Power Tools for Traders

I wrote Technical Analysis to give beginning as well as experienced investors a collection of useful observations regarding the stock market. I also wanted to offer forecasting tools so readers could make their own informed decisions as to the likely direction of stock prices, rather than relying on stock brokers, mutual fund managers and the financial and general news media.

Research has indicated that the average mutual fund investor, for example, is generally late in responding to changing trends in the stock market -- selling most heavily as serious market declines are approaching their end and buying most heavily near significant market tops.

As a result, the typical investor fails to match the performance of investors who simply buy and hold individual stocks or mutual funds through both favorable and unfavorable market periods -- a strategy that has its own considerable risks and drawbacks.

Investors receive little help in this regard from either mutual fund managers or their stockbrokers, who tend, also, to offer lots of buy recommendations but few recommendations to sell.

Technical Analysis provides that help. The culmination of 40 years of personal study, research and investment in the stock market and 30 years of actual management of client capital, this book is a means of sharing with financial professionals and personal investors some of the most useful techniques and strategies for market-timing for investment purposes that I have learned and developed over the years.

Short Term and Long Term

In this book, readers learn strategies that they can apply for both long-term investment and short-term market trading. Sections of the book relating to market time cycles -- that appear to repeat with surprising regularity -- show readers how to identify and act upon the powerful four-year stock market cycle (bear market bottoms tend to be spaced at four-year intervals), how to use seasonal tendencies (almost all net market gains take place within certain six-month periods of the year), and even how to recognize and make effective use of shorter-term market cycles that last as long as weeks or as short as several days.

Sections of this book deal with market breadth, which is a measure of the internal strength of the stock market compared with popular market indices such as the S&P 500 index, which are subject to excessive over-weighting influence of relatively few large companies. Readers are shown how to identify "true market strength," which market indicators are useful in this regard and how to post and interpret daily and weekly readings.

The book also shows how to recognize certain predictive patterns of stock price behavior, which are present in stock charts and which, by their nature, provide clues as to likely price movement in the days, weeks, months and even years ahead. Wedges, head-and-shoulder patterns, T-formations and selling climaxes may seem, by their names, to be somewhat arcane, but they won't be after readers have taken the time to study this book.