GLOSSARY home about service resources

articles The purpose of this glossary is to make the language of technical analysis less mysterious. We know

academia
that some clients may not be familiar with the use of words such as “divergence” and “consolidation”
in connection with the energy market. To be sure, these words do have precise technical meanings.
glossary
Please note that some of the terms below are not strictly specific to technical analysis, but are still
book list used frequently by traders and technical analysts. Another excellent technical analysis glossary is
links maintained by StockCharts.com.

For those completely new to technical analysis, we suggest reading the tutorial available at
Investopedia.com. Basic informationcan can also be found on the internet, usually for free. There
are also many worthwhile books available on the subject of technical analysis. Please see our book
list for details.

Click on the nearest letter of the term you want defined:

A-B-C-D-E-F-G-H-I-J-K-L-M-N-O-P-Q-R-S-T-U-V-W-X-Y-Z

Accumulation. Process by which an excess supply of an instrument is absorbed by an expanding

demand. Over a period of time, accumulation has a positive effect on price. Accumulation generally
occurs after an extended decline, but can also occur during an intermediate-term correction of an
uptrend, sometimes referred to as a period of “re-accumulation.”

Alpha. Alpha measures how much better an asset's return has been than a benchmark (such as the
GSCI or SPX) irrespective of Beta (see Beta). It is that part of a asset's movement that is
independent of the benchmark's movement. Alpha is a function of active management -- it is the
return that comes from selection skill. The higher the Alpha, the better.

Angle. Refers to the slope of a price ascent or decent measured on an arithmetic scale chart.
Generally, sharp angles are associated with high volatility and shallow angles are associated with low
volatility.
Apex. Point of intersection of two trendlines; the usual connotation is that a new trend may evolve
as prices approach the apex. A characteristic feature of the classic “triangle” chart pattern.

Automatic Rally or Reaction. A term coined by Wyckoff students. It is rally that occurs after a
selling (or buying) climax. A period of base building or stabilization is not required to produce an
automatic rally or reaction, hence the phrase “automatic.”

Average Directional Index or ADX. The ADX indicator was developed in the late 1970's by Welles
Wilder. A strong trend is indicated by a high and rising ADX, whereas weak and non-trending
markets are denoted by low and falling ADX levels. Note that the ADX does not suggest whether a
trend is up or down. ADX levels below 15 suggests a non-trending market with low volatility, and
often signal the beginning of an important trend or chart pattern breakout.

Asymmetric Information. Information that is known to some people but not to other people. It is
one of the primary reasons for studying price and market action, i.e., technical analysis.

Asymmetric Volatility. Phenomenon in which there exists a higher volatility in down markets than
in up markets. While this is generally true in equity markets, it is not necessarily true in
commodities.

Autocorrelation. Autocorrelation is a correlation coefficient. However, instead of correlation

between two different variables, the correlation is between two values of the same variable (i.e.,
correlation of a variable with itself) over successive time intervals. Sometimes called serial
correlation. Range (volatility) shows greater autocorrelation than price changes.

Back and Fill. Another way of referring to consolidation behavior.

Backwardation. A market situation where prices for future delivery are lower than the spot price,
caused by shortage or tightness of supply. Also sometimes referred to as an “inverted” market.
Backwardation is the opposite of “contango.”

Base. A period of accumulation. Also called a “bottom” and usually found after a long decline,
although short and intermediate-term bases can also be found within the context of an existing
uptrend.

Basis Point. 1/100th of a percent. An interest rate or a yield of 5% is 50 basis points higher than
an interest rate or a yield of 4.5%.

Bear Market. A long period of time, usually measured in months or years, when the general trend
of the market is down.
Bear Trap. A temporary move to the downside that triggers a sell signal but does not initiate a new
trend, thereby “trapping the bears” before reversing. Also known as a Terminal Shakeout in Wyckoff
terminology.

Benchmark. A standard by which an asset's performance can be measured or judged. Often used
as a synonym for Index.

Beta. That part of an asset's movement that is influenced by an index. A stock with high beta
responds strongly to variations in the market, and a stock with low beta is relatively insensitive to
variations in the market. For example, a stock with beta of 1.5 would be expected to return 1.5%
percent if the market goes up 1 percent and return -1.5% percent if the market falls -1.0 percent.

