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The Visual Investor: How to Spot Market Trends, Second Edition

Book Description

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.

Table of Contents

  1. Title Page
  2. Copyright Page
  3. Dedication
  4. Preface
  5. Acknowledgements
  6. SECTION ONE: Introduction
    1. WHAT HAS CHANGED?
    2. FUND CATEGORIES
    3. GLOBAL FUNDS
    4. INVESTORS NEED TO BE BETTER INFORMED
    5. BENEFITS OF VISUAL INVESTING
    6. STRUCTURE OF THE BOOK
    7. CHAPTER 1: What Is Visual Investing?
      1. WHY MARKET ANALYSIS?
      2. THE TREND IS TO BLEND
      3. WHAT’S IN A NAME?
      4. WHY STUDY THE MARKET?
      5. CHARTISTS ARE CHEATERS
      6. IT’S ALWAYS JUST SUPPLY AND DEMAND
      7. CHARTS ARE JUST FASTER
      8. CHARTS DO LOOK AHEAD
      9. PICTURES DON’T LIE
      10. PICTURE ANYTHING YOU WANT
      11. THE MARKET’S ALWAYS RIGHT
      12. IT’S ALL ABOUT TREND
      13. ISN’T THE PAST ALWAYS PROLOGUE?
      14. TIMING IS EVERYTHING
      15. SUMMARY
    8. CHAPTER 2: The Trend Is Your Friend
      1. WHAT IS A TREND?
      2. SUPPORT AND RESISTANCE LEVELS
      3. ROLE REVERSAL
      4. SHORT VERSUS LONG TERM
      5. DAILY, WEEKLY, AND MONTHLY CHARTS
      6. RECENT VERSUS DISTANT PAST
      7. TRENDLINES
      8. CHANNEL LINES
      9. RETRACING OUR STEPS BY ONE-THIRD, ONE-HALF, AND TWO-THIRDS
      10. WEEKLY REVERSALS
      11. SUMMARY
    9. CHAPTER 3: Pictures That Tell a Story
      1. CHART TYPES
      2. TIME CHOICES
      3. SCALING
      4. VOLUME ANALYSIS
      5. CHART PATTERNS
      6. MEASURING TECHNIQUES
      7. EVEN THE FED IS CHARTING
      8. THE TRIANGLE
      9. POINT-AND-FIGURE CHARTS
      10. CHART PATTERN RECOGNITION SOFTWARE
  7. SECTION TWO: Indicators
    1. CHAPTER 4: Your Best Friend in a Trend
      1. TWO CLASSES OF INDICATORS
      2. THE MOVING AVERAGE
      3. THE SIMPLE AVERAGE
      4. WEIGHTING THE AVERAGE OR SMOOTHING IT?
      5. MOVING AVERAGE LENGTHS
      6. MOVING AVERAGE COMBINATIONS
      7. SUMMARY
    2. CHAPTER 5: Is It Overbought or Oversold?
      1. MEASURING OVERBOUGHT AND OVERSOLD CONDITIONS
      2. DIVERGENCES
      3. MOMENTUM
      4. WELLES WILDER’S RELATIVE STRENGTH INDEX
      5. THE STOCHASTICS OSCILLATOR
      6. COMBINE RSI AND STOCHASTICS
      7. SUMMARY
    3. CHAPTER 6: How to Have the Best of Both Worlds
      1. MACD CONSTRUCTION
      2. MACD AS TREND-FOLLOWING INDICATOR
      3. MACD AS AN OSCILLATOR
      4. MACD DIVERGENCES
      5. HOW TO BLEND DAILY AND WEEKLY SIGNALS
      6. HOW TO MAKE MACD EVEN BETTER—THE HISTOGRAM
      7. BE SURE TO WATCH MONTHLY SIGNALS
      8. HOW TO KNOW WHICH INDICATORS TO USE
      9. THE AVERAGE DIRECTIONAL MOVEMENT (ADX) LINE
      10. SUMMARY
  8. SECTION THREE: Linkage
    1. CHAPTER 7: Market Linkage
      1. THE ASSET ALLOCATION PROCESS
      2. THE RELATIVE STRENGTH RATIO
      3. 2002 SHIFT FROM PAPER TO HARD ASSETS
      4. COMMODITY/BOND RATIO ALSO TURNED UP
      5. TURNS IN THE BOND/STOCK RATIO
      6. 2007 RATIO SHIFTS BACK TO BONDS
      7. BONDS RISE AS STOCKS FALL
      8. FALLING U.S. RATES HURT THE DOLLAR
      9. FALLING DOLLAR PUSHES GOLD TO RECORD HIGH
      10. COMMODITY-RELATED STOCKS
