Glossary of Technical Terms

Long-term up-trend - An up-trend lasting more than 3 months, in which the stock makes an uninterrupted progression of higher highs and higher lows and trades above a rising 200-day moving average.

200-day Moving Average - An indicator averaging the closing prices of the last 200-days. Used to determine the direction of the long-term trend as well as function as strong support levels which often terminate big corrections against the long-term up-trend.

Relative Strength Differential (RSD) - A proprietary indicator I developed which measures the performance of any stock against that of the S&P 500. If a stock has RSD value of 25 or higher, it is considered to be strong enough to be a momentum stock. If less than 25, it indicates either that the stock's up-trend is too slow or that the stock is not in an up-trend.

Consolidation - A time period in which the stock's price movement is confined to a sideways movement between two price levels, the lower of which becomes support and the higher becomes resistance. Consolidations can last from a few days to years, in which case they go into long-term sideways trends.

Candlestick Chart - A Japanese candlestick chart plots the trading days as the direction in which prices traveled from open to close.

White candlestick - a chart formation indicating an up-day, in which the stock went up from open to close rather than up from the previous day's close. In a white candlestick, buyers were in control of the market and it is a bullish indication

Black candlestick - a chart formation indicating a down-day, in which the stock went down from open to close rather than down from the previous day's close. In a black candlestick, sellers were in control of the market and it is a negative indication.

For more information and more examples, which explains some of the terms used in this trade alert, visit our "Technical Analysis" page.