Absorption: The reduction of the floating supply caused by persistent longer term buying within a trading range.
Accumulation: From the Supply/Demand perspective is demand coming in to gradually overcome and absorb the supply and to support the stock at this level.
Advance: A rise in price or an upward movement in a stock, index, security, etc.
Against the Box: As in, "Short against the box." A protracted action in which one sells short a security which he currently owns. The purpose of this action is that of a limiting risk during a period of market uncertainty.
Angle of: That inclination of arising price trend.
Apex: The focal point of converging support and supply lines. (See dead center, hinge, pivot, wedge).
ASE (or AMEX): American Stock Exchange.
Automatic rally (AR): Following the Selling Climax one of two things may happen: an Automatic rally (AR) or a lateral move. This is then followed again by one or two things either a Secondary Test (ST) of the Selling Climax or a continuation of the down move. To understand this we must go back to what happens on the Selling Climax: The Selling Climax is caused by panicky liquidation, panicky selling. The price is driven down to far and this creates a vacuum and as soon as the down move has been stopped the stock should begin to rally. We call this the Automatic Rally (AR) because it occurs automatically.
Generally the (AR) lasts for only a few days to about a week. The rally may be weak or strong. It may be however, so weak and the supply press on the market so strongly that instead of being able to rally well the price simply moves sideways for a couple of days, or perhaps for as much as a couple of weeks and a lateral move will then continue the downtrend. If there is a simple lateral move the stock is FAR MORE LIKELY to continue the downtrend then if there is a good rally.
Automatic reaction (AR): Following the Buying Climax is the Automatic Reaction. As with the Automatic Rally, the time factor here is generally measured in days. The extent of the reaction depends on how completely the demand is exhausted and how extensive the first wave of short selling is. The (AR) will also be limited by renewed buying buy those who see the reaction as a way of acquiring stock at bargain prices, and by the fact that the REACTION does not have any significant preparation in advance to sustain it.
Average: a numerical representation which purports to reflect the mean (average) price of a particular class of stocks.
1. Dollar Averaging: A periodic investing of a definite number of dollars irrespective of the number of shares involved;
2. Share Averaging: Periodic purchases of the same number of shares irrespective of the number of dollars required.
3. Averaging Up: Periodic purchases on rising scale whose purpose generally is to permit profits; and
4. Averaging Down: Periodic purchases as a price declines, which has the general purpose of lowering the mean cost of the stock.
Backup to the edge of the creek (BEC): Is normally a potential (SOS), after jumping the creek the backup to the edge is usually the reaction of the jumping of the creek (rally) and comes to rest (find support) above the creek. The Backup to the edge is normally a potential Last Point of Support (LPS).
a) Minor Creek: Lower branch, The minor creek very often occurs in the lower or the middle part of the Trading Range (T/R) but is still somewhere in the T/R.
b) Major Creek: Upper branch, The jump of the major creek is a larger move and it very often carries the stock above the old supply levels in the T/R often into new high ground.
Bear: A speculator who concludes that the profitable future trend will be one of declining prices.
Bear Market: A market condition characterized by declining prices.
Board Room: The room in a brokerage house in which stock prices are visually displayed.
Breakthrough: A price movement of above/below a previous supply/support area
Bulge: A sudden expansion of price or volume. (However, bulge generally is used in reference to volume.)
Bull: A speculator who concludes that the probable future trend will be one of advancing in prices.
Bull Market: A market condition characterized by advancing prices.
Buying Climax (BC): The climax ending an uptrend is called a Buying Climax because it is the end of the condition where the buying is stronger than the selling. The buying gradually builds up & builds up and finally comes in with a RUSH and EXHAUSTS itself on the buying climax. The buying climax has increased volume and a widening spread as it moves up.
