Glossary

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Glossary

Elliott Wave Theory

Definition: a technical analysis method used to forecast market movements by identifying repetitive investor behaviour reflected in price patterns.

According to Elliott Wave, market price movements unfold in predictable cycles, composed of two major phases:

Impulse (or motive) waves: Move in the direction of the overall trend and consist of five smaller waves (three upward moves separated by two corrections).

Corrective waves: Move against the trend, typically consisting of three smaller waves (two countertrend moves separated by one brief bounce in the trend direction).

Investors use these wave patterns to anticipate market turning points, identify potential buy or sell signals, and better manage risk.

Example: If Tesla stock is in a bullish (upward) trend, an impulse wave might include a strong rise (Wave 1), brief pullback (Wave 2), another significant rise (Wave 3), a smaller correction (Wave 4), and a final push higher (Wave 5). This is usually followed by a three-wave correction (A-B-C) moving against the trend.

General Market Terms

YTD (Year-to-Date)
Definition: The period from January 1st up to today.
Example: SPY’s YTD performance up to June 30 is +5.4%.
ATH (All-Time High)
Definition: The highest price or level an asset has ever reached.
Example: Bitcoin reached a new ATH of $112k.
Volatility
Definition: The measure of how quickly and dramatically prices move up or down.
Example: Tesla’s 6.8% drop was within normal daily volatility, despite alarming news headlines.
SMA (Simple Moving Average)
Definition: A widely-used technical analysis indicator calculated by averaging an asset’s price over a specific number of days, giving equal weight to each day. It smooths out short-term price fluctuations, helping traders identify trends and potential support or resistance levels.
Example: If Tesla’s 50-day SMA is rising and crosses above its 200-day SMA (known as a “golden cross”), it often signals a bullish trend, encouraging investors to expect further price increases. Conversely, when a shorter-term SMA crosses below a longer-term SMA (a “death cross”), it could indicate bearish market sentiment.

EMA (Exponential Moving Average)
Definition: Like the SMA, but it smoothes the price data, emphasising recent data points.
Example: TLT found resistance at its 200-day EMA.
RSI (Relative Strength Index)
Definition: Technical indicator measuring momentum; helps identify if an asset is overbought or oversold.
Example: NVDA’s RSI suggested its shares were overbought, hinting a pullback could come.
Correlation
Definition: Measure of how closely assets move in relation to each other.
Example: Bitcoin has high correlation with SPY, indicating similar investor sentiment influences both assets.

Tickers

SPY
Definition: Ticker for the SPDR S&P 500 ETF Trust, an ETF that mirrors the performance of the S&P 500.
Example: If SPY is up, it indicates overall positive sentiment for US equities.
QQQ
Definition: Ticker for Invesco QQQ Trust, an ETF tracking the Nasdaq-100, heavily weighted toward tech stocks.
Example: QQQ is often used to gauge the health of large-cap technology stocks like Apple and Microsoft.
TLT
Definition: Ticker for the iShares 20+ Year Treasury Bond ETF, tracking long-term U.S. government bonds.
Example: Investors watch TLT to gauge expectations of interest rates and economic outlook.
USO
Definition: United States Oil Fund ETF, tracking the price of West Texas Intermediate crude oil.
Example: Geopolitical tensions in the Middle East pushed USO’s price higher.
BTC
Definition: Ticker symbol for Bitcoin.
Example: BTC rallied to a new ATH at $112k.
COIN
Definition: Ticker symbol for Coinbase, a cryptocurrency exchange platform stock.
Example: COIN rose significantly after positive news around stablecoin regulations.
GLD / GDX
Definition: GLD tracks gold prices directly, while GDX is an ETF for gold-mining companies.
Example: When inflation fears rise, investors often buy GLD or GDX as a hedge.
SOXX
Definition: ETF tracking semiconductor stocks.
Example: Strong earnings from Nvidia positively impacted SOXX.
Mag-7 (Magnificent Seven)
Definition: Refers to seven major tech stocks: Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia, and Tesla.
Example: The Mag-7 often drive overall market direction given their large market capitalizations.
PLTR
Definition: Ticker for Palantir Technologies, known for AI and data analytics.
Example: PLTR stock rose on strong AI-driven growth expectations.

Central Bank & Rates Terms

FOMC (Federal Open Market Committee)
Definition: The Fed committee that makes decisions on U.S. interest rates.
Example: FOMC projections indicate potential interest rate cuts later in the year.
Fed Funds Rate
Definition: Short-term interest rate set by the Fed, influencing borrowing and lending across the economy.
Example: Investors closely watch Fed Funds futures to predict future rate changes.
SOFR (Secured Overnight Financing Rate)
Definition: Benchmark interest rate replacing LIBOR for short-term borrowing costs.
Example: SOFR futures pricing indicates market expectations for Fed actions.

