The Visual Investor

• The Visual Investor, Second Edition breaks down technical analysis into terms that are accessible to even individual investors.

Auteur

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.

Texte du rabat

Visual analysis, also known as technical or chart analysis, is one of the best ways to invest in today's markets--and it's not as hard as you might think. This proven approach allows you to follow almost any market, without having to be an expert on any of them, and it can give you an enormous advantage over those who prefer to use some form of economic or fundamental analysis. With over forty years of market experience and a number of bestselling financial books to his name, John Murphy, one of the world's foremost technical analysts and educators, knows what it takes to make it in this field. Now, with the Second Edition of The Visual Investor--which has been completely updated for current markets--Murphy shares his invaluable insights on this subject with you. Written in a straightforward and accessible style, this updated guide will introduce you to "visual" investing by explaining a variety of charting techniques that professionals have used for decades, and shows you how specific visual tools can put you in a better position to successfully trade commodities, currencies, bonds, and stocks in both domestic and global financial markets. With the real-world examples and comprehensive charts found here, you'll quickly discover how to:

• Tell the difference between markets that are trending and those that are not
• Locate important breakouts or breakdowns
• Spot significant support and resistance levels
• Implement asset allocation and sector rotation strategies through exchange-traded funds and mutual funds
• Utilize moving averages to keep track of trends
• Incorporate essential price patterns into your investment analysis Along the way, Murphy takes you through the ins and outs of reading price and volume charts that can help you make sensible investment decisions, and highlights how you can track the ups and downs of financial markets by visually comparing charts--instead of relying upon complex mathematical formulas and confusing technical concepts. Knowing why a market is moving is interesting, but not crucial to investment success. In order to trade profitably, all that really matters is what the markets are actually doing. Visual analysis is the best way to determine this, and with the Second Edition of The Visual Investor as your guide, you'll learn how to put this effective approach to work for you to enhance the performance of your portfolio.

Contenu

Preface xv

Acknowledgments xix

Section One Introduction 1

What Has Changed? 1

Fund Categories 2

Global Funds 2

Investors Need to Be Better Informed 3

Benefits of Visual Investing 3

Structure of the Book 3

Chapter 1 What Is Visual Investing? 5

Why Market Analysis? 5

The Trend Is to Blend 6

What's in a Name? 6

Why Study the Market? 7

Chartists Are Cheaters 7

It's Always Just Supply and Demand 7

Charts Are Just Faster 8

Charts Do Look Ahead 8

Pictures Don't Lie 9

Picture Anything You Want 9

The Market's Always Right 9

It's All About Trend 10

Isn't the Past Always Prologue? 10

Timing Is Everything 13

Summary 13

Chapter 2 The Trend Is Your Friend 15

What Is a Trend? 15

Support and Resistance Levels 18

Role Reversal 18

Short Versus Long Term 25

Daily, Weekly, and Monthly Charts 28

Recent versus Distant Past 28

Trendlines 31

Channel Lines 34

Retracing Our Steps by One-Third, One-Half, and Two-Thirds 34

Weekly Reversals 38

Summary 38

Chapter 3 Pictures That Tell a Story 41

Chart Types 41

Time Choices 46

Scaling 46

Volume Analysis 50

Chart Patterns 52

Measuring Techniques 61

Even the Fed Is Charting 65

The Triangle 65

Point-and-Figure Charts 66

Chart Pattern Recognition Software 70

Section Two Indicators 73

Chapter 4 Your Best Friend in a Trend 75

Two Classes of Indicators 75

The Moving Average 76

The Simple Average 76

Weighting the Average or Smoothing It? 77

Moving Average Lengths 77

Moving Average Combinations 78

Summary 95

Chapter 5 Is It Overbought or Oversold? 97

Measuring Overbought and Oversold Conditions 97

Divergences 97

Momentum 99

Welles Wilder's Relative Strength Index 100

The Stochastics Oscillator 110

Combine RSI and Stochastics 113

Summary 119

Chapter 6 How to Have the Best of Both Worlds 121

MACD Construction 121

MACD as Trend-Following Indicator 123

MACD as an Oscillator 123

MACD Divergences 125

How to Blend Daily and Weekly Signals 125

How to Make MACD Even Better-The Histogram 128

Be Sure to Watch Monthly Signals 130

How to Know Which Indicators to Use 130

The Average Directional Movement (ADX) Line 133

Summary 135

Section Three Linkage 137

Chapter 7 Market Linkage 139

The Asset Allocation Process 140

The Relative Strength Ratio 142

2002 Shift from Paper to Hard Assets 142

Commodity/Bond Ratio also Turned up 144

Turns in the Bond/Stock Ratio 144

2007 Ratio Shifts Back to Bonds 147

Bonds Rise as Stocks Fall 147

Falling U.S. Rates Hurt the Dollar 147

Falling Dollar Pushes Gold to Record High 150

Commodity-Related Stocks 153

Foreign Stocks Are Linked to the Dollar 153

Commodity Exporters Get Bigger Boost 156

Global Decoupling Is a Myth 156

Rising Yen Threatens Global Stocks 158

Review of 2004 Intermarket Book 159

Summary 161

Chapter 8 Market Breadth 163

Measuring Market Breadth with NYSE AD Line 163

NYSE AD Line Violates Moving Average Lines 164

Advance-Decline Shows Negative Divergence 164

Where the Negative Divergences Were Located 166

Retail Stocks Start to Underperform During 2007 169

Retailers and Homebuilders Were Linked 171

Consumers are also Squeezed by Rising Oil 173

Dow Theory 173

Transports Don't Confirm Industrial High 175

Percent of NYSE Stocks above 200-Day Average 175

NYSE Bullish Percent Index 179

Point-and-Figure Version of BPI 181

Summary 182

Chapter 9 Relative Strength and Rotation 183

Uses of Relative Strength 183

Top-Down Analysis 186

Relative Strength versus Absolute Performance 187

Using Relative Strength between Stocks 190

Comparing Gold Stocks to Gold 190

How to Spot New Market Leaders 193

Where the Money Came from 193

Spotting Rotation Back into Large Caps 196

Trend Changes Are Easy to Spot 198

Rotation within Market Sectors 198

Chinese Stocks Lose Leadership Role 200

Summary 202

Section Four Mutual Funds and Exchange Traded Funds 205

Chapter 10 Sectors and Industry Groups 207

Difference between Sectors and Industry Groups 208

Performance Charts 209

Sector Carpets 211

Using Market Carpet to Find Stock Leaders 212

Industry Group Leader 213

Sector Trends Need to Be Monitored 214

In…