Blow Off. The final phase of an uptrend, ending a mark-up phase, when prices rise very rapidly
usually on high volume, leading to a sharp reaction. See also Climax.

Breakout. When a market's price or volume makes a decisive move, especially through an area of
important resistance or support. Usually characterized by increasing levels of momentum and
volume. Some people use the terms “breakout” and “breakdown” to further distinguish between
upside and a downside moves. We use the term breakout synonymously for moves in both
directions.

Bulge. A sudden expansion of price and/or volume.

Bull Market. A long period of time, usually measured in months or years, when the general trend of
the market is up.

Bull Trap. A temporary move to the upside that triggers a buy signal but does not initiate a new
trend, thereby “trapping the bulls” before reversing. Also known as a Terminal Upthrust in Wyckoff
terminology.

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Candlesticks. A type of bar chart, developed by the Japanese in the 1700s, in which the price
range between the open and the close is depicted as either a hollow rectangle (if the close is higher
than the open) or a solid rectangle (if the close is lower than the open).

Chart Pattern or Area Pattern. Geometric patterns with distinct boundaries that occur in market
prices when viewed on a vertical bar chart. Chart patterns fall into one of several categories of either
trend reversal or trend continuation patterns. Much of the original work on the subject was
pioneered in late 1920s by Richard Schabacker, editor of Forbes.

Churning. Determined hesitation in a trend, usually leading to a technical rally or a reaction.

Volume is normally above average and price movement is limited. Conceptually, buyers (sellers) are
accommodating sellers (buyers) while requiring little or no concession in price.

Climax. A sudden and usually volatile end to a trend, accompanied by high volume. Selling and
buying climaxes are also usually followed by a period of stabilization. Climaxes are a form of
capitulation, where the fear level among the last bastion of losing investors is so great, that it finally
compels the simultaneous liquidation of losing positions.

Commitment of Traders Report or COT. The COT reports provide a breakdown of each Tuesday's
open interest for markets in which 20 or more traders hold positions equal to or above the reporting
levels established by the CFTC. The reports are released every Friday at 3:30 p.m. Eastern time.

Confirmation. Occurs when two or more related markets or indicators extend their trends to new
highs (or lows) simultaneously. Confirmation is one of the bedrock principles of Dow Theory and
technical analysis in general. The opposite of confirmation is “divergence.”

Consolidation (also Congestion). A pause in an ongoing trend characterized by successive

periods of overlapping ranges (quite litterally, excessive crowding within a more or less stable price
range). Consolidation patterns often lead to follow through in the same direction as the preceding
price trend once the consolidation ends.

Contango. A market condition in which futures prices are higher in the distant delivery months.

Continuation Pattern. A category of classical chart pattern that represent a temporary pause in an
existing trend. Examples include flags, pennants, wedges, diamonds, et al.

Contraction. Decreasing price fluctuations and/or daily ranges and/or diminishing volume. The
reverse of contraction is expansion.

Contrarian. An investor who buys and sells contrary to the prevailing market sentiment. The idea is
that as more people become bullish or bearish the more the underlying bullish or bearish inputs are
already discounted in the market; the market then corrects as there is no longer any reason for it to
go up or down.

Correction. See Technical Rally or Reaction.

Correlation. A measurement of relationship between two variables. The correlation coefficient (r)
shows if there is any correlation between an asset and the market. 1.0 is perfect correlation, 0.0 is
absolutely no correlation, and -1.0 is a perfect negative correlation. Studies indicate that a
correlation coefficient below 0.3 has no correlation to the market.

Correlation coefficient. A standardized statistical measure of the dependence of two random

variables, defined as the covariance divided by the standard deviations of two variables.

Divergence. Occurs when two or more related markets or indicators fail to extend their trends to
new highs (or lows) simultaneously. The opposite of divergence is “confirmation.”

Distribution. Process by which an excess demand of an instrument is absorbed by an expanding

supply. Over a period of time, distribution has a negative effect on price. Distribution generally
occurs following an extended advance, but can also occur during an intermediate-term correction in
an downtrend, sometimes referred to as a period of “re-distribution.”

Double Bottom or Double Top. A specific type of classical chart pattern that represents a
potential trend reversal.

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Exhaustion. See Climax.

Expansion. A sharp increase in volatility and/or daily price range. Usually occurs following a period
of contraction.

Extended. When a market has advanced or declined to, or in excess of, its trend parameters.
Extended markets are often followed by a period consolidation and/or mean reversion.