Following a buying climax one of two things can occur, either a (AR) or a lateral move. This in turn is followed by one of two things: either a continuation of the uptrend or a Secondary Test (ST). If the supply is too weak to drive the stock down or demand to strong to allow it to go down, instead of having the (AR) the stock will have the lateral move. Usually however, it will have some form of an (AR). That (AR) may have increased volume, heavy volume or no volume. It may have a wide price spread, or a relatively narrow price spread.
Campaign: An organized market operation for the purpose of moving the price of the stock.
Climax: the peak, the extreme or the end of something and as the point of highest dramatic tension or a major turning point in the action. Some synonyms are: top, pinnacle, height, maximum, consummation, culmination or turn of the tide. What does a climax do? A climax stops a trend either temporarily or permanently depending on the subsequent action. A climax is preceded by some sort of a trend.
Close: The last price of the security, issue, index, etc. For specific time period. Generally, the last price of the day.
Commitment: A market position in a stock or other trading medium.
Common Stock: Securities which represent an ownership interest in a corporation. If the company has also issued preferred stock, both common and preferred have ownership rights, but the preferred normally has prior claim on dividends and, in the event of liquidation, assets. Common stockholders assume the greater risk but, generally, exercise the greater control and may gain the greater reward in the form of dividends in capital gains.
Composite Average: An index composed of a number of stock which is used to represent the general market. Normally constructed by adding to prices of a limited but fixed number of stocks, adjusting for splits, etc., then dividing by the number of stocks making up the average.
Composite Man: The term used to refer to the sponsors or large professional interests in the stock market, also called composite operator.
Corner: A condition in which the available supply of stock is held by a single speculative interest for the purpose of effecting a controlled price rise. The purpose of a corner is that of forcing those who have sold the stock short to pay an inordinately high-priced cover their short position.
Cover: the act of buying a security previously sold short. (See short sale, short covering).
Creek: relates to the flow of supply across the top of the trading range. The creek itself is a wiggly, squiggly trend line drawn free hand through the tops of the rallies within that trading range.
Cross or Jump the creek (JAC): either minor/major. To jump (rally) above the creek (drawn trendline) or flow of supply. This jump or crossing is a Sign Of Strength (SOS). Now where is the creek? After much searching for the answer to this question Mr. Evans finally reached the conclusion that the CREEK is WHERE the BOY JUMPED. Applying this to the market, the CREEK is WHERE the VOLUME CAME IN, where the EFFORT, the PUSH, the POWER came in.
It is important to recognize that there is no one exact way of drawing these creeks. Do some experimenting with them, you may wish to draw the creek lightly in pencil on your chart and continue the creek as long as it is useful, then later, either erase the creek, or a branch of the creek, or perhaps remove it from your chart altogether. However, leave the important creeks on your chart as they can be EXTREMELY HELPFUL in drawing your attention to the MEETING of supply in a T/R and in assisting in defining the probable extent of the reaction, that is the BACK UP, which is likely to occur after a possible crossing of the creek. It will be especially helpful in drawing your attention to situations where a stock falls back into the edge of the creek, because every so often it does that and every so often that little old boy scout sort of drowns. Our problem and very often is NOT to drown with him.
Culminating: The ending of the move.
Day Order: An order to buy or sell which is good only on the particular day on which it is made.
Dead Center: The focal point of converging support and supply lines. (Also, apex, hinge, pivot).
Deduction: The form of logic or reasoning which proceeds from the general statement to the specific case.
Distribution: from the Supply/Demand perspective, Distribution area is where the Supply overcomes Demand and stops the upward move and eventually begins the downward move. Distribution refers to the elimination of a long investment or speculative position and often involves establishing a speculative short position by professional interests in anticipation of a decline of price.
In the distribution area the professional investors or speculators who had previously had bought stock, sell their stock to the public. The public buys and it generally buys because of good news of various sorts. Good news on the company, its product, the economy or any news which will entice untrained people to rationalize their buying decision. The best news of all is the advancing of the price of a stock.
