P1:a/b P2:c/d QC:e/f T1:g
gloss JWBK182-McDowell April 25, 2008 16:35 Printer: Yet to come
196 GLOSSARYPTP potential When the pyramid is potential, it will beyellowin color. Once the
market moves beyond the apex of the pyramid it will then be confirmed and will
turn eithergreenorred,depending on whether it is a bull or bear trend. If the
market does not confirm the pyramid by exceeding the apex, the yellow pyramid
(triangle) will disappear.
PTP voided If a potentialyellowpyramid is not confirmed, it will be voided and
will disappear.
put An options contract with the right to sell a security at a specified exercise
price on or before a specific expiration date.
put option This is the right to sell a stock (or bond or commodity) at a certain
price by a certain date. A put option writer sells the right to a buyer. If the option
exercises, the buyer puts the stock to the writer, and the writer must buy it.
primary pyramid trading point©R(P) ThisARTsignal indicates entries and exits
into a primary trend trade or investment.
pyramid trading point©R(PTP) ThisARTtrend trading signal was developed by
Bennett A. McDowell and identifies exact entries and exits. It enables you to trade
and invest utilizing therealitiesof the markets. It can be used on all markets and
all time frames.
rally (Recovery) An upward movement of prices.
range-bound market Seebracketed market.
reality-based trading Living in reality is to be seeing and reacting to the envi-
ronment as they are occurring, without attempting to predict future events. When
traders are living in reality, they are dealing with what is actually occurring to them
at any given moment. When trading and investing in reality, they are focusing on the
current moment. They are devoid of opinions and other past or future distractions
or thoughts. Reality-based trading and investing involves looking at what is real in
the market, such aspriceandvolume.
recession A contraction in the business cycle, usually manifesting in slow or neg-
ative GDP growth.
relative strength indicator (RSI) An indicator developed by J. Wells Wilder Jr.
that is used to ascertain overbought and oversold conditions. It works on a scale of
99 to 1, with 99 being the strongest and 1 being the weakest. In the stock market, a
measure of a given stock’s price strength—relative to a broad index of stocks. The
term can also be used in a more general sense to refer to an overbought/oversold
type of indicator.
resistance level In technical analysis, a price area at which a rising market is
expected to encounter increased selling pressure sufficient to stall or reverse the
advance.
retracement A price movement in the opposite direction of the previous trend.
A retracement is usually a price correction. For example, in a rising market, a