When the Market Moves, Will You Be Ready?

by Navarro, Peter

• ISBN13: 9780071410670
• ISBN10: 0071410678
• Edition: 1st
• Format: Paperback
• Copyright: 2003-09-26
• Publisher: McGraw-Hill Education

Summary

Interactive exercises and trading guidelines for using today's most strategically advanced "event-trading" techniqueHigh-profile events and announcements can cause tremendous swings in stocks and sectors, and often point out tremendous opportunities to investors who know how to read them.When the Market Moves, Will You Be Ready?is a "how-to" for knowing which events matter versus which are meaningless, and how to take advantage of the former for consistent trading success.Emphasizing the practical side of trading,When the Market Moves, Will You Be Ready?features exercises, Q&As, and checklists for using investing techniques in day, swing, value, or virtually any other trading or investing style.This hands-on book explores: Techniques for finding the best stock in a given sector Methods for profitably combining technical and fundamental analysis Ways to continually assess market and sector trends

Author Biography

Peter Navarro, Ph.D. is a professor of business and economics at the University of California. The author of If It's Raining in Brazil, Buy Starbucks, Dr. Navarro has written articles for Harvard Business Review, BusinessWeek, the Wall Street Journal, and other financial publications.

Table of Contents

Acknowledgments	xi
Introduction	xiii
Part One The Big Picture	1	(26)
1 So You Want to Make a Million in the Stock Market	3	(4)
Anatomy of a Crash	4	(3)
2 What's Your Wall Street "IQ"?	7	(8)
3 The Four Stages of Macrowave Investing	15	(12)
The Four Stages of Macrowave Investing	16	(1)
Stage One: The Four Dynamic Factors	17	(2)
Stage Two: Three Key Cycles That Shape Market and Sector Trends	19	(4)
Stage Three: Picking Strong and Weak Stocks and Sectors	23	(1)
Stage Four: Using Solid Money, Risk, and Trade Management Tools to Buy, Sell, and Short Stocks	24	(3)
Part Two The Four Dynamic Factors	27	(42)
4 Follow the Earnings Calendar!	29	(8)
Key Point #1: Fall into the Gap?	30	(1)
Key Point #2: Buy on the Rumor, Sell on the News	31	(1)
Key Point #3: Consensus Estimates versus Whisper Numbers	32	(1)
Key Point #4: Sector Watch	33	(1)
Key Point #5: Earnings and the Broad Market Trend	33	(4)
5 Follow the Macroeconomic Calendar!	37	(12)
Key Point #1: The Market's Major Fuel	38	(1)
Key Point #2: Use Macro Scenario Building	38	(3)
Key Point #3: Mr. Market Hates Inflation	41	(1)
Key Point #4: Mr. Market Hates Recession	42	(1)
Key Point #5: Mr. Market Hates Productivity Decreases	43	(1)
Key Point #6: Mr. Market (Mostly) Hates Trade Deficits	44	(5)
6 Uncle Sam and the Stock Market	49	(10)
Key Point #1: The Tools of Monetary Policy	50	(1)
Key Point #2: The Fed Moves in Cycles, Not Isolated Steps	51	(1)
Key Point #3: Monetary Policy Ripples through the Stock Market	52	(1)
Key Point #4: You Can't Push on a String	53	(1)
Key Point #5: The Two Problems with Financing Fiscal Policy	54	(1)
Key Point #6: Fiscal Policy's Blunt and Irreversible Tool	55	(1)
Key Point #7: The Problem(s) with Tax Cuts	55	(4)
7 Exogenous Shocks and the Strategy of the Macroplay	59	(10)
Key Point #1: The Art of the Macroplay	60	(1)
Key Point #2: Contractionary Oil Price Spikes	61	(1)
Key Point #3: War Premiums and Penalties	62	(1)
Key Point #4: The Terrorism Tax	63	(2)
Key Point #5: The Market Stain of Scandals	65	(1)
Key Point #6: The Role of Disruptive Technologies	66	(3)
Part Three The Three Key Cycles	69	(46)
8 Tracking the Market and Sector Trends	71	(14)
Key Point #1: The Market Trends Up, Down, or Moves Sideways	72	(2)
Key Point #2: Individual Sectors Move Up, Down, or Move Sideways	74	(1)
Key Point #3: Use Exchange-Traded Funds to Track Market and Sector Trends	75	(2)
Key Point #4: It's Easy in Hindsight to Spot Market and Sector Trends	77	(1)
Key Point #5: Use the 3-Point-Break Method to Spot Changes in Trends	78	(7)
9 The Business Cycle and the Stock Market Cycle	85	(10)
Key Point #1: The Business Cycle's Ups and Downs	86	(2)
Key Point #2: The Stock Market's Crystal Ball	88	(1)
Key Point #3: The Stock Market and Four Dynamic Factors	89	(1)
Key Point #4: The Profitable Patterns of Sector Rotation	90	(5)
10 As the Interest Rate Cycle Turns	95	(10)
Key Point #1: The Four Stages of the Interest Rate Cycle	96	(1)
Key Point #2: Higher Interest Rates Negatively Affect the Market and Sector Trends	97	(3)
Key Point #3: Some Bond Market Basics	100	(1)
Key Point #4: The Term Structure of Interest Rates	101	(4)
11 Unlocking the Mysteries of the Yield Curve	105	(10)
Key Point #1: Constructing the Yield Curve	106	(1)