Often the reason that untrained people buy is that they do not want to miss out on the anticipated profits they think there are going to get as the stock continues to move up. Or they may buy because the stock has reacted a few points from the top and they think they are getting a bargain. After having sold their long stock, professionals have no reason to support the stock on reactions and so they cancel there bids under the market. They may not only cancel the bids but they may establish short positions in anticipation of a large decline in price.
Distribution is usually accomplished in a relatively SHORT TIME, Whereas accumulation takes MUCH LONGER, sometimes over many years. MAJOR distribution occurs in only a few weeks or perhaps a few months very rarely over a several year period. Distribution is usually characterized by wide price movements and heavy volume and GREAT activity.
Dividend: The payment designated by the Board of Directors to be distributed pro rata among the shares outstanding.
Down Tick: A transaction with a price lower than that of the last preceding transaction.
Effort versus Result (E/R): If you have an effort expressed, the result should be in proportion to the effort. If a stock has been moving up every day with a two point spread every day with ten thousand shares and it breaks into the high ground with twenty thousand shares and a half point spread for a couple of days straight, we know supply is coming in and is overcoming the demand. This is an effort that is not having an proportionate result, therefore the stock is likely to be in trouble and have a reversal in its movement.
Ex-Dividend: (Without Dividend) When the purchasers of a stock are no longer entitled to the most recently declared dividend. (Abbreviated xd).
Figure Charts: A chart of a stock, commodity or index, which takes into consideration price movements and fluctuations. Volume and regular time intervals are not generally used in the construction of figure charts.
Floating Supply: The supply of the stock that is normally available for purchase during a given period of time.
Force Index: An index developed by the Stock Market Institute to portray the investment factors during continuous periods of market history.
G.T.C.: a customers order to his broker to buy or sell securities at a specified price. The order remains in effect until it is either executed or canceled.
Half-way-points (1/2): Used as a measurement of relative strength on a rally or reaction. Example, if a stock moves from $50 to $56 the distance of six points and then reacts, the half-way-point would be half of that six points or at $53. Reverse the process for calculating the half-way-point on a rally following a decline. Example, if a stock moves down from $30 to $21 a distance of nine points. The half-way-point would be at half of that distance and is $4 % points added to $21 gives a half-way-point of $25 IA
Do not expect the stock or index to go exact half-way-point at the exact 1/8th. It is sufficient to meet support or supply in the vicinity of that half-way-point. Always calculate Half-way-points mathematically do not guess, because your eyes will lead you astray.
Hedge: A condition in which both long and short positions are maintained by the same interests.
High: The highest price of the security, issue, index, etc., for specified time period. Generally, the highest price of the day.
Hinge: The focal point of converging support and supply lines. (See apex, dead center, pivot, wedge).
Hypodermics: A deliberately forced, fast markup in the price of a common stock. The purpose of hypodermics is the stimulation of uninformed buying in order to facilitate distribution.
Ice: The ICE is the FORMER SUPPORT AREA at the BOTTOM of the T/R which BECOMES a SUPPLY AREA. The ICE is shown by drawing a wiggly trendline across the various support points at the bottom of the range. In a manner similar to the creek which is drawn through the supply points at the tops of the rallies in the
Index (Price): A statistical instrument which is used to determine the trend of particular class of security. This is not an average.
Induction: The reasoning process or logic which begins with specific cases and proceeds to a broad generalization.
Inside Day: A day for which the high and low prices are, respectively, lower and higher than those of the preceding day.
Institutional investors: Generally, large corporate investors such as banks, insurance companies, investment trusts, mutual funds, pension funds, colleges and universities, and charitable foundations.
Intermediate Trend: A price movement which has two basic characteristics. These are (a) a move of approximately 15 % of its value and (b) the duration of two weeks to two months.
Intra-Day Wave Charge: A continuous line chart reflecting the price wings occurring entirely within the single days trading (IDWC)
Investment position: Securities holdings established for investment purposes only.