a moving average line. These curving lines are common on the charts of technical traders, but how they are used can vary drastically. The higher the number of closing price taken into account the moving average curve gets smoother.

The simple moving average is very popular among traders as a powerful stock market trading signal, but like all technical indicators, it does have its critics. Many individuals argue that the effectiveness of the SMA is narrow since each point in the data series is weighted the equal, regardless of where it occurs in the sequence. 

Critics argue that the most recent data is more significant than the older data and should have a greater impact on the final result. In response to this criticism, traders started to give more weight to recent data, which has since led to the development of various types of new averages, the most popular of which is the Exponential Moving Average (EMA). 

Source : www.globalmarketastro.com/blog/how-to-calculate-simple-moving-averages/

Stock Analysis

Stock Analysis is a major factor in share market. Stock investors should have the knowledge about basic stock analysis methods to analyze the stock effectively. Here, some brief explanation about the basic 'Stock Analysis'. It will be helpful to the beginners who want to be expert in 'Global Stock Market'.

Stock analysis is an analytical method used by the investors and traders to make buying and selling decisions. By evaluating and studying current and past data, investors and traders attempts to gain an edge in the markets by making informed decisions.

Stock analysis is a term that refers to the evaluation of a particular trading instrument, an investment sector or the market as a whole. Stock analysts attempt to determine the future performance activity of an instrument, sector or share market.

There are two basic types of stock analysis

• Fundamental analysis
• Technical analysis.

Fundamental Analysis 

Fundamental analysis concentrates on company data from sources including financial records, economic reports, company assets and market share. Fundamental analysis takes a relatively long-term approach to analyzing the market compared to technical analysis. Fundamental analysis often looks at data over a number of years. In general, fundamental analysis is used to make an investment.

Technical Analysis

Technical analysis focuses on the study of past market performance data to predict future price movement of the stock using various technical indicators like moving averages, relative strength index, MACD, chart patterns, etc.,. Technical analysis can be used on a time frame of weeks, days or even minutes.In general, technical analysis is used for a trade.

Hope you gain some useful information .

Source : https://www.globalmarketastro.com/blog/stock-analysis/