CSC Vol.2 Chapter 13

Fundamental Analysis

A method of assessing the short-, medium-, and long-range prospects of different industries and companies to understand security prices.

Technical Analysis

The study of historical stock prices and market behavior to predict future prices and market movements.

Efficient Market Hypothesis

The theory that stock prices fully reflect all available information and represent the best estimate of a stock’s true value.

Macroeconomic Factors

Economic variables such as fiscal policy, monetary policy, and inflation that can impact investor expectations and security prices.

Cyclical Industries

Industries whose performance is highly correlated with the business cycle, typically performing well during economic upturns and poorly during downturns.

Defensive Industries

Industries that provide stable returns and perform relatively well during economic downturns.

Emerging Growth Industries

New industries developing to meet changing societal needs, often characterized by rapid innovation and higher levels of risk.

Head-and-Shoulders Formation

A common chart pattern that indicates a possible trend reversal in stock prices.

Moving Average

A technical analysis tool that smooths out price data by creating a constantly updated average price.

Support Level

A price level at which a stock tends to stop falling due to a concentration of buying interest.

Resistance Level

A price level at which a stock tends to stop rising due to a concentration of selling interest.

Quantitative Analysis

A form of technical analysis that uses statistical methods and is often enhanced by computer technology.

Cycle Analysis

The study of cyclical movements in the market to determine potential turning points or trends.

Speculative Industries

Industries that carry higher levels of risk and uncertainty, often involving companies with less predictable profits.

Rational Expectations Hypothesis

The theory that individuals use all available information to make informed and rational economic decisions.

Sentiment Indicators

Measures that help assess investor expectations and market sentiment, often used by contrarian investors.

Reversal Pattern

A chart pattern that signals a possible change in the direction of a price trend.

Continuation Pattern

A chart pattern that indicates a pause in an existing trend before it resumes.