Glossary – S
S & P 100 Index ($OEX): The S&P 100 Index is a market-cap weighted index consisting of 100 large blue chip stocks across numerous industries. Many fund managers use this index as a benchmark to measure the overall performance of large cap stocks.
S & P Large Cap 500 Index ($SPX): The Standard and Poors (S&P) Large Cap 500 Index lists the 500 largest “large-cap” stocks (stocks from major companies in numerous industries).
S & P Mid Cap 400 Index ($MID): The Standard and Poors (S&P) Mid Cap 400 Index lists 400 mid-size companies in numerous industries. According to S & P, it is a market-value weighted index.
S & P Small Cap 600 Index ($SML): The Standard and Poors (S&P) Small Cap 600 Index lists 600 small-cap stocks. These stocks are chosen for liquidity, market size, and to represent numerous industry groups.
Scan: A list of stocks, sorted and filtered according to criteria that vary with the scan. Finviz.com is an exceptional example of a free scanning service.
Sector: A grouping of companies that generate revenue in similar ways, and tend to rise and fall with the economic cycle. Sectors are typically broken down into smaller groupings referred to as industries. The sectors tracked by the Standard and Poors Index are Financials, Technology, Utilities, Basic Industries, Industrials, Energy, Consumer Staples, Consumer Services and Transport/Cyclicals.
Securities and Exchange Commission (SEC): “The police of the stock market.” A federal agency created to regulate and monitor the securities industry. All U.S. companies with stock must abide by the SEC rules and regulations and are required to file quarterly status reports.
Sell Signal: A condition that indicates a good time to sell a stock. The exact circumstances of the signal will be determined by the indicator that an analyst is using. For example, it’s often considered a sell signal when the RSI crosses down through the 50 level.
Selling Climax: See Reversal Spike.
Sentiment Indicators: Psychological indicators that attempt to measure the degree of bullishness or bearishness in a market. These are contrary indicators and are used in much the same fashion as overbought or oversold oscillators. Their greatest value is when they reach upper or lower extremes.
Shakeout: A situation where many scared investors exit their positions due to unfavorable news or uncertainty regarding the stock or industry.
Shooting Star: A single day pattern that can appear in an uptrend. It opens higher, trades much higher, then closes near its open. It looks just like the Inverted Hammer except that it is bearish.
Short Interest Ratio (SIR): Also referred to as “short interest” or “short float,” SIR is the ratio of tradable shares being shorted to outstanding shares in the market, or the “float.” A great way to track short interest is through Nasdaq.com.
Short Sale Restriction (SSR): In 2010, the SEC adopted a new short sale price test restriction, which is commonly referred to as the “alternative uptick rule.” The alternative uptick rule (or SSR) is designed to restrict short selling from further driving down the price of a stock that has dropped more than 10 percent in one day compared to the closing price on the previous day.
Short Selling: The process of selling a stock with the hope of buying it back at a lower price (sell high, buy low). Short sellers carry bearish sentiment, and believe the price will go down rather than up. Short selling involves borrowing stock from your broker to sell short, and using margin to finance the borrowing. If the price of the stock that is shorted moves up too high, the short seller will receive a margin call and be required to wire in more money, or may be forced to cover (buy back) their short position.
Short Squeeze: Occurs when price action climbs so fast that short sellers are forced to cover their positions (buy the stock back), which only pushes prices higher.
Signal Line: Also referred to as the “trigger line”, it is a moving average of another indicator that is used to generate simple buy and sell signals. Probably the most used signal line is the one that is built into the MACD. The signal line is the exponential moving average of the MACD line. A buy signal is generated when the MACD line crosses above the signal line and a sell signal is generated when the MACD line crosses below the signal line.
Simple Average: A moving average that gives equal weight to each day’s price data.
Six Month Cycle: A bullish cycle is said to last from November to April and a bearish cycle from May to October. Yale Hirsch, founder of the Stock Trader’s Almanac, discovered this six month cycle theory in 1986.
Slope: The rise-over-run of an invisible line that is the “best fit” line through the previous n data points. (The angle of incline or decline.)
SPDR: Referred to as “spider”, it stands for Standard & Poor’s Depositary Receipt. SPDRs have three letter symbols (e.g. SPY) and trade just like stocks on the AMEX. They offer a convenient means to buy and sell the S&P 500, S&P 400 and select S&P sectors.
SPDR Trust Series I ($SPY): An exchange traded fund (ETF) that tracks the performance of the S&P 500 index. The fund is managed by the State Street Global Advisors and is traded on the New York Stock Exchange. Each share of the fund is priced to reflect 1/10 of the value of the S&P 500 index ($SPX). The shares trade continuously on the market. They pay the aggregate dividend of the companies in the S&P 500 index.
Spinning Top: Candlestick lines that have small bodies with upper and lower shadows that exceed the length of the body. Spinning tops signal indecision.
Split: The division of a stock into multiple shares. In a 2-for-1 split, the stockholder’s shares will double in quantity, though the value of each stock will be halved.
Spread: The difference between the bid and the ask. Read more about Bid/Ask Spreads.
Spring: A scenario where prices break below support, but soon reverse course and move back above support. Prices are said to “spring” back from their support break and indicate that the bulls are still alive.
Standard Deviation (volatility): A statistical term that provides a good indication of volatility. It measures how widely values (closing prices for instance) are dispersed from the average. The larger the difference between the closing prices and the average price, the higher the standard deviation will be and the higher the volatility. The closer the closing prices are to the average price, the lower the standard deviation and the lower the volatility.
Stochastic Oscillator: A momentum indicator that measures the price of a security relative to the high/low range over a set period of time. The indicator rotates between 0 and 100, with readings below 20 considered to be oversold and readings above 80 considered to be overbought. A 14-period Stochastic Oscillator reading of 30 would indicate that the current price was 30% above the lowest low of the last 14 days and 70% below the highest high.
StochRSI: An oscillator used to identify overbought and oversold readings in RSI. Because RSI can go for extended periods without becoming overbought (above 70) or oversold (below 30), StochRSI provides an alternative means to identify these extremities. StochRSI is found by applying the Stochastics formula to RSI readings – hence its name. As an indicator of RSI, it measures the value of RSI relative to its high/low range over a set number of periods. When RSI records a new low for the set period, StochRSI will be at 0. When RSI records a new high for the set period, StochRSI will be at 100.
Stop Loss Order: An instruction to the broker to buy or sell stock when it trades beyond a specified price. They serve to either protect your profits or limit your losses. Read more on Stop Loss orders.
Stop-And-Reversal Indicator: See Parabolic SAR.
Summation Index: A cumulative sum of all daily McClellan oscillator readings that provides longer range analysis of market breadth.
Supply Line: See Trend Lines.
Support: Also referred to as “demand,” a price level at which there is sufficient demand for a stock to cause a halt in an downward trend and turn the trend upward.
Symmetrical Triangle: A sideways chart pattern between two converging trend lines in which the upper trend line is declining and the lower trend line is rising. This pattern represents an even balance between buyers and sellers, although the prior trend is usually resumed. The breakout through either trend line signals the direction of the price trend. Read more on Symmetrical Triangle.