Extension. A price forecast determined by extending the vertical height of a pattern or price
impulse by a fixed ratio. See Target or Objective.

Fibonacci Series. The infinite sequence of numbers beginning 1, 1, 2, 3, 5, 8, 13, ... in which each
term is the sum of the two terms preceding it. The ratio of successive Fibonacci terms tends to the
Phi ratio, namely (1 + sqrt 5)/2. The original problem that Fibonacci investigated (in the year 1202)
was about how fast rabbits could breed in ideal circumstances.

Flag. A specific type of classical chart pattern that takes the shape of a small “flag” and is usually
followed by a continuation of the preceding trend move. Flags are among the most common and
reliable of all continuation patterns.
Forward curve. A graph of forward prices for different maturities. The “shape” of the curve reflects
the current view of the future supply/demand situation.

Fresh picture. Updated estimation of a stock or market, usually following recent trading activity or
news that has changed the previous look.

Fresh signal. Piece of information leading one to believe a stock will move in a certain manner.

Gap. When an instrument's range over a given period (usually a day) does not overlap the range of
the previous period. Gaps that occur at the beginning of a trend are known as breakaway gaps;
gaps that reverse a trend are referred to as exhaustion gaps.

Head and Shoulders or H&S. A specific type of classical chart pattern that often precedes a trend
reversal in a rising market. Inverse head and shoulders patterns are found at the bottom of a trend,
after a long decline.

Heavy. A market now dominated by sellers, or oversupply, resulting in falling prices. Sometimes
referred to as a “tired” market as well.

Hikkake pattern. A trading pattern discovered and introduced to the financial community in 2004
by Daniel L. Chesler. The pattern consists of a defined period of volatility contraction followed by a
false move which quickly reverses itself, usually over the next 2-3 consecutive periods (i.e., 2-3
hours, days, weeks, etc.). Hikkake is a Japanese verb which means “to trap.” See our article section
for more information, also see our Wikipedia entry.

Informational efficiency. The speed and accuracy with which prices reflect new information.

Intermediate-term. A period of time time sufficient to accommodate fundamental changes in

supply/demand balance. Measured in terms of weeks to months.

Inside Day. A day in which the high is less than the previous day's high, and the low is greater
than the previous day's low, i.e., a day in which the range is completely encapsulated by the
previous day's range. Inside days represents a pause or a hesitation in trading activity. The concept
can be applied to any time frame (i.e., inside hours, days, weeks, etc.).

Kondratieff Wave. An economic theory of the Soviet economist Kondratieff stating that the
economies of the western world are susceptible to major up-and-down "supercycles" lasting 50 to
60 years.

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Law of large numbers. The mean of a random sample approaches the mean (expected value) of
the population as sample size increases.

Liquidation. The phase following distribution, when prices decline rapidly and with little hesitation.

Liquidity. The capacity of a market to absorb fluctuations in demand and supply without excessive
price disruptions.

Long-term or Primary Trend. A period of time adequate to permit unfolding of major trends in
production, consumption, utility patterns, etc. Usually measured in terms of years.

MACD. The abbreviation stands for Moving Average Convergence Divergence indicator, developed by
fund manager Gerald Appel. It is the difference between a fast moving average and a slow moving
average. The name originated from the fact that the fast average is continually converging towards
or diverging away from the slow average. MACD is used primarily for detecting divergences.

Mark Up. Phase following accumulation, when prices advance rapidly and with little hesitation.
Wyckoff probably coined this phrase. Also 'marking up' or 'marking down' used in context of the
amount by which a securities dealer raises or lowers the price of a stock or bond due to changes in
demand and supply.

Mean Reversion. The notion that asset values revert to an average value or to an equilibrium
value. Thus, if an asset's price is above its equilibrium value the presumption of mean reversion is
that the asset's price will eventually decline to its equilibrium value. Similarly, if the price is below its
equilibrium value the presumption is that the asset's price will eventually rise to its equilibrium
value.

Modeling. The process of creating a depiction of reality, such as a graph, picture, or mathematical
representation.

Momentum. Refers mainly to indicators that depict the change in an assets's price over some fixed
time period. For example, the close of NYMEX gas futures today versus the price 30 days ago.
Momentum is one of the few leading indicators. Momentum as a market indicator is quite different
from momentum as a term in physics which equals mass times acceleration.

