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Sri Lanka Equity Forum » Stock Market & Forum Help » Some Technical Stock Measurements

Some Technical Stock Measurements

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1 Some Technical Stock Measurements on Sat Dec 31, 2011 12:00 pm


Stock Analytic
Stock Analytic
We will use just five technical measurements to help us time our purchase of stocks. The idea is that we want to buy companies with solid fundamentals per the previous section, just as their stock prices show confirming signals per the tools in this section.


This is a simple moving average of the stock’s price and smoothes out the bounciness of the raw price so you can better detect its trend. The position of the current price in relation to the SMA provides hints on where the price is heading next.


The letters stand for moving average convergence divergence, which sounds like a marital relations map but is a stock indicator created by Gerald Appel in the 1960s. It compares the exponential moving average of a stock’s price from two time periods, usually 12 and 26 days or weeks or months, and then plots that difference to show a trend.

Relative Strength Index

RSI alerts you to when a stock’s price has stretched too far in one direction or the other and is due for a snap back toward the middle. When it stretches too far up, it’s called overbought. When it stretches too far down, it’s called oversold.

RSI fluctuates between 0 and 100. Most commonly, anything higher than 70 is considered overbought and due for a pullback, and anything lower than 30 oversold and due for a bounce.


This is an easy one. Volume is simply the amount of a stock that’s traded on any given day, week, or any other time period. A stocks volume is a good indicator of how much interest people have in the stock. That’s important to know because the stock market is greatly affected by supply and demand.

If everybody wants to buy a certain stock, its price will rise. If nobody wants it, the price will fall. Some investors like to buy stocks with low volume hoping that major institutions will discover them and begin trading heavily. Demand soars and so do prices. Lots of investors watch stock volume in an attempt to catch trends early. As with surfing, you want to be in front of the wave.

Volume is measured in either the number of shares traded or the Rupee amount that is moved as a result of that trading. If 1,000,000 shares of EXPO LANKA hands on Tuesday at a price of RS 8, the share volume was 1,000,000 and the Rupee volume was Rs 8,000,000.

The strongest signal from volume occurs when it surges higher as the stock price moves. Rising volume on a rising stock price shows something good going on at the company. Rising volume on a falling stock price shows something bad. The stronger the volume, the more persistent the stock’s price trend.

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2 Re: Some Technical Stock Measurements on Sat Dec 31, 2011 12:06 pm


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Thanks a lot for sharing useful infos.
Good luck. Wish you Happy new year.

3 Re: Some Technical Stock Measurements on Sat Dec 31, 2011 12:24 pm


Thanks Dha123.

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