Full View Integrated Technical Analysis A Systematic Approach to Active Stock Market Investing

by Xie, Xin

• ISBN13: 9780470825792
• ISBN10: 0470825790
• Edition: 1st
• Format: Hardcover
• Copyright: 2011-01-04
• Publisher: Wiley

Summary

Has the bear market ended? Is the rebound lasting? Everybody wants an answer but nobody can provide one with a good degree of confidence. While fundamental analysis is notoriously weak when it comes to market timing decisions and providing good forecasts with any degree of accuracy except for the very long run, technical analysis is equally timid in providing any concrete answers to the above fundamentally important questions to market participants. Nobody, no existing system can give you a firm answer with a respectable degree of conviction. This book will provide you with a system to answer those questions with high degree of confidence. If someone says 200 day moving average can be used to answer the above questions, what is the reason for not using 150 day moving average? Should the same 200 day moving average be used to judge whether the market has bottomed out after a 70 day decline as well as after a 400 day decline? The answer is obviously "no". While there could be other candidates, the logic remains the same, that the parameters of the indicators must be adjusted, one way or the other, to reflect the specific situation of each market decline. This book will provide you with a systematic, objective and consistent adjustment mechanism so that judgment can be made in the most efficient way the shortest possible time with which we can reach a reliable decision. The book will also provide a full description of major pausing points, including the ones that are not visible to the naked eye in the form of traditional chart patterns. More specifically, the book achieves these breakthroughs by radically departing from the existing technical analysis in three significant ways. First, it rejects the erroneous use of fixed parameters in the existing technical analysis when employing the indicators, but doing so indirectly through the introduction of appropriate data series with the right time frames while maintaining the parameter themselves constant, as compared with the existing approach of using the same time interval chart and the same fixed parameter for analyzing all situations. The idea of looking at different time interval is sometimes mentioned in the literature, but most times, only as a

Author Biography

Xin Xie is the Director for the Institute of International Trade and Investment at the Upper Yangtze River Economic Research Center, Chongqing University of Business and Technology and PRC Ministry of Education. He has a PhD in Economics from the Columbia University in New York and a Master of Arts Degree in Statistics at Zhongnan University of Finance in China. He has extensive experience in the banking and investment industries as a Senior Economist and Strategist, starting his investment career with UBS AG in Zurich and later working for the Bank of America in Singapore.

Table of Contents

Preface	p. ix
The Need for a Full View Integrated Approach	p. 1
The Motivation	p. 1
The Need for a New Paradigm	p. 1
The Answers from FVITA	p. 4
The Necessity of FVITA	p. 6
Random Walk?	p. 9
Two Basic Elements of Market Dynamics	p. 11
Oscillators-An Overview	p. 11
The Oscillator of Choice-Stochastics	p. 19
Trend Indicator-Moving Average	p. 21
Trend Indicator-Moving Average Convergence/Divergence	p. 24
Adaptive Trend Indicators	p. 29
Kaufman's Adaptive Moving Average	p. 30
Chande's Variable Index Dynamic Average	p. 31
Mart's Master Trading Formula	p. 31
Adaptive Oscillators	p. 33
Other Tools of Technical Analysis	p. 33
Multi-Screen Systems	p. 35
The Need for Multi-Screen Approaches	p. 35
Triple Screens	p. 37
Extended Interval Charts in FVITA-Daily and Up	p. 39
Intra-Day Interval Charts in FVITA	p. 45
Bounded, Interval-Specific Bull and Bear Markets	p. 49
Interval-Specific Bull and Bear Market I-Concept	p. 49
Interval-Specific Bull and Bear Market II-Criteria	p. 52
Interval-Specific Bull and Bear Market III-Limits of Countermovements	p. 57
Triple Screen System Under Full View	p. 66
Market Turning Points and Duration of Pauses	p. 69
Support and Resistance	p. 69
Bollinger Bands	p. 74
Waves	p. 78
Turning Points after Eight and R9 Observations	p. 85
Thrust	p. 86
Type I, II, and III Pauses	p. 91
Trend Reversals vs. Temporary Countertrends	p. 101
Trend Reversals	p. 101
Without the Two-Day Chart	p. 108
Running Space after Trend Reversal	p. 109
Temporary Countertrends	p. 111
Straight Pauses	p. 122
Exception 1: Composite Bottoming-Up and Composite Topping-Off	p. 128
Exception 2: Approaching the Turning Point	p. 130
Relationship between Low- and High-Order Signals	p. 132
Trading Strategies on Trend Signals	p. 134
Pauses Under Different Market Conditions	p. 141
Pausing-Down from a Historical New High	p. 142
Pauses Against Temporary Trends	p. 145
Trading Strategies for Pauses	p. 151
Case Studies	p. 157
Case 1: The 2007 Financial Market Crisis-DJIA	p. 158
Case 2: The 2000 High-Tech Bubble and its Aftermath-DJIA	p. 162
The Formation of the High-Tech Bubble-DJIA	p. 163
The Bursting of the High-Tech Bubble-DJIA	p. 167
Case 3: The 1990 Bubble and Fall-Topix	p. 172
The Formation of the 1990 Bubble-Topix	p. 172
The Bursting of the Bubble in 1990, I-Topix	p. 177
The Bursting of the Bubble in 1990, II-Topix	p. 183
Case 4: The 2003 Rebound and 2007 Crash	p. 187
The Rebound in 2003-Topix	p. 187
The Fall after the Crash in 2007-Topix	p. 192
Case 5: The 2007 Crash-Shanghai Composite Index	p. 195
Market at the Turning Point-Shanghai Composite Index 2007	p. 195
The Crash of 2007-Shanghai Composite Index	p. 201
Random Walk, Efficient Market vs. Market Activism	p. 207
Efficient Market Hypothesis-The Roots	p. 208
Efficient Market Hypothesis-The Evidence	p. 212
EMH, Market Activism and the $100 Bill Story	p. 216
Flawed Empirical Observations Against Market Activism	p. 217
A Fund to Show Effective Market Activision	p. 224
A Theoretical Argument for Technical Analysis	p. 228
Integrating Macro, Fundamental, Quantitative and Technical Analysis	p. 237
The Fragmented State of Market Analysis	p. 237
Integrating Different Technical Analyses Under FVITA	p. 239
Macroeconomic Analysis and FVITA	p. 240
Integrated Approach to News Processing	p. 241
Integrated Analysis of Bubbles and Panics	p. 244
Firm Fundamentals and FVITA	p. 248
Options and FVITA	p. 249
Other Issues	p. 253
Statistical Analysis	p. 253
Technical Analysis as Public Knowledge	p. 255
Concluding Remarks	p. 259
Glossary	p. 261
References	p. 265
Index	p. 267
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