Moving Average. Indicator which is overlaid on top of prices on a chart. Moving averages help
smooth noisy data and are also used as a mechanical method of defining the trend. Positively
sloping averages usually denote an uptrend, while negatively sloping averages usually denote a
downtrend. There are many varieties of moving averages, such as: simple, exponential, triangular,
hamming, adaptive, and others. However the most common, and in our view the most useful, is the
simple moving average, or arithmetic mean, which is calculated by summing all values (such as the
close) and dividing by the number of periods.

Normal distribution. A continuous probability distribution whose probability density function has a
"bell" shape.

Open Interest. In exchange traded derivative markets, the number of outstanding contracts that
are held by market participants at the close of trading.

Oscillator. The most common type of oscillator plots the distance between two moving averages
(such as the MACD indicator) or between an asset's price and its moving average. More elaborate
constructions (such as RSI) are also possible. The theory is to identify periods when the distance is
stretched beyond upper (see Overbought) and lower (see Oversold) thresholds, thereby indicating
an asset's vulnerability to correcting or even reversing its trend.

Outside Day. A day in which the high is greater than the previous day's high, and the low is less
than the previous day's low, i.e., a day in which the range completely encapsulates the previous
day's range. Often found at or near turning points in the market.

Outperform. To appreciate at a rate faster than appreciation of the overall market in a rising
market, or to depreciate less than the overall market in a falling market. A form of relative (as
opposed to absolute) performance.

Overbought or Oversold. Refers to a market which is extended above (or below) its trend
parameters. A market which has moved sharply in one direction over a relatively short period of
time, and is vulnerable to mean reversion.

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Panic buying or selling. Rapid, high volume trading in anticipation of sharply rising or falling
prices, usually after unexpected news is released.

Periodicity. The phenomenon whereby prices make repeated peaks and/or troughs at roughly
equal time intervals. Classical chart patterns often display periodicity.

Perpetual Chart. Is a chart where the front month rolls to the next contract month on its expiration
(roll) date. This is sometimes referred to as a “nearest futures” perpetual chart. There is no
backward or forward adjustment to prices; only real prices are used, including gaps due to
variations in carry/contango, spreads, etc. Perpetual weekly and monthly charts are used for long-
term trend and pattern analysis.

Phi Ratio. An irrational number (can not be expressed as an integer or a fraction) although it is
always represented as a ratio. Phi is equal to the ratio of any number in the Fibonacci series to the
preceding number in the same series. For example, 89/55 = 1.618. Phi ratios are used to project
potential future price targets. See “Price Extensions.”

Pivot. Price level established as being significant by market's failure to penetrate or as being
significant when a sudden increase in volume accompanies the move through the price level.

Point & Figure or P&F. One of the oldest Western charting techniques, developed in the US about
1880, some fifteen years before the advent of bar charting. It is a method of charting price action
which completely ignores time; forward progress along the horizontal chart axis is entirely a function
of the specific P&F rules for plotting price changes.

Position. A market commitment; the number of contracts bought or sold for which no offsetting
transaction has been entered into. Also referred to as an “open position.”

Positive feedback. A strategy whereby buying is triggered by rising prices and selling is triggered
by falling prices (i.e., buying past winners and selling past losers). Also referred to as “momentum”
and “trend following” strategies.

Puke. Slang for a trader selling a position, usually a losing position. “When in doubt, puke it out.”

Pullback. See Technical Rally or Reaction.

Quant. Any practitioner of quantitative finance, a wide-ranging discipline that includes, among other
things, the pricing of financial instruments, the evaluation of risk, and the search for exploitable
patterns in market data.

Rally. Upward tendency in price following a decline that does not reverse the primary trend. Serves
to correct short-term oversold conditions. See also Technical Rally or Reaction.

Random walk. Theory that price changes from day to day are accidental or haphazard; changes
are independent of each other and have the same probability distribution. Many believers in the
random walk theory believe that it is impossible to outperform the market consistently without
taking additional risk.

Range. The difference between the high and low of a given period, usually one day, but can refer to
any time period including hours, weeks, etc.
Reaction. Downward tendency in price following an advance that does not reverse the primary
trend. Serves to correct short-term overbought conditions. See also Technical Rally.

