The Visual Investor How to Spot Market Trends

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  • Edition: 2nd
  • Format: Hardcover
  • Copyright: 2009-02-03
  • Publisher: Wiley
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The Visual Investor, Second Edition breaks down technical analysis into terms that are accessible to even individual investors. Aimed at the typical investor--such as the average CNBC viewer--this book shows investors how to follow the ups and downs of stock prices by visually comparing the charts, without using formulas or having a necessarily advanced understanding of technical analysis math and jargon. Murphy covers all the fundamentals, from chart types and market indicators to sector analysis and global investing, providing examples and easy-to-read charts so that any reader can become a skilled visual investor.

Author Biography

John J. Murphy is a former technical analyst for CNBC and has over forty years of market experience. He is the face of StockCharts.com, which provides financial information to online investors via technical analysis tools. Murphy has appeared on Bloomberg TV, CNN's Moneyline, Nightly Business Report, and Wall $treet Week with Louis Rukeyser. In 1992, he was given the first award for outstanding contribution to global technical analysis by the International Federation of Technical Analysts, and was the recipient of the 2002 Market Technicians Association Annual Award. In addition to the First Edition of The Visual Investor, he is also author of Intermarket Technical Analysis and Intermarket Analysis, all of which are published by Wiley. He also authored Technical Analysis of the Financial Markets. Murphy has a bachelor of arts in economics and a master of business administration from Fordham University.

