Technical Analysis

[rkahn]

I feel that I need to really learn more about technical analysis to become a well-rounded investor. Does anyone have any book suggestions? I am looking for something that is very articulate and informative, but not too much of a textbook.

Thanks.

[rkahn]

From past threads , I have compiled a list:

Technical Analysis for Dummies
Getting Started in Technical Analysis by Jack D. Schwager
Toni Turner books
Steve Nison books
Cramer's book
The Investor's Guide to Technical Analysis
How Technical Analysis Works
Magee and Edwards, "Technical Analysis of Stock Trends"

Any other suggestions or comments on which books are the best would be appreciated.

[Firecracker]

My opinion:

you've got plenty of good suggestions so pick up one and see how it goes for you. there are tons of books on this topic and each person will have their own opinion on which one is good/best. my advice would be to not concern yourself with which is best but to just pick one and start learning. go to a library and see what they have

best,
FC

[Luc1Grunt]

From past threads , I have compiled a list:

Technical Analysis for Dummies
Getting Started in Technical Analysis by Jack D. Schwager
Toni Turner books
Steve Nison books
Cramer's book
The Investor's Guide to Technical Analysis
How Technical Analysis Works
Magee and Edwards, "Technical Analysis of Stock Trends"

Any other suggestions or comments on which books are the best would be appreciated.


Rkahn, how a bout doing a search on this forum and then cut/paste the results to this thread? There have to be at leasy 15 threads on the same topic. :D

[rkahn]

Luc -

I don't quite understand what you mean. I posted several books taken from past threads and was wondering if anybody had either a) a good book that I missed or b) a comment on one of these books.

[madcowdisease]

From past threads , I have compiled a list:

Technical Analysis for Dummies
Getting Started in Technical Analysis by Jack D. Schwager
Toni Turner books
Steve Nison books
Cramer's book
The Investor's Guide to Technical Analysis
How Technical Analysis Works
Magee and Edwards, "Technical Analysis of Stock Trends"

Any other suggestions or comments on which books are the best would be appreciated.

That's a good list to start with. Good work, good luck, and happy reading.

[Luc1Grunt]

Luc -

I don't quite understand what you mean. I posted several books taken from past threads and was wondering if anybody had either a) a good book that I missed or b) a comment on one of these books.

Don't take me wrong, I was serious.

I think we recommended it as a sticky, but it never stuck <-----me so funny!

Hmmmm.....tech book? Find one that lists chart patterns and tools in a concise edition that you can use for reference. Toni Turner etc. may not fill that bill. I'm thinking more Bulkowski.

Backtest on stockfetcher or quotetracker may be your best bet.

Try a search on stockfetcher.com for:

"muddy stochastics"

DMI

RSI(2).....one of the few I actually rely on!

Happy trading :)

[rkahn]

Luc -

Thanks a lot for all the info. I'll try to compile some addt'l threads and create one MASTER post that Thierry can make a "sticky" if he feels it's appropriate.

[Luc1Grunt]

Rock on Rkahn!

[rkahn]

Bman409:
I personally learned the most by reading Magee and Edwards, "Technical Analysis of Stock Trends"

also, Reminisciences of a Stock Operator... can't remember the author.. its an oldie but goodie

Luc1Grunt:
You need to understand trading and investing can be very differenjt in nature.

The Bible on value investing: Ben Graham...The intelligent investor.

Technical and trading: Save your money, surf the net for free, glean ALL the info you need. Most books are the same info packaged differently. I've read over 200 over the years......

Magazines: Technical Analysis of Stocks and Commodoties, Acitve Trader, Options Trader.

theticktrader
Dont forget the all time favorite: Market Wizards. Plenty of good books out there.

skysurf67
STAN WEINSTEIN´s secrets for profiting in bull and bear markets

KOSTOLANY´s boersenseminar

PETER LYNCH´s one up on wall street

Randomizer:
Picked up "The Neatest Little Guide to Stock Market Investing" by Jason Kelly (goofy name but it actually has some really good stuff in it, all 5 star ratings on amazon) and "A beginner's guide to short-term trading" by Toni Turner today. I'm about 1/3 the way through the first book, and I really am learning a lot, some great stradegies used by the big names are in here (Buffet, O'Neil, etc.), along with all the other good stuff...basic technical analysis, chart reading, financials/fundamentals and how to interpret them. Once I get through both of these I think I'll do maybe another week of paper trading and jump back in.

