whereas a secondary correction is an intermediate reaction occurring within the long -term trend.

resistance Any price level that is deemed as a significant high in trading by the market. When prices approach these levels on the way up, price movements often tend to slow down or "bounce off them, and when they break out through these levels, they often break out sharply.

secondary correction In the stock market, an important intermediate price move ment that moves in a contrary direction to the primary trend, usually consisting of at least a 5% change in prices over a minimum period of 14 calendar days.

short The state of having sold a security or futures contract prior to ownership. A person with a short position is liable for delivery of the item(s) sold until he or she buys back the position, short-term trend A price trend lasting from days to weeks.

S&P futures A futures exchange located in Chicago in which futures contracts are traded based on t he S&P 500 Cash Index.

speculator A market participant who buys and sells market instruments in an attempt to profit from intermediate-term (weeks to months) price changes.

stop order An order given to a broker that becomes a market order when the marke t price of the underlying instrument reaches or exceeds the specific price stated in the stop order.

stock option An options contract in stocks, a put or a call, standardized to 100 shares per contract.

straddle A pair of options held by the same person consisting of one call and one put on the same underlying instrument having the same strike price and expiration date.

strike price The price specified in an options contract at which the underlying in strument will be bought or sold if the option is exercised.

support Any price level deemed as a significant low in trading by the market. When prices approach these levels on the way down, price movements often tend to slow down or "bounce off" them, and when they break above these levels, they often break sharply.

takeover stock Any stock that is involved in takeover negotiations, or a stock that is thought to be so involved.

technical analysis A method of market forecasting that relies exclusively on the study of past price and volume behavior to predict future price movements.

tick The smallest incremental price movement allowed by the rules of an exchange (V8 for stocks, V16 for stock options, and so on).

top The high price in any market over a specified period (namely, intraday top, weekly top, long-term top, and so on).

volume The number of shares (for stocks) or contracts (for commodities) that change ownership in a given time period.

Bibliography

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Index

ABC correction, 84,85 Absolute retum, 22 Accumulation, 54-55 Adjusted monetary base, 156,268 Advance/decline line, 101,271 Aggregate demand, 126 Aggressive risk taking, 21, 26,27 Alligator Principle, 15-16 Alpha, 164-165,271 Anchoring, 242-243 Anger, 201 Anxiety, 247, 270 Arbitrage, 66,186,271 Ask, 271

Asset allocation, 20,172 At-the-market, 65, 82 At-the-money, 271 Automation, 121,123 Averaging down, 182 Awareness, 226-228 Bmcki, Jim. 11,184 Baker, James, 169 Balance of trade deficit, 119 Bank notes, 116 Bargains, 183 Barter, 115 Bear, 27,264, 271 Bear market, 9,20 and the deficit, 19 defined, 37,38,271-272 investing in, 181-182 key characteristics of, 39-41,53 risk in, 22, 23 trends and, 24

Beliefs, 202-203,209,228,234-239 Bells, John, 11 Bergman, Ricky, 8 Beta, 164-165,272 Bid, 62,187,265,272 Bid and ask, 272 Black markets, 118 Block,272 Blue chip, 272 Boesky, Ivan, 248 Bond yields, 272 Book, 83

Book value, 66,105,164, 272 Borrowing, 116,117,128-129 Bottom. 84,131. 272 Branden. Nathaniel, 202, 248 Breadth, 99,100-101,102,103 Break, 55,184, 272 Breakout, 56,184, 272 Brokerage, 272

Bubble, 110, 266 Budget deficit, 109 Bull, 38, 264, 272 Bull market, 20 anticipating, 33,34 defined, 37,38,272 hedging and, 9 investing in, 181-182 key characteristics of, 41-43,57 risk in, 22,23 secondary correction of. 84,86 trends and, 24 Bumout, 248

283 284

Business cycle: Mississippi

anticipating changes in, 112 Scheme

credit expansion and, 139-144,162and the business cycle, 133,139-144 govemment intervention and, 110,effects of, on the economy, 134.159, 131,190 264

nature of, 134-144 role of govemment in, 153

origins of, 134-135 role of money in, 116

risk and, 182 128-129

stock market and, 31, 33 Currency devaluation, 135. 267

Business philosophy, 21,172,189Cycle theory, 66-67. See also Business Buy and hold approach, 4, 38,165,172 cycle

Call, 8,27, 37, 273 Daily fluctuations, 37. 56

Campbell, David, 221 Dampening effect, 88

Capital, 10-11, 273 Day trade. 25, 64, 79,80,177.180,273

allocation of, 143,170-174 Deficit financing, 17,19,130,158, 266, preservation of, 21-24 267

Capital goods, 125,129,140,142, 267Deficit spending. 111. 126,127,157-16( Capital savings, 124-125,139 Deflation. 243

Car, 186, 273 Delivery, 10-11,273

Central banks, 13,116,135,139,141 Demand, 273

Chain letters, 134, 266 Demand deposits. 147. 266

Change, 221 Depository institutions, 146,268

Credit expansion, see also

Credit transaction.