Economic Indicators & Terms

Nonfarm Payrolls
Definition: Monthly report of U.S. job gains excluding farm, nonprofit, and certain government positions.
Example: Strong nonfarm payrolls numbers (e.g., 147k new jobs) suggest a healthy economy, potentially delaying Fed rate cuts.
CPI (Consumer Price Index)
Definition: CPI measures the average change over time in the prices consumers pay for a basket of goods and services, such as food, energy, housing, and healthcare. It’s widely used to gauge inflation in the economy.
Headline CPI: Includes all items, such as food and energy, whose prices can fluctuate significantly from month to month.
Core CPI: Excludes food and energy prices, giving a clearer view of long-term inflation trends by removing volatile items
Example: If headline CPI rises sharply due to gasoline prices spiking after an oil shortage, but core CPI remains stable, it suggests that underlying inflation remains relatively calm, despite temporary energy shocks
PCE (Personal Consumption Expenditures) Price Index
Definition: PCE measures changes in the prices consumers pay for goods and services, similar to CPI, but reflecting consumer spending patterns more comprehensively. It’s the Federal Reserve’s preferred inflation indicator when setting monetary policy.
Headline PCE: Includes all categories, including volatile items like food and energy.
Core PCE: Removes food and energy prices to better reflect persistent inflation trends. The Fed closely watches Core PCE to decide on interest rate policy.
Example: If Core PCE steadily rises above the Fed’s 2% inflation target, the Federal Reserve might respond by increasing interest rates to slow inflation down.
Yield Curve
Definition: Graph showing interest rates on debt across various maturities; its shape signals economic expectations.
Example: A steeper yield curve suggests economic optimism and expectations for rising inflation.
Bear Steepening
Definition: When long-term yields rise faster than short-term yields, often signaling inflation or increased bond supply concerns.
Example: Passage of the 1BBB caused bear steepening as long-term bond yields rose.

Quantitative & Systematic Trading Terms

Systematic Signals
Definition: Automated signals generated by quantitative models indicating buy/sell or risk-on/risk-off positions.
Example: YXI Signals turned risk-on for Bitcoin at $83k.
ML (Machine Learning)
Definition: Use of algorithms to analyze data and predict outcomes based on historical patterns.
Example: YXI Insights employs ML to produce trading signals and risk ratings.
4-3-2-1 Ratings Framework
Definition: Proprietary rating system combining ML signals (4 points), technical analysis (3), valuation (2), and seasonality (1).
Example: GOOGL received a high total score of 9, suggesting a strong investment outlook.

Valuation Terms

P/E (Price-to-Earnings Ratio)
Definition: Valuation ratio comparing a company’s stock price to its earnings per share; indicates if a stock is expensive or cheap relative to earnings.
Example: Tesla’s P/E ratio remains historically high compared to peers.
PEG (Price/Earnings-to-Growth Ratio)
Definition: Valuation metric adjusting P/E by earnings growth rate, providing insight into value relative to growth.
Example: Apple’s PEG ratio suggests valuation is in line with its earnings growth.
EV / TTM Revenue (Enterprise Value-to-Trailing Twelve Months Revenue)
Definition: A valuation metric used by investors to assess how expensive or cheap a company’s stock is relative to the sales it generates over the past 12 months (TTM). Enterprise Value (EV) is the total value of the company, accounting for market capitalization plus debt and minus cash.
Example: If Tesla’s EV/TTM Revenue is 8, it means investors are currently valuing Tesla at eight times the total revenue it earned over the past year. Higher numbers typically indicate higher growth expectations, while lower numbers may suggest the stock is undervalued or facing growth concerns.

ETF (Exchange-Traded Fund) Terms

ETF Flows
Definition: Net money moving into or out of an ETF, indicating investor sentiment.
Example: Positive ETF flows into USO suggest investors anticipate rising oil prices.
AUM (Assets Under Management)
Definition: Total market value of investments managed by a fund or ETF.
Example: The ETF with the ticker NVDL has $4.1 billion AUM.

Special Terms & Legislation

1BBB (One Big Beautiful Bill)
Definition: A major U.S. legislative bill significantly increasing government spending and the debt ceiling.
Example: The 1BBB Act is expected to push bond yields higher due to greater Treasury issuance