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Clear filtersRelative Strength Against the Market
Relative strength is how a stock performs against a benchmark rather than in isolation. A stock down 3 percent on a day the index fell 6 has outperformed. It is a different measure from RSI.
Keltner and Donchian Channels
Two envelope constructions that answer different questions: one is built from average range, the other from the highest high and lowest low over a window.
Parabolic SAR
A trailing stop that accelerates. It is always in the market, always on one side, and it flips when price reaches it.
CCI and Williams %R
Two more oscillators. Both normalize price against a recent range, which is what almost every oscillator does, and the differences are in the arithmetic rather than in the information.
Money Flow Index
RSI with volume weighting. It is one of the few oscillators that introduces an input other than price, which is the whole of its claim.
Divergence, Across Indicators
Divergence is price making a new high or low while an indicator does not. It is the most cited observation in chart reading and one of the weakest, for a reason that follows from how indicators are built.
The Bull Flag
A bull flag is a continuation pattern: a sharp advance (the pole) followed by a shallow, orderly pullback (the flag). Its defining quality is what the pullback does not do.
The Flat Base
A tight sideways range that holds after an advance rather than giving it back. Its virtue is that it is boring, which is exactly what makes it informative.
The Cup and Handle
A cup and handle is a rounded recovery back to a prior high, followed by a small drift (the handle) before that high is tested. The shape describes a supply problem being worked through.
The Ascending Triangle
An ascending triangle is a flat ceiling met by a rising series of lows. Buyers pay up earlier each time while a fixed supply sits overhead, and the narrowing space means the shape has to resolve.
Double Bottoms and Double Tops
A double bottom is two lows at about the same price with a rally between them, confirmed only when price clears that rally's high. A double top is the mirror image.
Head and Shoulders
Head and shoulders is a reversal pattern of three peaks, the middle one highest, measured against the neckline joining the troughs between them. It is the most recognizable reversal shape and the most over-identified.
Gaps
A gap is a space on a chart where a bar opens away from the prior close and nothing traded in between. Many gaps fill and many do not; the cause matters more than the shape.
Reversal Candles: Hammer, Engulfing, Doji and Shooting Star
A doji, hammer, engulfing or shooting star candle describes a session's balance between buyers and sellers. Their meaning depends on where they appear; the word reversal promises more than they deliver.
Volume Confirmation
The idea that a price move backed by heavy participation carries more information than the same move on light volume. It is the most durable principle in pattern work.
Rising and Falling Wedges
Two converging lines that both slope the same way. The convergence is the observation; the direction attached to it in the folklore is a separate claim.
Pennants and Rectangles
Two continuation shapes that differ only in whether the pause is converging or flat. Both describe a period in which nothing was decided.
Descending and Symmetrical Triangles
The other two triangles. All three describe a narrowing range, and the labels differ only in which boundary is flat.
Rounding Bottoms and Tops
A gradual curve rather than a sharp reversal. It describes a slow change in the balance between buyers and sellers, and it takes a long time to become visible.
Morning and Evening Stars
A three-bar sequence: a strong bar, a small indecisive one, and a strong bar the other way. The middle bar is where the description lives.
Harami and Engulfing Patterns
Two two-bar relationships that are mirror images: one bar contained inside the previous one, or one bar covering it entirely.
Piercing Lines and Dark Cloud Covers
Two-bar patterns defined by how far the second session recovers into the first. The threshold is a convention, and the degree is the information.
Three White Soldiers and Three Black Crows
Three consecutive strong sessions in the same direction. The pattern is a description of persistence, and persistence is exactly what momentum research measures.
Measured Moves and Targets
A pattern's price target is usually a measured move: the pattern's height added to the price where it completed. Every named pattern scales the expected move to the size of the structure this way.
Linear and Logarithmic Price Scales
On a linear scale equal distances mean equal dollars; on a logarithmic scale they mean equal percentages. Over long spans the two produce genuinely different pictures.
Adjusted and Unadjusted Prices
Historical prices are routinely restated so that splits and dividends do not appear as real moves. This is correct, and it means the chart does not show what the stock actually cost.
Extended-Hours Data on a Chart
Whether a chart includes premarket and after-hours trading changes its bars, its gaps and every indicator computed from them.
Chart Layouts and Saved Templates
A layout is a saved way of looking. Fixing it in advance is what makes comparisons across securities and across time meaningful.
Bar Replay and Reviewing Your Own Decisions
Stepping through a chart bar by bar, with the future hidden. It is the only charting tool that addresses hindsight directly.
Comparison Overlays and Ratio Charts
Plotting two securities together, or dividing one by the other. The second is more informative and is used far less.
Workspaces and Comparing Several Securities
Several charts on one screen. The value comes from them being configured identically, which is the only thing that makes the comparison real.
Reading Someone Else's Chart
A published chart carries a set of choices that are rarely stated. Establishing them is the first step in reading it, and most of them change what it appears to say.
The 8-K: Current Reports
The form a company files when something material happens between periodic reports. It is the fastest-moving filing type and the one most worth watching in real time.
The Proxy Statement (DEF 14A)
The document covering the shareholder vote. It is also where executive pay, board composition and related-party transactions are disclosed in detail.
The S-1 and the IPO
The registration statement filed before a company sells shares publicly for the first time. It is the most detailed document a company ever produces about itself.
Form 13F: Institutional Holdings
A quarterly disclosure of US-listed equity positions by large managers. Genuinely informative, and surrounded by more misconceptions than any other filing.
Insider Transactions: Forms 3, 4 and 5
Officers, directors and large holders must report their own trades within two business days. The transaction codes are what separate a real signal from routine administration.
How to Read a Filing Fast
A 10-K runs to two hundred pages and most of it is boilerplate. A repeatable order of attack extracts the substance in twenty minutes.
Form 20-F and Form 40-F
The annual reports filed by foreign private issuers. Less frequent than a 10-K, on a different accounting basis, and with a different disclosure regime behind them.
The FOMC and the Dot Plot
Eight scheduled meetings a year set policy. The projections published at four of them are the most scrutinized chart in macro, and the most over-interpreted.
PCE: The Fed's Preferred Inflation Gauge
The measure the Federal Reserve actually targets. It differs from CPI in ways that matter, and it consistently reads lower.
Gross Domestic Product
The broadest measure of economic output. Comprehensive, and released so late that markets have usually worked out the answer already.
The Dollar and Equities
A stronger dollar mechanically reduces the reported earnings of US multinationals and tightens conditions globally. The relationship is real and it is not constant.
Oil and Commodity Shocks
Energy is an input to nearly everything, which makes a large oil move a shock that propagates through inflation, consumption and policy at once.
Which Calendar Events Actually Move Markets
Dozens of releases appear on an economic calendar each week and a handful matter. Knowing which, and why the reaction depends on the surprise, is most of the value.
ISM and PMI Surveys
Diffusion indices built from surveys of purchasing managers. They measure the breadth of change rather than its size, which is what the fifty level means.
Retail Sales
A monthly measure of spending at retailers. Consumption is most of the economy, which makes this one of the most closely watched releases and one of the noisiest.
Housing Data
A set of monthly releases covering construction, sales and prices. Housing is the most rate-sensitive part of the economy, which makes it an early indicator of policy taking effect.