Also have Toni Turner's day trading book on the way. Haven't really decided if I'm going to do too much of that anymore...probably will stick with the few day to few week holds and long holds, but I can't really complain about more knowledge regardless of if I use it much in practice.

clavocat:
reminiscence of a stock operator- good foundation for lessons, currently reading now

All of toni turners books are good for beginners

i like secrets of the millionaire mind- not a stock book but a foundation on how to think like a successful person.

Steve nison, although the dude is an A$$hole, i hear his books on candlesticks and western technicals are really good.

cramers book= decent for short term investing/ fundamentals.

umm thats what ive read, i have a whole bookshelf of books, Technical analysis for dummies

http://www.invest-store.com/toniturner/tl110106.html

thats a really good site to buy books or DVDs off of, free shipping over 99 and i bought alot of books for like half price, also check buy.com they have good deals also.

Thanks for the recommendations everyone.

watchtvgetpoor:
Martin Pring's "Technical Analysis Explained".

aiki14:
Reminisciences of a stock operator. If you want to be a trader it's compulsory.
Blood on the Street will give you a little insight as to some of the shenanigans that can go on as well.

Gonz:
Trading for Dummies.

[Luc1Grunt]

Nice job rkahn..shaping up to be a great thread. :D

[netwrangler]

Nice job rkahn..shaping up to be a great thread. :DAbsolutely agree on "nice job rkahn." Let me add to this soup:
Technical Analysis - Power Tools for the Active Investor by Gerald Appel, Inventor of MACD

Bollinger on Bollinger Bands by John Bollinger [bet you can guess what he invented] :wink:
Bollinger's book places Bollinger bands in historical perspective with other banded tech indicators that were developed over the years.

Appel covers a much broader spectrum of indicators, although these indicators are not necessarily "better."
He gives examples of how you might actually apply TA information to trading decisions.

[rkahn]

Thanks folks. Would you recommend that I add the suggestions that netwrangler made to the long post with all the other quotes?

[freakscene]

I didnt see this one mentioned yet. I just ordered a copy this morning.

Technical Analysis of the Financial Markets - John J. Murphy

http://stockcharts.stores.yahoo.net/teanoffimajo.html

[Luc1Grunt]

Still a great "sticky" candidate.

[netwrangler]

My new toy, a TA oriented screener, gives me no fewer than six different built-in screens dealing with gaps:
Gap Up
Stay up
In Gap
Fill-in
Gap Down
Stay Down
In Gap
Fill-in
I figure a stock that has gapped is often a trade candidate.... And now I can get lists of these stocks in real time.

So, what can I do with this information? ...other then share it in the Chat Room, that is.

I'd like to see if there are characteristics shared by stocks with similar gap behavior. If I can identify characteristics in common, I might be able to turn that around and predict behavior in the future — to my financial advantage.

Before I embark on an empirical study [from which I might never return], I'd like to get some thoughts from others.
OK, gaps up or down usually result from news outside of trading hours.
But what makes a stock stay, fill, or go into the gap?

Is this a classic GKW*? Or is there some rhyme or reason here?

Any ideas?

=====
* GKW stands for "God Knows [Who, What, Where, When, Why]" I'm sure all current and former newspaper folks recognize the five "W's." For each instance of GKW, the reader needs to supply the appropriate "W."

[Albert0373]

Could you please give us examples/visuals of stocks that have done a "Stay up, In Gap, and Fill-in"? I haven't come by those terms yet and searching online to no avail.

I know there's runaway, breakaway, and common gaps. Both with different criteria to each. But I'm going to give an educated guess on what the terms you provided with us mean.

Gap Up

Stay-up: XYZ stock gaps up at open and continues to go up steadily and continue posting excellent gains.

Reason why/Examples: Excellent earnings, production/forecast news, technical breakouts out of common chart patterns, etc.

In Gap: XYZ stock gaps up at open and trades in that range with a delta of 0-5%

Reason why/Examples: Mergers, limited upside potential after news is released, etc.

