These terms are defined in relationship to the manner in which they are used in the text and at Wyckoff SMI.
Absorption: The reduction of the floating supply caused by persistent longer term buying within a trading range.
Accumulation: The establishment of an investment or speculative position by professional interests in anticipation of an advance in price.
Advance: A rise in price or an upward movement in a stock, index, security, etc.
(Short) Against the Box: A protective action in which one sells short a security which he currently owns. The purpose of this action is that of eliminating risk during a period of market uncertainty.
Angle of Advance: The inclination of a rising price trend.
Angle of Decline: The inclination of a lowering price trend.
Apex: The focal point of converging support and supply lines. (See dead center, hinge, pivot, wedge).
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 a rising scale whose purpose generally is to pyramid profits; and
(4) Averaging Down: periodic purchases as a price declines, which has the general purpose of lowering the mean cost of the stock.
Bear: A speculator who concludes that the probable future trend will be one of declining prices.
Bear Market: A market condition characterized by declining prices.
Breakthrough: A price movement 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 prices.
Bull Market: A market condition characterized by advancing prices.
Buying Climax: A situation characterized by the highest intensity of speculative demand occurring
within an uptrend. This situation occurs only after a move has been in effect for some time. This condition marks the end or the approaching end of the particular uptrend.
Campaign: An organized market operation for the purpose of moving the price of a stock.
Close: The last price of a security, issue, index, etc. for a 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 and capital gain.
Composite Average: An index composed of a number of stocks which is used to represent the general market. Normally constructed by adding the 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. (See Preface: Explanatory Notes .)
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 price to cover their short position.
Cover: The act of buying a security previously sold short. (See short sale, short covering).
Culminating: The ending of a 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 wedge).
Deduction: The form of logic or reasoning which proceeds from the general statement to the specific case.
Distribution: The elimination of a long investment or speculative position.
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 preceeding transaction.
Ex-Dividend: (Without Dividend) The condition of a stock in which the purchasers are not 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 stock that is normally available for purchase during a given period of time.
Force Index: An index developed by the Stock Market Institu te to portray the investment factors during continuous periods of market history.
G.T.C. (Good ’til Cancelled) A customer’s order to his broker to buy or sell securities at a specified price. The order remains in effect until it is either executed or cancelled.
Hedge: A condition in which both long and short positions are maintained by the same interests.
High: The highest price of a security, issue, index, etc., for a specific 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 mark-up in the price of a common stock. The purpose of hypodermics is the stimulation of uninformed buying in order to facilitate distribution.
Index (Price): A statistical instrument which is used to determine the trend of a 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) a duration of two weeks to two months.
Intra-Day Wave Chart: A continuous line chart reflecting the price swings occurring entirely within a single day’s trading (IDWC).
Investment Position: Securities holdings established for investment purpose only.
Law of Supply and Demand: The basic economic law used to explain the cause of all price changes.
Limit Order: An order to buy or sell only at a specified price or at one more favorable than the specified price.
Line of Least Resistance: The trend of security prices, whether it be advancing or declining.
Liquidation: The process of converting securities and/or other property into cash.
Locked-In: A psychological state of mind which exists when an individual believes that he cannot afford to liquidate a security position.
Long: The ownership of securities.
Long-Sale: The sale of a long security position.
Long Terms: Financially , it is considered to be a five year investment; the tax definition is six months.
Low: The lowest price of a security, issue, index, etc., for a specific time period. Generally, the lowest price of the day.
Maintenance Margin: The minimum margin required in order to maintain a previously established position.
Margin: The amount of money deposited by a customer when he uses credit to buy securities, the balance being financed or advanced by the broker.
Mark-Down: A sustained downward price movement.
Market Order: An order to buy or sell at the best price available at the time the order is received at the appropriate trading post.
Mark-up: A sustained upward price movement.
Momentum Index: An SMI index to measure speculative market factors.
NYSE: New York Stock Exchange.
Odd Lot: An amount less than the established round lot for any class of security.
Option: A contractual right to buy or sell a security at a specified price within a specified period of time.
Optimism-Pessimism Index: An index developed by Wyckoff SMI which reflects the optimism due to buying and pessimism due to selling during any specific period of market history.
Overbought: A condition in which the supply – demand relationship for a particular class of securities is such that normal equilibrium between economic forces exists only at a price below that at which the current trades are being made.
Preparation: Transactions designed to affect the supply – demand relationship for a security order to facilitate its future price move.
Pressure: Sustained selling of a security.
Primary Distribution: The initial liquidation of a long position.
Process of Rotation: The principle that all securities of a class do not prepare, advance, or decline at the same time. Some stocks lead the various stages while others lag.
Puts and Calls: Options which give the right to buy or sell a fixed amount of a certain stock at a specified price within a specified time. A put gives the holder the right to sell and a call gives the holder the right to buy.
Pyramid: The use of accrued profits to enlarge a speculative position.
