Glossary
The terms on this site, defined.
Broken Stocks is rules-based, so the vocabulary is precise. Every term below maps to an exact, public criterion — not a vibe. The full ruleset is on the methodology page.
Falling knife
A steep, recent breakdown from a fresh high — typically a 30%+ drop where the high was set inside the last ~120 days. The phrase describes the pattern; Broken Stocks flags it and never recommends trying to catch it. A 30% decline whose high is two years old is a long downtrend, not a falling knife.
Rolling 252-day high
The highest closing price over the trailing 252 trading days — roughly one calendar year, hence "52-week high." Every decline percentage on the site is measured from this number, recomputed daily.
Decline depth
How far below the rolling 252-day high a stock is trading right now, in percent. The primary axis of the tier system: 20% lands on Watch, 30% on Amber, 40% on the Red List.
Decline sigma
The drop from a local high, scaled by the stock's own typical daily volatility. A 12% drop in a normally-placid utility can be a larger structural event than a 25% drop in a name that swings 8% a day — sigma catches the first when a pure-percent screen would miss it.
Time-frame continuity (TFC)
Whether the most recent bar is bearish across the daily, weekly, monthly, quarterly, and yearly time frames at once. We report it as a count out of five. When multiple time frames break together, the trend has continuity to the downside and is harder to reverse.
2-Down and red 3 (Strat bar types)
From Rob Smith's "The Strat." A 2-Down takes out the prior bar's low but not its high — a lower low only, directional down. A 3 is an outside bar that takes out both the prior high and low; a red 3 closes lower and behaves like a 2-Down. Both count as bearish for time-frame continuity.
Red List · Amber List · Watch
Red List — down 40%+ from the rolling high, or down 30%+ with that high set inside the last 120 days. Amber List — down 30%+ and not Red. Watch — down 20–29%. A ticker can also reach a tier on decline sigma or time-frame continuity alone, independent of headline depth.
Recovering
A badge, not a tier. It means a confirmed bullish structural signal has formed alongside the decline. The tier still tells you how deep the damage is; Recovering tells you momentum may be turning. It is explicitly not a buy signal — working out whether a turn is investable is what ConvictionEdge does.