Fill-In: XYZ stock gaps up at open but declines from there on to return back to its original price
Reason why/Examples: Massive profit taking as news is soon dissipated, etc.



Gap Down

Stay-up: XYZ stock gaps down at open and continues to go down steadily and continue posting losses.

Reason why/Examples: Horrible earnings, disappointing news/forecast, technical breakdown of common chart patterns, etc. This can happen in a stock in a strong uptrend until a gap down appears and could indicate a possible trend reverse.

In Gap: XYZ stock gaps down at open and trades in that range with a delta of 0-5%

Reason why/Examples: Downgrades, slightly bad news but not enough to induce panic selling, etc.

Fill-In: XYZ stock gaps down at open but improves from there and rises back to its original price.

Reason why/Examples: An over exaggerated reaction to slightly bad news and soon stablizes, continuation of previous day's decline until market rallies later, etc. Also, as it is gaping down, if it is so weak that it cannot even make it back to the previous day low, intra-day, this tells me is that something in this stock is really breaking down and the gap is just the beginning and could turn out to be a possible short.

[Albert0373]

Edit: Sorry, typo in the Gap-Down group. First headline should be Stay-down instead of Stay-up.

And here are some chart examples:


Gap Up

Stay-up: (Gapped up slightly and continually climbed.)

http://i17.tinypic.com/86g1ml4.png

In Gap: (Gapped up immensely and traded tightly in range, doesn't usually have to be that tightly bound.)

http://i12.tinypic.com/6xfv3eq.png

Fill-In:

No chart found at the moment.


Gap Down (Didn't exactly gap down, only 0.01 difference, but close enough :) )

Stay-down:

http://i11.tinypic.com/6xiet7p.png

In Gap:

http://i4.tinypic.com/71hoxg3.png

Fill-In:

No chart found at the moment.

[netwrangler]

Could you please give us examples/visuals of stocks that have done a "Stay up, In Gap, and Fill-in"? I haven't come by those terms yet and searching online to no avail.

I know there's runaway, breakaway, and common gaps. Both with different criteria to each. But I'm going to give an educated guess on what the terms you provided with us mean.Sure, I'll run the screens and post examples from there.

Thanks for making your "educated guess" on the initial definitions. I think it's helpful to have an initial hypothesis.

I can edit the "built-in" screens.

That means I can define the screens in terms of their filters.
Also, that means we can refine the screens to try for something we like.
Sector analysis is another possibility.

Are there sectors where stocks are prone to gapping?
My educated guess there is "Yes," and pharmaceuticals would be a prime candidate.
Are there stocks within a sector that are prone to gapping?
I would think the answer was "Yes" again.

In both cases, there is probably high autocorrelation between the gapping behavior and a stock's or sector's Beta. It's possible, however, that the gapping behavior is a more detailed [and useful?] description of the "risk" incorporated in the Beta.

Obviously, all of this could take a little bit of study. Won't be done today or tomorrow. Still, we might be able to give ourselves a nice present for the holidays.

=====
It is important that we keep this generic. In particular, I do not plan to publicly post what software I am using.
First of all, I signed an agreement that says I won't "share" the software with others. I intend to honor the agreement I signed.
Second, what we may come up with will be much more useful to others if it is defined in generic terms — allowing them to implement the screen on a variety of screening software packages.

[Luc1Grunt]

Net, I love gaps.....have some input if you would like.

I play gappers that have consistent fill rates. You can look at gap up or down. Many stocks gap daily and have a consistent rate that increases probability. I think I have posted a few pre-calls and live calls on AAPL and maybe GOOG.

I access an intraday screener that finds gappers as well, but unless they are familiar to me, I do not know the probability (through statistics) of whether they will fill or not. I have tried to trade those from the intra-day screen, and the probability is lower than I would like. So I quit chasing.

CEPH has a fill rate of 83%. Those are incredible odds in your favor.

Check your PM.

[AJLightning]

Great post fellas...quick gander below if you will...

DISH
gap down stay down...then fill in 5 days later? (bet that was a fun trading day) ran somewhat sideways, now it's consider a breakaway gap down.
now my point is, will it fill in again to maybe 43.50? play it a few weeks? trade solely intraday? when will these guidelines apply?