Table of Contents

Prefacep. xv
Acknowledgmentsp. xix
Introductionp. 1
What Has Changed?p. 1
Fand Categoriesp. 2
Global Fundsp. 2
Investors Need to Be Informedp. 3
Benfits of Visual Investingp. 3
Structure of the Bookp. 3
What Is Visual Investing?p. 5
Why Market Analysis?p. 5
The Trend Is to Blendp. 6
What's in a Name?p. 6
Why Study the Market?p. 7
Chartists Are Cheatersp. 7
It's Always Just Supply and Demandp. 7
Charts Are Just Fasterp. 8
Charts Do Look Aheadp. 8
Pictures Don't Liep. 9
Picture Anything You Wantp. 9
The Market's Always Rightp. 9
It's All About Trendp. 10
Isn't past Always Prologue?p. 10
Timing is Everythingp. 13
Summaryp. 13
The Trend Is Your Frlendp. 15
What Is a Trend?p. 15
Support and Resistance Levelsp. 18
Role Reversalp. 18
Short Versus Long Termp. 18
Daily, Weekly, and Monthly Chartsp. 25
Recent Versus Distant Distant Past?p. 28
Trendllinesp. 28
Channel Linesp. 31
Retracing Our steps by One. Third, One-Half, and Two Thirdsp. 34
Weekly Reversalsp. 38
Summaryp. 38
Pictures That Tell a Storyp. 41
Chart Typesp. 41
Time Choicesp. 46
Scalingp. 46
Volume Analysisp. 50
Chart Patternsp. 52
Measuring Techinquesp. 61
Even the Fed Is Chartingp. 65
The Trianglep. 65
Polnt-and-Figure Chartsp. 66
Chart Pattern Recognition Softwarep. 70
Indicatiorsp. 73
Your Best Friend in a Trendp. 75
Two Classes of Indicatorsp. 75
The Moving Averagep. 76
The Simple Averagep. 76
Weighting the Average or Smoothing it?p. 77
Moving Average Lengthsp. 77
Moving Average Combinationsp. 78
Summaryp. 95
Is Overbought or Oversold?p. 97
Measuring Overbought and Oversold Conditionsp. 97
Divergentump. 97
Momentump. 99
Welles Wilder's Relative Strength Indexp. 100
The Stochastics Oscillatorp. 110
Combine RSI and Stochasticsp. 113
Summaryp. 119
How Lo Have the Best of Both Worldsp. 121
MACD Constrctionp. 121
MACD as Trend-Following Indicatorp. 123
MACD as an Oscilatorp. 123
MACD Divergencesp. 125
How to Blend Dally and Weekly Signalsp. 125
How to Make MACD Even Batter-The Histogramp. 128
Be Sure to Watch Monthly Signalsp. 130
How to Know Which Indicators to Usep. 130
The Average Directional Movement (ADX) Linep. 133
Summaryp. 1335
Linkagop. 137
Market Linkagep. 139
The Asset Allocation Processp. 140
The Relative Strength Ratlop. 142
2002 Shift from Paper to Hard Assetsp. 142
Commodlty/Bond Ratio also Turned upp. 144
Turns in the Bond/Stock Ratiop. 144
2007 Ratio Shifts Back to Bondsp. 147
Bonds Rise as Stocks Falpp. 147
Falling U.S. Rates Hurt the Dollarp. 147
Falling Dollar Pushes Gold to Record Highp. 150
Commodity-Related Stocksp. 153
Foreign Stocks Are Linked to the Dollarp. 153
Commodity Exporters Get Bigger Boostp. 156
Global Decoupling is a Mythp. 156
Rislng Yen Threatens Global Stocksp. 158
Review of 2004 Intermarket Bookp. 159
Summaryp. 161
Market Breadthp. 163
Measuring Market Breadth with NYSE AD Linep. 163
NYSE AD Line Violates Moving Average Linesp. 163
Advance-Decline Shows Negative Divergencep. 164
Where the Negative Divergences Were Locatedp. 164
Retail Stocks Start to Underperform During 2007p. 166
Retailers and Homebuilders Were Linkedp. 171
Consumers are also squeezed by Rising Oilp. 173
Dow Theoryp. 173
Transports Don't Confirm Industrial Highp. 175
Percent of NYSE Stock above 200-Day Averagep. 175
NYSE Bullish Percent Indexp. 179
Point-and Figure Version of BPIp. 181
Summaryp. 182
Relative Strength and Rotationp. 183
Uses of Relative Strengthp. 183
Top-Down Analysisp. 186
Relative Strength versus Absolute Performancep. 187
Using Relative Strength between Stocksp. 190
Comparing Gold Stocks to Goldp. 190
How to Spot New Market Leadersp. 193
Where the Money Came fromp. 193
Spotting Rotation Back into Large Capsp. 196
Trend Changes Are Easy to Spotp. 198
Rotation within Market Sectorsp. 198
Chinese Stocks Lose Leadership Rolep. 200
Summaryp. 202
Mutual Funds and Exchange Traded Fundsp. 205
Sectors and Industry Groupsp. 207
Difference between Sectors and Industry Groupsp. 208
Performance Chartsp. 209
Sector Carpetsp. 211
Using Market Carpet to Find Stock Leadersp. 212
Industry Group Leaderp. 213
Sector Trends Need to Be Monitoredp. 214
Information on Sectors and Industry Groupsp. 214
Spotting Natural Gas Leadershipp. 215
Natural Gas Componentsp. 215
CBOE Volatility (VIX) Indexp. 217
Summaryp. 221
Mutual Fundsp. 227
What Works on Mutual Fundsp. 228
Open- versus Closed-End Fundsp. 228
Charting Adjustments on Open-End Fundsp. 228
Blending Fundamental and Technical Fundsp. 229
Relatlve Strength Analysisp. 229
Traditional and Nontraditional Mutual Fundsp. 229
Keep It Simplep. 230
200-Day Moving Average and Housingp. 230
Natural Gas Breakoutp. 232
Consumer Discretionary Broakdownp. 232
Bear Crossing Sinks Chipsp. 235
Negative ROC Hurts Technologyp. 235
Consumer Staples Hold Up Okayp. 235
Retail Ratio Plungesp. 235
Energizing a Portfoliop. 240
Latin America Leadsp. 240
Real Estate Is Glonbalp. 240
Profunds Rising Rates Fundp. 244
Profunds Falling U.S. Dollar Fundp. 244
Commodity Mutual Fundsp. 247
Inverse Stock Fundsp. 247
Summaryp. 240
Exchange-Traded Fundsp. 251
ETFs versus Mutual Fundsp. 252
Using ETFs to Hedgep. 253
Using a Bear ETFp. 253
Trading the Nasdaq 100p. 253
Using Sector ETFsp. 255
Inverse Sector ETFsp. 258
Using Technology as a Market Indicatorp. 260
Commodity ETFsp. 263
Foreign Currency ETFsp. 263
Bond ETFsp. 267
International ETFsp. 269
Summaryp. 275
Conclusionp. 279
Why It's Called Visual Inverstingp. 279
The Media Will Always Tell You Why Laterp. 279
Media Views Keep Shiftingp. 280
Visual Analysis Is More User Frjendlyp. 280
Keep It Simplep. 280
Visual Tools Are Universalp. 281
The Stock Market Leads the Economyp. 281
Prices Lead the Fundamentsp. 282
Sector Investingp. 282
Exchange-Traded Fundsp. 283
A Year After the 2007 Topp. 283
Warning Signs were Clearly Visiblep. 284
Getting Startedp. 285
Find a Good Web Sltep. 285
Use the Readers Choice Awardsp. 285
StockCharts.comp. 286
ChartSchoolp. 286
Online Bookstorep. 287
Investor's Business Dailyp. 288
Stock Scansp. 288
Bullish Percent Indexesp. 289
DecisionPoint.comp. 294
McClellan Breadth Indicatorsp. 294
Japanese Candlesticksp. 295
Candlestick Patternsp. 297
Bullish Engulfing Patternsp. 298
Stock Scan Candlestick Patternsp. 300
Recommended Readingp. 300
Point-and-Figure Chartingp. 301
Triple and Quadruple Signalsp. 302
How to Vary P&F Charts for Sensltlvityp. 304
There's No Doubt about P&F Singnalsp. 305
Recommended Readingp. 306
Indexp. 307
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