Glossary - I, J, K

Implied Volatility

An estimation of volatility based on prices of options.

Impulse Wave

A wave or cycle of waves that carries the current trend further in the same direction.

Inside Day

A day in which the daily price range is completely within the previous day's daily price range. It indicates a balance between buyers and sellers and, if preceded by a worthwhile trend often represents a short-term reversal signal.

Insider

Any person who directly or indirectly owns more than 10 percent of any class of stock listed on a national exchange, or who is an officer or director of the company in question.

Interest Rate Swaps

An arrangement that requires both sides of the transaction to make payments to each other based on two different interest rates. The most commonly traded requires one side to pay a fixed rate and the other to pay a floating rate.

Intermarket Analysis

Observing the price movement of one market for the purpose of evaluating a different market with which there is a historical inter-relationship.

In-The-Money Option

Condition where an option has a positive intrinsic value.

Intrinsic Value

The portion of an option's premium that is represented when the cash market price is greater than the exercise price; a known constant equal to the difference between the strike price and underlying market price.

Inverse Head and Shoulders Patterns

Consist of a final decline ( the head) separated by two smaller declines ( the left and right shoulders). When the price rallies above a line joining the two shoulder rally highs the pattern is completed. It is important for the breakout to be accompanied by relatively heavy volume.

Irregular Flat

A type of Elliott wave correction that has a 3-3-5 wave pattern, where the B wave terminates beyond the start of wave A. A "flat" is in progress, implying that a larger pattern is developing. It will contain waves of one higher degree than the A-B-C waves just completed.

J

January Effect

The tendency for securities prices to recover in January after tax-related selling is completed before the year-end. The January effect is often associated with low cap stocks out performing the blue chips.

Junk Bond

A bond with a significant credit risk that pays a high yield.

K

Kalman Filters

A linear system in which the mean squared error between the desired and the actual output is minimized when the input is a random signal.

Key Reversal Day

A day in which, following a strong trend, the price opens sharply in the direction of the then prevailing trend. By the end of the session the price closed close to the previous day’s close or even below it. Key reversal days are exhaustion phenomena and are typically accompanied with heavy volume.

KST (Know Sure Thing)

An oscillator developed by Martin Pring calculated from the weighted summed rate of change of 4 smoothed rate of change indicators KST’s can be calculated for any time frame, including Intraday. The most common are short, intermediate and long-term (Primary trend) . KST’s can also be very effectively applied to comparative relative strength.

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