Apr 22, 2009

Definition of Technical Ratings

Definition of Technical Ratings 
Maybank Investment Bank Research uses the following technical rating system:
FIRM BUY (TECHNICAL)  Total return is expected to exceed 20% in the next 1 month.
ACCUMULATE (TECHNICAL)  Total return is expected to be above 10% in the next 2 weeks.
STRONG SELL (TECHNICAL)  Total return is expected to drop below 20% in the next 1 month.
TAKE PROFIT (TECHNICAL)  Total return is expected to drop below 10% in the next 2 weeks.
SHORT-TERM BUY (TECHNICAL)  Total return is expected to be between 5-10% in the next 2 weeks. However, the upside may or may not be sustainable.

Applicability of Technical Ratings
Technical ratings are purely based on price and volume-related indicators extracted from Bursa Malaysia Securities Berhad, explained in the Glossary below. Featured securities are selected as and when their technical indicators appear convincing for an investment action. Maybank nvestment Bank Bhd expressly disclaims any obligation to update or revise its Technical Ratings to reflect new information, events or circumstances after the date of this publication or to reflect the occurrence of unanticipated events.

Glossary of key technical terms

An oscillator used in technical analysis to help determine when an investment vehicle has been overbought and oversold.  It quantifies the relationship between the asset's price, a moving average (MA) of the asset's price, and normal deviations (D) from that average.

An indicator for identifying when a definable trend is present in an instrument, i.e. the DMI tells whether an instrument is trending or not.

A trend lagging momentum indicator that shows the relationship between two moving averages of prices. A “signal line” is also plotted on top of the MACD to function as a trigger for buy and sell signals.

A technical analysis tool that is banded between two extreme values and built with the results from a trend indicator for discovering short-term overbought or oversold conditions. As the oscillator approaches the upper extreme value the stock is overbought, while in the lower extreme it is oversold.
A technical momentum indicator that compares the magnitude of recent losses to determine overbought and oversold conditions of the stock. The stock is overbought (overvalued) once the RSI approaches the 80-level. Meanwhile, the stock is oversold (undervalued) as the RSI approaches the 20-level.

A technical momentum indicator that compares a security’s closing price to its price range over a given time period. The stock is overbought when the indicator is above 80 and oversold when it is below 20.
Source: Investopedia.com