Page 51 - FINAL CFA I SLIDES JUNE 2019 DAY 4

Session Unit 3:

13. Technical Analysis

Non-Price-Based Indicators, p.324

Volatility Index (VIX) measures the volatility of options on the S&P 500 stock index.

High levels suggest investors fear declines in the stock market.

Often interpreted in a contrarian way; predominantly bearish investor outlook = bullish sign.

Margin debt – as reported by brokers:

Increasing outstanding levels coincide with increasing market prices and vice versa: Why?

Short interest ratio (short interest / daily trading volume) – as reported by brokers:

#. of shares investors have borrowed and sold short.

High ratio means investors expect the stock price to decrease; But,

also implies future buying demand when short sellers must return their borrowed shares.

Technical Analysts’ divided as to its interpretation!