REVERSAL TERMS

A bullish reversal indicates a new upward trend is possible. A bearish reversal indicates a new downtrend is possible.

Abandoned Baby (A high bullish reversal): The first day is a red candlestick. The second day is a Doji gapping downward. The third day is a white candlestick gapping upward. The shadows on the Doji must completely gap below the shadows of the first and third day.

Engulfing (A moderate bullish reversal): A white candlestick engulfing the real body of the first day.

Hanging Man (A moderate bearish reversal): A black candlestick that moves significantly lower after the open, but rallies to a close well above the intraday low. If this candlestick forms during a decline, then it is called a Hammer.

Hammer (A moderate bullish reversal): A small real body with a lower shadow (at least twice as long as the real body) and no upper shadow.

Harami (A low bearish reversal): The first day is a long white candlestick. The next day is a red candlestick where the real body is completely engulfed by the real body of the first.

Harami Cross (A moderate bearish reversal): A two day pattern similar to the Harami, but with a Doji in the second day.

Morning Star (A high bullish reversal): The first day is a long red candlestick. The second day is a small candlestick gapping downward. The third day is a white candlestick.

Rising Three Methods (A high bullish continuation): A long white candlestick is followed by three small body days, each fully contained within the range of the high and low of the first day. The fifth day is along white candlestick with a close higher than the first day.

Three Inside Up (A high bullish reversal): A bullish harami occurs in the first two days. The third day is a white candlestick with a higher close than the previous day.

Three White Soldiers (A high bullish reversal): Three white days occur, each with a higher close than the previous day.

Upside Tasuki Gap (A moderate bullish continuation): A continuation pattern with a long white candlestick followed by another white candlestick that has gapped above the first one. The third day is red and opens within the body of the second day, then closes in the gap between the first two days, but does not close the gap.

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A bond (a fixed income) is a loan for which a person is the lender.
The borrower (the issuer) must pay the investment with interest payments.
The interest rate or coupon is the interest the organization must pay to the investor.
The date on which the issuer has to pay the amount borrowed (face value or principal) is called the maturity date.
Yield is a figure that shows the return an investor gets from a bond. Simplest Yield = coupon amount / price.
The longer the time to maturity, the higher the interest rate.
Calculate a bond's "yield to call,"  or how money you will get if you redeem early. The higher the yield, the more money you will make.

VALUATION OF BONDS

Three conditions are required for a continuous increase in the value of the bond:
* The asset must continuously produce cash flow.
* Cash flow must have a positive rate of growth.
* Risk must be controlled.

Determining the value of the bond:

Bond value = annual interest (PVIFA) + face value (PVIF)

PVIFA = present value interest factor annuity
PVIF = present value interest factor

Find Bond Market Quotes:

Yahoo! Bond Center

Types of bonds

1) Treasuries: From the U.S. Government.

Widely considered the safest type of bond:
- Interest (but not capital gains) is exempt from state and local income taxes.
- Because the market for them is so vast, they are easy to buy and easy to sell.
- Commissions tend to be modest. In fact, you can buy Treasuries direct at regularly scheduled auctions, which you don't even have to attend, and eliminate commission charges entirely.
Backed by the U.S. Treasury Department.
Many different types available to meet specific investing needs:

Treasury bonds: These have maturities of more than ten years, although some can be called in early by the Treasury. The minimum purchase is $1,000.

Treasury Bills: These mature within a year -- one, three- and six-month T-bills are the most common. Minimum purchase is $1,000. A key feature of T-bills is that they pay the interest up front. You pay the face value of the bill minus the interest; when the bill matures, you collect the face value.

Here is how the system works: The Treasury holds regularly scheduled auctions at which investors bid for the bills. If the bids determine that the interest on that week's bills is 5%, you pay $9,500 for a $10,000 bill (assuming the maturity is a year; for shorter maturities, the payment would be adjusted accordingly). Then, when the bill matures, the Treasury sends you a check for $10,000.

The 5% interest you earn is called the auction, or discount, rate, and it actually understates your yield. Because you are earning 5% on $10,000 but had to lay out only $9,500 to get it, you're a little ahead of the corporate-bond buyer, who would have had to ante up the entire $10,000. You can calculate the bond-equivalent yield for a T-bill by figuring the interest earned on the actual cash investment. In this case, you're putting up $9,500 in exchange for $500 in interest. Thus your bond-equivalent yield is about 5.3%.

Treasury notes: Treasury notes, like corporate bonds, pay interest semiannually. Notes are issued in medium-term maturities of two to ten years and are sold about once a month in minimum denominations of $1,000 for maturities of four years or more, $5,000 for shorter maturities. They can't be called.

How to Buy Treasuries?

The easiest way to buy a newly issued Treasury bill, note or bond is by touch-tone phone (800-722-2678) or
at the Bureau of the Public Debt Online.

You can also pay a broker or bank to buy Treasuries for you. You'll probably be charged about $50 per transaction, which lowers your yield a bit. Some institutions also levy fees for collecting interest payments on your behalf. If you want to sell the Treasury before it matures, you simply notify the bank or broker and it will be done for you.

For more information on buying Treasuries, visit the Bureau of the Public Debt Online.

2) Municipal

Issued by state and local governments to raise money.
Exempt from federal—and often state and local—taxes.

3) Corporate

Issued by corporations to raise capital.
Higher returns and higher risk, depending on the company's financial health.

Where to buy corporate bonds?

a) Online broker.

b) The New York Stock Exchange: www.nyse.com. The site offers information on the bond's history. The NYSE offers auction twice a day where buyers can buy bonds at a discount.

c) Your bank or 401k provider.

Bond Financing:

The cost of issuing bonds is due to:
- The years to maturity.
- The coupon rate or rate of interest.
- Economic and market conditions.
- The market yield to maturity of similar bonds.