2215


**for any "outsiders" reading this thread...this is the place to be! these guys have the juicy knowledge you, I, gzapp, we all need to bring in the cabbage!**

[netwrangler]

Sure, I'll run the screens and post examples from there.Seemed like it should be easy.

Al, you were right to try to nail down definitions first. Here's an example from RIO that illustrates why.

2216

There are two gaps shown on the chart:

RIO gapped up on Friday at the open and then declined during the day, ending just above the prior day's close.
RIO gapped down on Tuesday and was unable to fill-in completely, closing below the prior day.

But the question is:
Is the gap the difference between the open and the prior close? Or is the the open space between the top [or bottom] of one day's candle and the next day's open?I'd like to believe that it is the vertical space between the prior candle and the next day's open. But even more, I'd like to know what the accepted terminology is. No sense reinventing the wheel and coming up with an oval.

Maybe we can get some help on this.

[Luc1Grunt]

Net, are you looking at daily gaps or longer term gaps as AJ pointed out?

I have somewhat a handle on the daily gap fills and the methods to get probability on your side, but the longer term gaps I don't have much experience with.

I think it will be harder to define parameters for those with longer term gap fills. They eventually fill, but how to determine risk to reward, hold time, position size is beyond me.

[AJLightning]

Net, are you looking at daily gaps or longer term gaps as AJ pointed out?

I have somewhat a handle on the daily gap fills and the methods to get probability on your side, but the longer term gaps I don't have much experience with.

I think it will be harder to define parameters for those with longer term gap fills. They eventually fill, but how to determine risk to reward, hold time, position size is beyond me.



that was my question also...intraday or swing? looks like both are possibilties...but seems to me intraday would be an easier target

[netwrangler]

Net, are you looking at daily gaps or longer term gaps as AJ pointed out?

I have somewhat a handle on the daily gap fills and the methods to get probability on your side, but the longer term gaps I don't have much experience with.

I think it will be harder to define parameters for those with longer term gap fills. They eventually fill, but how to determine risk to reward, hold time, position size is beyond me.The answer is daily gaps.
A gap that starts as a daily may continue beyond that day. My interest, however, is in what happens on that first day.

Some definitions and modeling issues:

The GapUp is the positive difference between the prior high and the open.
The GapDown is the negative difference between the prior low and the open.
If the sign (+/-) isn't right, there isn't a gap.

"Daily" seems right for definition of the "prior" time period. No reason it couldn't be weekly or monthly, but daily is a better fit for this forum.
In theory, there is no reason it couldn't be intraday, but getting a model to parse intraday candles in real time is more than I want to take on.

While I am defining the "gap" as based on the prior high or low, the difference between today's open and yesterdays close is also of interest. As I do research on gaps, I see references to both types of gaps.

Is there a gap definition gap? :wink:

[netwrangler]

that was my question also...intraday or swing? looks like both are possibilties...but seems to me intraday would be an easier targetSo, to get my words right, I'm talking about intraday trading triggered by a "gap" from the prior day to the open. ["Gap" being defined in the previous post.]

I think we are all together here.

[Luc1Grunt]

Still a good resource sticky candidate???

[Spa City Hawg]

Still a good resource sticky candidate???

I hope you guys will continue this I'm still in need of much more knowledge.

TD Ameritrade (Apex account holders) has a free Advance Analyzer with screens Basic and advance (build your own). Has a candlestick definitions at the press of the button when you Run Candle Screens really nice for FREE!

But there is no definition (expected trend) of the other screens.

example: Gap Down Recovery play

Basic screen criteria= Find stocks gapping down 2% or more but close higher than they opened and within the top half of the daily range.

From todays Charts: OPWV

[Dr Winston]

My opinion is that most online books are much worse than real offline books. Many offline books have much more substance in them...take a look att amazon.com to find books that other people have appreciated and fit your "level"

There are many dissertations and studies from universities out there for you if you have the patience to read them (they are...well...quite boring) and some math knowledge.

Or you may take a look at our website below where you can download our user guide (quite basic) for free (about 50 pages).

Good luck!

/Dr. Winston

[Firecracker]

http://stockcharts.com/school/doku.php?id=chart_school:trading_strategies:gap_tr ading_strategi

[Albert0373]

Bump, should still be stickied for the great lists of recommended books