Relative Strength. An instrument or group's price performance compared with a benchmark index
or instrument. For example, NYMEX gas futures price divided by the price of a the GSCI Energy Sub
Index. A rising relative strength line means that the NYMEX price is exceeding the performance of
the GSCI. This does not imply that the NYMEX gas price is rising, just that it is rising more (or falling
less) than the GSCI. A similar comparison can be made between related markets (gas and oil, etc.)
and delivery months.

Resistance. Price level where there is a high offer concentration, enough to temporarily stop or
reverse an advance.

Reversal Pattern. A specific type of classical chart pattern that represents a potential trend
reversal. Examples include head and shoulders tops and bottoms, double bottoms, et al.

R square (R2). Square of the correlation coefficient. The proportion of the variability in one series
that can be explained by the variability of one or more other series a regression model. A measure
of the quality of fit. 100% R-square means perfect predictability. Also known as Coefficient of
determination.

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Seasonality. The phenomenon where the price and the volatility of an underlying asset predictably
rises, falls, or stabilizes during the same time period each year due to recurring fundamental factors
such as production and marketing cycles, weather, etc.

Secondary Test. A term coined by Wyckoff students. It is the first reaction (rally) following an
automatic rally (reaction). A secondary test on light volume is one sign that the prior, primary trend
has been completed.

Secular Trend. Very long-term trends. Secular trends typically last 5-20 years and are made up of
one or more primary trends, conforming to the standard trend definition rules of a sequence of
higher-highs and higher-lows. In the US stock market, the 1929-1949 period would be an example
of a secular downtrend; 1982-2000 would be an example of a secular uptrend.

Set-up. Specific pre-conditions and patterns used for entering trades. The set-up becomes an active
buy or sell signal once the market trades at or through a specific trigger price.
Shakeout. A sharp, quick move which forces speculators to liquidate their positions. Also referred to
as a “stop cleaning” move — i.e., a move that is engineered by other players, to take out all resting
stop orders in the market. Once the liquidation is completed, the market usually forms an important
high or low pivot.

Short Selling. Short selling is the selling of a security that the seller does not own, or any sale that
is completed by the delivery of a security borrowed by the seller. Short selling is a legitimate trading
strategy. Short sellers assume the risk that they will be able to buy the security at a more favorable
price than the price at which they sold short.

Short-term. A price movement measured in hours or days. See also Technical Rally or Decline.

Signal. A confirmed trade set-up that has been activated by the market by trading at or through a
trigger price.

Simple Moving Average. The mathematical average (mean) of the underlying instrument over a
specified time period. Prices (mainly closing prices) over this period are added and then divided by
the total number of time periods. Moving averages follow the trend while smoothing price
movement.

Sold out market. A long-term condition characterized by persistently oversold weekly oscillators
and low turnover. Sellers have finally run out of inventory for sale. This is different than an
"oversold" market.

Specific risk. The risk which is unique to an individual asset. It represents the component of an
asset's return which is uncorrelated with general market moves. Specific risk can be diversified
away.

Spot market. A commodities market in which goods are bought and sold immediately for cash. The
spot market also includes futures contracts that expire in the current month. Trades in the spot
market are usually conducted over the counter in the form of phone trading as opposed to on an
organized exchange.

Stabilization. A period of sideways price action and “base building” prior to a trend reversal.
Synonymous with “accumulation” and “distribution.”

Stochastic. Indicator allegedly developed by George Lane (much controversy exists in technical
analysis debating circles over this point) that compares where a security's price has closed relative
to its price range over a specific time period. Stochastics may be used to identify divergences, as
well as short-term overbought and oversold conditions in strongly trending markets.
Stop Order. An order placed which is not at the current market price. It becomes a market order
once the market touches the specified price. Buy stop orders are placed above the present market
price. Sell stop orders are placed below the present market price.

Stop Limit Order. Similar to a stop order. Becomes a limit order once the specified price is touched.

Strong hands. Commercial hedgers and well-financed professional speculator who are hard to
“shake loose” from an established market posture.

Support. Price level where there is a high demand concentration, enough to temporarily stop or
reverse a decline.

Systematic risk. That component of an instrument or portfolio's market risk that is correlated with
the overall market. According to the capital asset pricing model (CAPM), the marketplace
compensates investors for taking systematic risk, since it can not be diversified away.

