1. 8 8 C h a p t e r Stock Price Behavior And Market Efficiency second edition Fundamentals of Investments Valuation & Management Charles J. Corrado Bradford D. Jordan McGraw Hill / IrwinSlides by Yee-Tien (Ted) Fu

2.  2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw Hill / Irwin 6 - 2 Wisdom “Don’t try to buy at the bottom and sell at the top. It can’t be done except by liars” Bernard Baruch

3.  2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw Hill / Irwin 6 - 3 Concepts Support level: price or level below which a stock or the market as a whole is unlikely to fall. Technical analysis: techniques for predicting based on historical price and volume behavior and investor sentiment Dow Theory: method fo predicting market direction that relies on the Dow industrial and the Dow transportation averages.

4.  2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw Hill / Irwin 6 - 4 The Dividend Discount Model Relative strength: a measure of the performance of one investment relative to another. to be paid t years from now Moving average: an average daily price or index level, calculated using a fixed number of previous days' prices or levels, updated each day. Resistance level: price or level above which a stock or the market as a whole is unlikely to rise.

5.  2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw Hill / Irwin 6 - 5 Concepts  High-low-close chart: plot of high, low, and closing prices.  Candlestick chart: plot of high, low, open, and closing prices that shows whether the closing price was above or below the opening price.  Point - and - figure chart: technical analysis chart showing only major price moves and their direction.