Reading 12: Technical Analysis-LOS b 习题精选 2011, relative, different, technical

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Session 3: Quantitative Methods: Application
Reading 12: Technical Analysis

LOS b: Discuss the construction and interpretation of different types of technical analysis charts.

 

 

When a relative strength ratio (stock price over market price) is increasing, the stock is:

A) tracking the index.

B) outperforming the index.

C) underperforming the index.

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Relative strength: When prices of an individual stock or industry change, it is difficult to tell if the change is stock specific or caused by market movements. If two variables are changing at the same rate, the ratio created by dividing one of the variables by the other will remain constant. This is called the relative strength ratio.

Relative Strength = Stock Price / Market Price

• If the ratio increases over time the stock is out-performing the market (a + trend)
• If the ratio declines over time the stock is under-performing the market (a – trend).

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Point and figure charts are most likely to illustrate:

A) changes of direction in price trends.

B) the length of time over which trends persist.

C) significant increases or decreases in volume.

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A point-and-figure chart includes only significant price changes, regardless of their timing or volume. The technician determines what price interval to record as significiant (the box size) and when to note changes of direction in prices (the reversal size). Point and figure charts do not show volume and are not scaled to even time periods.