      11. FOREIGN STOCKS ARE LINKED TO THE DOLLAR
      12. COMMODITY EXPORTERS GET BIGGER BOOST
      13. GLOBAL DECOUPLING IS A MYTH
      14. RISING YEN THREATENS GLOBAL STOCKS
      15. REVIEW OF 2004 INTERMARKET BOOK
      16. SUMMARY
    2. CHAPTER 8: Market Breadth
      1. MEASURING MARKET BREADTH WITH NYSE AD LINE
      2. NYSE AD LINE VIOLATES MOVING AVERAGE LINES
      3. ADVANCE-DECLINE SHOWS NEGATIVE DIVERGENCE
      4. WHERE THE NEGATIVE DIVERGENCES WERE LOCATED
      5. RETAIL STOCKS START TO UNDERPERFORM DURING 2007
      6. RETAILERS AND HOMEBUILDERS WERE LINKED
      7. CONSUMERS ARE ALSO SQUEEZED BY RISING OIL
      8. DOW THEORY
      9. TRANSPORTS DON’T CONFIRM INDUSTRIAL HIGH
      10. PERCENT OF NYSE STOCKS ABOVE 200-DAY AVERAGE
      11. NYSE BULLISH PERCENT INDEX
      12. POINT-AND-FIGURE VERSION OF BPI
      13. SUMMARY
    3. CHAPTER 9: Relative Strength and Rotation
      1. USES OF RELATIVE STRENGTH
      2. TOP-DOWN ANALYSIS
      3. RELATIVE STRENGTH VERSUS ABSOLUTE PERFORMANCE
      4. USING RELATIVE STRENGTH BETWEEN STOCKS
      5. COMPARING GOLD STOCKS TO GOLD
      6. HOW TO SPOT NEW MARKET LEADERS
      7. WHERE THE MONEY CAME FROM
      8. SPOTTING ROTATION BACK INTO LARGE CAPS
      9. TREND CHANGES ARE EASY TO SPOT
      10. ROTATION WITHIN MARKET SECTORS
      11. CHINESE STOCKS LOSE LEADERSHIP ROLE
      12. SUMMARY
  9. SECTION FOUR: Mutual Funds and Exchange-Traded Funds
    1. CHAPTER 10: Sectors and Industry Groups
      1. DIFFERENCE BETWEEN SECTORS AND INDUSTRY GROUPS
      2. PERFORMANCE CHARTS
      3. SECTOR CARPETS
      4. USING MARKET CARPET TO FIND STOCK LEADERS
      5. INDUSTRY GROUP LEADER
      6. SECTOR TRENDS NEED TO BE MONITORED
      7. INFORMATION ON SECTORS AND INDUSTRY GROUPS
      8. SPOTTING NATURAL GAS LEADERSHIP
      9. NATURAL GAS COMPONENTS
      10. CBOE VOLATILITY (VIX) INDEX
      11. SUMMARY
    2. CHAPTER 11: Mutual Funds
      1. WHAT WORKS ON MUTUAL FUNDS
      2. OPEN- VERSUS CLOSED-END FUNDS
      3. CHARTING ADJUSTMENTS ON OPEN-END FUNDS
      4. BLENDING FUNDAMENTAL AND TECHNICAL DATA
      5. RELATIVE STRENGTH ANALYSIS
      6. TRADITIONAL AND NONTRADITIONAL MUTUAL FUNDS
      7. KEEP IT SIMPLE
      8. 200-DAY MOVING AVERAGE AND HOUSING
      9. NATURAL GAS BREAKOUT
      10. CONSUMER DISCRETIONARY BREAKDOWN
      11. BEAR CROSSING SINKS CHIPS
      12. NEGATIVE ROC HURTS TECHNOLOGY
      13. CONSUMER STAPLES HOLD UP OKAY
      14. RETAIL RATIO PLUNGES
      15. ENERGIZING A PORTFOLIO
      16. LATIN AMERICA LEADS
      17. REAL ESTATE IS GLOBAL
      18. PROFUNDS RISING RATES FUND
      19. PROFUNDS FALLING U.S. DOLLAR FUND
      20. COMMODITY MUTUAL FUNDS
      21. INVERSE STOCK FUNDS
      22. SUMMARY
    3. CHAPTER 12: Exchange-Traded Funds
      1. ETFs VERSUS MUTUAL FUNDS
      2. USING ETFs TO HEDGE
      3. USING A BEAR ETF
      4. TRADING THE NASDAQ 100
      5. USING SECTOR ETFs
      6. INVERSE SECTOR ETFs
      7. USING TECHNOLOGY AS A MARKET INDICATOR
      8. COMMODITY ETFs
      9. FOREIGN CURRENCY ETFs
      10. BOND ETFs
      11. INTERNATIONAL ETFs
      12. SUMMARY
  10. Conclusion
  11. APPENDIX A: Getting Started
  12. APPENDIX B: Japanese Candlesticks
  13. APPENDIX C: Point-and-Figure Charting
  14. Index