Rally: A short term advance in the price of any securities or class of securities.
Reaction: A short term decline in the price of any securities or class of securities.
Resistance: Opposition to advancing prices caused by an increase in the available supply.
Round Lot: A unit of trading. On the New York Stock Exchange the unit of trading is, generally, 100 shares in stocks and $5,000 par value in the case of bonds.
Secondary Distribution: The liquidation of a long security position occurring after primary distri bution but prior to the next mark-down phase. A plateau in a big down move.
Securities: Stocks, bonds, commodity futures contracts, or other issues which may be traded.
SEC: The Securities and Exchange Commission established in 1934 by Congress to regulate the investment industry.
Security Position: Securities held long and/or short by investors and/ or speculators.
Selling Climax: A situation characterized by the highest intensity of speculative supply occurring within a downtrend. This situation occurs only after a move has been in effect for some time. This condition marks the end or the approaching end of the particular downtrend.
Shakeout: A deliberately forced price reaction, whose purpose is that of stimulating pu blic selling in order to facilitate the accumulation of speculative positions.
Short Covering: Buying stock to eliminate or close out a short position.
Short Position: Securities and/or commodity future contracts sold short.
Short Sale: Sale of a borrowed stock by a person who believes the price will decline. i.e. You instruct your broker to sell short 200 shares of XYZ. Your broker borrows the stock so he can deliver the 200 shares to the buyer. The monetary value of the shares borroweu is deposited with the lender. You are later required to cover your short sale by purchasing the same amount to return to the lender.
SMI: Wyckoff SMI
Speculation: To assume a market risk in expectation of gam; especially, to buy or sell m expectation of profiting from market fluctuations.
Springboard: A condition in the price movement of a stock that has completed preparation and has been brought to a point where the stock may move into a mark-up or a mark-down period.
Stop Limit Order: An order to buy or sell which becomes a limit order as soon as the stock’s price reaches or sells through a specified stop price.
Stop Order: An order to buy or sell which becomes a market order as soon as the price of the stock reaches or sells through the specified price.
Straddle: Going long in one security or option and short in another.
Strength: A security or class reflects strength when its price shows the ability to advance.
Strong Technical Position: Condition in which normal available demand exceeds floating supply.
Supply Line: In a downtrend a line connecting at least two important points of supply.
Support: Opposition to declining prices caused by the increase in available demand.
Tape Reader: A person trained to determine the characteristics of market fluctuations, using data which he derives from the ticker tape.
Technical Position Barometer: A chart which graphs the number of stocks in the various positions as determined by the Wyckoff Position Sheet.
Technical Rally: A technical rebound. A part of a typical selling climax. (Automatic rally)
Technical Reaction: Opposite of technical rally-part of a typical buying climax.(Automatic reaction)
Technometer: An index developed by the WyckoffSMI for the purpose of indicating normal extremes in the supply – demand conditions.
Terminal Shakeout: A sharp downward thrust through a previous support area. Executed for the purpose of buying all the stock possible from weak or vulnerable holders.
Terminal Thrust: A temporary bulge through the top of a trading range which fails to hold.
Thrust: The price difference between consecutive tops in uptrends or between consecutive bottoms in downtrends.
Thrust Movement: A sharp run-up out of an area of distribution; or a temporary bulge through the top of a trading range which fails to hold (Synonym: upthrust).
Trade: To buy or sell stocks, securities, options, etc.
Trading Range: A condition characterized by temporary price trends, which are offset by ensueing moves in the opposite direction, and by a persisting equilibrium in the supply – demand relationship.
Trans-Lux: Equipment for optical viewing of stock sales.
Trend: The line of least resistance. It is the direction in which a price is moving.
Trend Barometer: A statistical tool which is portrayed graphically and consists of the Momentum Index, the Force Index and the Technometer. This was developed by the WyckoffSMI.
Trend Charts: These are charts which graphically depict the trend of the market, an index, or an individual stock.
Turning Point: The place at which a security price trend reverses its direction.
Upthrust: A sharp price movement above a prior supply level, which does not hold, but immediately reacts below that previous level.
Vertical Line Charts: Charts which graph the volume, high, low, and closing prices for the day, week, month, or year of any security or class of securities.
Warrants: Rights to buy a stock at a specific price. Generally, issued for longer periods of time than ordinary stock subscription rights.
Weakness: The ability of price to decline.
Weak Technical Position: A condition in which normal available demand is exceeded by the floating supply.
Wedge: The focal point of converging support and supply lines. (See apex, dead center, hinge, pivot.)
Whipsawed: A situation in which a speculator is repeatedly wrong no matter what he does. It usually results from buying at the tops and selling at the bottoms.
Up-Tick: A transaction where the price is higher than that of the previous transaction.
Zero-Minus Tick: A transaction price identical to the preceding price(s) which itself had been a down-tick.
Zero-Plus Tick: A transaction price identical to the preceeding price(s) which itself had been an up-tick.