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Glossary - P, Q, R


The face value of a security.

Pinocchio (bar) Day

Is one in which the bulk of the trading takes place outside the range of the high and low as well as the range for several previous sessions. Pinocchios represent exhaustion whipsaw moves and can develop in up or down markets.


A pennant is a short-term counter-cyclical price pattern the trading range for which is bounded by two converging trendlines . The lines slope in different directions. Volume declines during the formation of the pennant and usually expands on the breakout.  


Used to describe the frequency, amplitude, and phase of all frequency components of the signal.

Point and Figure Technique

Plots charts as a series of xs and os. Xs record a series of pre-determined rising price units and 0s declining ones. Time is ignored in these calculations. Reversals occur after the price has reversed by a specified amount. Point and Figure charts are interpreted using trendline and price patterns.


Market commitment. A buyer of a futures contract would be in a long position and, conversely, a seller of futures contracts would have a short position.

Price /Earnings Ratio

The ratio of the price of a stock to the earnings per share, i.e., the total annual profit of a company divided by the number of shares outstanding.

Price Limit Order

The price specified by a customer order at which a trade can be executed.

Price Patterns

When a trend reverses direction, the price action typically traces out a formation known as a reversal pattern. The larger and deeper the pattern, the greater is its significance.  Patterns that are formed at market tops are called distribution formations, i.e., the stock or market is assumed to be undergoing distribution from strong, informed hands to weak, uninformed buyers.  Price patterns at market bottoms are known as accumulation formations.  Price formations, may also represent temporary interruptions of the prevailing trend, in which case they are called continuation patterns.

Primary Market

Market of new issues of securities.

Put Option

A contract to sell a specified amount of a stock or commodity at an agreed time at the stated exercise price.



A brisk rise following a decline or consolidation of the general price level of the market.

Random Walk

A theory that says there is no sequential correlation between prices from one period to the next and that prices will act unpredictably as they seek a level in response to supply and demand.


The difference between the high and low price during a given period.

Rate of Change

A momentum indicator in which today's closing price is divided by the closing price n periods ago. Multiply by 100. Subtract 100 from this value. ((C today/Cn) * 100) - 100.

Rate of Return

Investment performance.


A counter-cyclical short-term decline in price.


Are horizontal trading ranges where buyers and sellers are evenly matched. They can be reversal or consolidation price patterns and develop in up and down trends.

Relative Strength

See comparative relative strength

Relative Strength Index

An momentum indicator developed by J. Welles Wilder and used among other things to ascertain overbought/oversold readings and divergences. The RSI can be calculated for any time span, but 14 periods is the accepted default. Overbought and oversold lines are generally plotted at 70 and 30 for this time span.


Repurchase agreement. An agreement to sell and repurchase an asset.


A concentration of supply sufficient to halt a rally.


A price movement that develops in the opposite direction of the prevailing trend.

Reversal Stop

An executed stop, which acts as, a signal to reverse the current trading position. Also known as a stop and reverse system.

Risk Factor

A variable that represents a degree of uncertainty


Changing leadership within the stock market during the course of the business cycle. Rotation is normally associated with industry groups.


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