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Target or Objective. A price forecast determined by extending the vertical height of a price pattern
or price impulse by a fixed ratio. The classic method uses 100% of the vertical pattern height. Phi
ratio extensions (1.618, 2.618, etc.) are also used. Other methods include targets based on the
upper and lower boundaries of trend channels, point and figure projections (known as a “p&f count”)
and significant support or resistance areas.

Technical Rally or Reaction. A usually short-term price move resulting from conditions within the
market itself rather than fundamental supply/demand factors. Also referred to variously as:
pullback, retracement, correction.

Term Structure. The value of a variable at different time increments, for example the term
structure of interest rates is the yield curve. Also referred to as a the forward curve.

Test or Testing. Consolidation behavior with expectation that an important support (or resistance)
level will hold. A test is passed if prices do not go below the support or resistance level, and the test
is failed if prices go on to new lows or highs.

Trading book. Under bank regulations, a portion of a bank's balance sheet set side for trading
activities.
Trading Range. The interval between the highest and lowest price for a given market, over a
specific period (days, weeks, etc.). Prices move within a range where the bottom represents demand
and the top represents supply forces.

Trend. Persistent directional price movement. Uptrends are characterized by higher highs and
higher lows, and downtrends by lower lows and lower highs.

Trendline. A diagonal line created by connecting a series of points on a chart and represents the
slope of price movement. Penetration of a trendline may indicate a diminishing trend.

Trend Channel. Two parallel trendlines that contain most of the price action over a given period of
time. In essence, a diagonally sloping trading range that implies an uptrend or downtrend.

Triangle. A specific type of classical chart pattern that appears in the shape of a geometric triangle
with converging upper and lower boundaries. Triangles can act as either continuation or reversal
patterns. Triangles depict, perhaps better than any other classical chart pattern, an area of price
equilibrium where buying and selling pressure are roughly equal.

Trigger. A pre-determined price at which a buy or sell signal becomes activated. Trigger prices are
usually a function of nearby support or resistance levels as well as volatility conditions.

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Underlying. The variable on which a futures, option or other derivative contract is based.

Volatility. In general, the extent of the fluctuations (up or down) in an asset's price over the course
of one year. Usually measured by the statistical measure of standard deviation.

Volume. Total trading activity in a futures contract, measured in the number of contracts, for a
specific time period. Volume has a tendency to expand and contract in tandem with range. Healthy
price trends are normally characterized by rising volume.

Weak Hands. Poorly capitalized public traders who can be expected to exit their positions in the
face of adverse price movements. Usually small public retail traders.

Wedge. A specific classical chart pattern characterized by rising tops and rising bottoms in an
uptrend, or declining tops and declining bottoms in a downtrend. A less common variant is the
“running wedge” in which these definitions are reversed. Wedges usually lead to trend reversals.
Wyckoff, Richard D. Along with Charles Dow, considered one of the grandfathers of Western
technical analysis. Trader, broker and prolific writer, Wyckoff began his career on Wall Street in the
late 1870s. In 1907 he launched a monthly publication called The Ticker, which later merged into
The Magazine of Wall Street. In 1910, he produced arguably the best book ever written on the
subject of tape reading, Studies in Tape Reading. Wyckoff was personally aquatinted with many of
the well known operators of his day, including J.P. Morgan, Livermore, Keene, and Gann. Wyckoff's
teachings distilled and codified the “best practices” of these operators. In 1931 he founded a school
which later became the Stock Market Institute.

Wyckoff / Stock Market Institute

13601 N. 19th Avenue, Suite 1
Phoenix, AZ 85029
(602) 942-5581

Yield Curve. A graphic representation of the interest rate structure in a particular country or bond
market. The yield curve is the connecting line between short-term interest rates and bond yields. A
steep yield curve is a situation in which short-term rates are significantly lower than bond yields. If a
central bank decides to raise short-term rates, in most cases to prevent inflation, and bond yields
stay the same, then the yield curve flattens. In general raising short-term rates reduces fears of
inflation, so that bond yields decline. The yield curve has an impressive record as a leading indicator
of economic conditions, alerting investors to an imminent recession or signaling an economic upturn.
A sharply upward sloping, or steep yield curve, has often preceded an economic upturn, whereas a
flat yield curve frequently signals an economic slowdown. An inverted yield curve can be a harbinger
of recession.

Z score. Statistical measure that quantifies the distance (measured in standard deviations) a data
point is from the mean of a data set.

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