Key Point #2: Shapes of the Yield Curve	107	(3)
Key Point #3: Some Historic Evidence of the Yield Curve's Predictive Powers	110	(5)
Part Four Picking Strong and Weak Stocks and Sectors	115	(54)
12 It's Finger-Lickin', Stock-Pickin' Good	117	(12)
Key Point #1: Buy Low on the Dips, Sell High on the Peaks	118	(1)
Key Point #2: Buy High, Sell Higher	119	(2)
Key Point #3: High Volume Movers	121	(1)
Key Point #4: The Ratings Game	122	(1)
Key Point #5: Buy What You Know	123	(1)
Key Point #6: The Way of the Red Herring	124	(1)
Key Point #7: Ignore Hot Stock Tips	125	(4)
13 It's Absolutely Fundamental	129	(14)
Key Point #1: An Efficient and Random Market? Not!	131	(1)
Key Point #2: Exploit Price Deviations from "Fair Value"	132	(1)
Key Point #3: Many Fundamental Analysts Are "Value Investors"	133	(1)
Key Point #4: The Fundamental Analyst's Tools	134	(1)
Key Point #5: Use the Internet to Simplify Your Fundamental Screening	135
Key Point #6: The Fundamental Analyst's Traps	131	(8)
Key Point #7: Use Both a Fundamental and Technical Analysis Screen!	139	(4)
14 Technically Speaking	143	(26)
Key Point #1: Learn the Lingo and Underlying Psychology	144	(3)
Key Point #2: Price Chart Patterns Identify Trends!	147	(3)
Key Point #3: Some Common Chart Patterns Can Be Helpful	150	(4)
Key Point #4: Volume Speaks Volumes	154	(1)
Key Point #5: Moving Averages Clarify the Trend!	155	(2)
Key Point #6: The Signals of Momentum Indicators	157	(2)
Key Point #7: Au Contrarian! The Logic of Market Sentiment	159	(1)
Key Point #8: Use a Technical Screen!	160	(3)
Key Point #9: Some Tools Work Better Than Others, Depending on the Market Trend	163	(6)
Part Five Buying, Selling, and Shorting Stocks	169	(50)
15 Managing Your Risk	171	(10)
Key Point #1: Risk Represents Both Danger and Opportunity	172	(1)
Key Point #2: The Three Dimensions of Risk	173	(1)
Key Point #3: The Myriad Sources of Risk	174	(1)
Key Point #4: The Reward-to-Risk Ratio	175	(1)
Key Point #5: Some Useful Yardsticks to Measure Risk	176	(1)
Key Point #6: What Does "Well Diversified" Mean?	177	(1)
Key Point #7: Some (More) Risk Management Rules	177	(4)
16 Managing Your Money	181	(14)
Step #1: Calculate Your Investing Batting Average or Win%	183	(1)
Step #2: Determine Your Risk Capital	184	(2)
Step #3: Determining Your Reward-to-Risk Ratio	186	(3)
Step #4: Determining Your Position Limit and Position Size	189	(1)
Step #5: Increasing Position Sizes by Adding Units of Risk	190	(5)
17 Managing Your Trades	195	(12)
Key Point #1: Market versus Limit Orders	196	(3)
Key Point #2: Set Intelligent Stop Losses-Don't Be Shaken Out!	199	(1)
Key Point #3: Use Trailing Stops to Lock in Profits	200	(1)
Key Point #4: Use Buy Stops to Play Breakouts	201	(1)
Key Point #5: Never Average Down a Loss	201	(1)
Key Point #6: Don't Churn Your Own Portfolio!	202	(1)
Key Point #7: Some Inside Tips	203	(1)
Key Point #8: David Aloyan's Top Ten Investor Psychology Tips	203	(4)
18 Executing Your Trades	207	(12)
Key Point #1: The Three Methods to Execute Your Trades	208	(1)
Key Point #2: Level I versus Level II Trading	209	(2)
Key Point #3: The Slippage Problem with Level I Brokers	211	(2)
Key Point #4: Direct Access Trading Eliminates Slippage	213	(2)
Key Point #5: The Virtues of Programmed Ordering	215	(4)
Part Six Macrowave Investing in Motion	219	(16)
19 Preparing for the Investing Week	221	(8)
The Savvy Macrowave Investor Newsletter	222	(7)
20 The Stimulation of Portfolio Simulation	229	(6)
Key Point #1: Simulate Your Portfolio With STOCK-TRAK	230	(1)
Key Point #2: The Tuition Bill Always Comes Due	230	(1)
Key Point #3: Stop the Bleeding and Find the Right Bandage	231	(1)
Key Point #4: Conquer Shortaphobia	232	(3)
Answer Key	235	(26)
Answers to Questions for Chapter 1	235	(1)
Answers to Questions for Chapter 2	235	(1)
Answers to Questions for Chapter 3	236	(1)
Answers to Questions for Chapter 4	237	(1)
Answers to Questions for Chapter 5	238	(2)
Answers to Questions for Chapter 6	240	(1)
Answers to Questions for Chapter 7	241	(1)
Answers to Questions for Chapter 8	242	(1)
Answers to Questions for Chapter 9	243	(1)
Answers to Questions for Chapter 10	244	(2)
Answers to Questions for Chapter 11	246	(1)
Answers to Questions for Chapter 12	247	(1)
Answers to Questions for Chapter 13	248	(2)
Answers to Questions for Chapter 14	250	(2)
Answers to Questions for Chapter 15	252	(1)
Answers to Questions for Chapter 16	253	(1)
Answers to Questions for Chapter 17	254	(2)
Answers to Questions for Chapter 18	256	(1)
Answers to Questions for Chapter 19	257	(1)
Answers to Questions for Chapter 20	258	(3)
Afterword	261	(4)
The Savvy Macrowave Investor Pledge	261	(4)
Index	265