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Summary of The Visual Investor
- The Visual Investor, Second Edition breaks down technical analysis into terms that are accessible to even individual investors.
Title Information
- ISBN:
- 9780470382059
- Pages:
- 336 pages
- Format:
- Hardback
- Product Code:
- 308125
- Publisher:
- John Wiley & Sons Ltd
- Published:
- 13/02/2009
- Edition:
- 2nd Edition
Press and Industry Reviews"John Murphy displays his remarkably broad knowledge of price patterns and intermarket relationships in this concise, up–to–date edition. It is a tour through the most important visual techniques, punctuated with practical, timely examples, including real estate, gold, VIX, mutual funds, and ETFs. Every trader will want to read this."
- Perry Kaufman, author of New Trading Systems and Methods, 4th Edition and A Short Course in Technical Trading
"John Murphy has surpassed another career milestone. His first book on technical analysis is widely regarded as the industry's standard, and his second is considered a groundbreaking dissertation on intermarket analysis. So too, The Visual Investor, Second Edition is expected to become a reference guide for technicians and fundamentalists alike, as he has successfully removed the mystique that has shrouded conventional chart analysis by providing a panorama of visual tools and relationships that simplify a heretofore seemingly complex investment approach."
- Tom DeMark, President, Market Studies Inc.
"Imagine going grocery shopping in the stock market and facing hundreds of canned goods marked candlesticks, chart patterns, and indicators. Murphy pulls from the shelf his favorites, explains them to you, and adds them to your shopping cart. At home, he opens each can and cooks a delicious meal that is not only tasty but profitable as well. The Visual Investor is John Murphy's cookbook. Read it."
- Thomas N. Bulkowski, ThePatternSite.com, author of Encyclopedia of Chart Patterns and Encyclopedia of Candlestick Charts
"If investors want to learn how to trade trends, they should study every word of The Visual Investor, Second Edition. Murphy hits the mark again!"
- Michael Covel, author of The Complete TurtleTrader and Trend Following
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Customer Reviews from AmazonAbout John J. Murphy
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.
Contents of The Visual Investor
Preface
Acknowledgments
SECTION ONE: INTRODUCTION
What Has Changed?
Fund Categories
Global Funds
Investors Need to Be Better Informed
Benefits of Visual Investing
Structure of the Book
1: What Is Visual Investing?
Why Market Analysis?
The Trend Is to Blend
What's in a Name?
Why Study the Market?
Chartists Are Cheaters
It's Always Just Supply and Demand
Charts Are Just Faster
Charts Do Look Ahead
Pictures Don't Lie
Picture Anything You Want
The Market's Always Right
It's All About Trend
Isn't the Past Always Prologue?
Timing Is Everything
Summary
2. The Trend Is Your Friend
What Is a Trend?
Support and Resistance Levels
Role Reversal
Short Versus Long Term
Daily, Weekly, and Monthly Charts
Recent versus Distant Past
Trendlines
Channel Lines
Retracing Our Steps by One-Third, One-Half, and Two-Thirds
Weekly Reversals
Summary
3: Pictures That Tell a Story
Chart Types
Time Choices
Scaling
Volume Analysis
Chart Patterns
Measuring Techniques
Even the Fed Is Charting
The Triangle
Points and Figure Charts
Chart Pattern Recognition Software
SECTION TWO: INDICATORS
4 Your Best Friend in a Trend
Two Classes of Indicator
The Moving Average
The Simple Average
Weighting the Average or Smoothing It?
Moving Average Lengths
Moving Average Combinations
Summary
5: Is It Overbought or Oversold?
Measuring Overbought and Oversold Conditions
Divergences
Momentum
Welles Wilde's Relative Strength Index
The Stochastics Oscillator
Combine RSI and Stochastics
Summary
6: How to Have the Best of Both Worlds
MACD Construction
MACD as Trend-Following Indicator
MACD as an Oscillator
MACD Divergences
How to Blend Daily and Weekly Signals
How to Make MACD Even Better—The Histogram
Be Sure to Watch Monthly Signals
How to Know Which Indicators to Use
The Average Directional Movement (ADX) Line
Summary
SECTION THREE: Linkage
7 Market Linkages
The Asset Allocation Process
The Relative Strength Ratio
2002 Shift from Paper to Hard Assets
Commodity/Bond Ratio also Turned up
Turns in the Bond/Stock Ratio
2007 Ratio Shifts Back to Bonds
Bonds Rise as Stocks Fall
Falling U.S. Rates Hurt the Dollar
Falling Dollar Pushes Gold to Record High
Commodity-Related Stocks
Foreign Stocks Are Linked to the Dollar
Commodity Exporters Get Bigger Boost
Global Decoupling Is a Myth
Rising Yen Threatens Global Stocks
Review of 2004 Intermarket Book
Summary
8: Market Breadth
Measuring Market Breadth with NYSE Ad Line
NYSE Ad Line Violates Moving Average Lines
Advance-Decline Shows Negative Divergence
Where the Negative Divergences Were Located
Retail Stocks Start to Underperform During 2007
Retailers and Homebuilders Were Linked
Consumers are also Squeezed by Rising Oil
Dow Theory
Transports Don't Confirm Industrial High
Percent of NYSE Stocks above 200-Day Average
NYSE Bullish Percent Index
Point-and-Figure Version of BPI
Summary
9: Relative Strength and Rotation
Uses of Relative Strength
Top-Down Analysis
Relative Strength versus Absolute Performance
Using Relative Strength between Stocks
Comparing Gold Stocks to Gold
How to Spot New Market Leaders
Where the Money Came from
Spotting Rotation Back into Large Caps
Trend Changes Are Easy to Spot
Rotation within Market Sectors
Chinese Stocks Lose Leadership Role
Summary
SECTION FOUR: MUTUAL FUNDS AND EXCHANGE TRADED FUNDS
10 Sectors and Industry Groups
Difference between Sectors and Industry Groups
Performance Charts
Sector Carpets
Using Market Carpet to Find Stock Leaders
Industry Group Leader
Sector Trends Need to Be Monitored
Information on Sectors and Industry Groups
Spotting Natural Gas Leadership
Natural Gas Components
CBOE Volatility (VIX) Index
Summary
11: Mutual Funds
What Works on Mutual Funds
Open–versus Closed-End Funds
Charting Adjustments on Open-End Funds
Blending Fundamental and Technical Data
Relative Strength Analysis
Traditional and Nontraditional Mutual Funds
Keep It Simple
200-Day Moving Average and Housing
Natural Gas Breakout
Consumer Discretionary Breakdown
Bear Crossing Sinks Chips
Negative ROC Hurts Technology
Consumer Staples Hold Up Okay
Retail Ratio Plunges
Energizing a Portfolio
Latin America Leads
Real Estate Is Global
Profunds Rising Rates Fund
Profund Falling U.S. Dollar Fund
Commodity Mutual Funds
Inverse Stock Funds
Summary
12: Exchange-Traded Funds
ETFs versus Mutual Funds
Using ETFs to Hedge
Using a Bear ETF
Trading the Nasdaq 100
Using Sector ETFs
Inverse Sector ETFs
Using Technology as a Market Indicat
Commodity ETFs
Foreign Currency ETFs
Bond ETFs
International ETFs
Summary
Conclusion
Why It's Called Visual Investing
The Media Will Always Tell You Why Later
Media Views Keep Shifting
Visual Analysis Is More User Friendly
Keep It Simple
Visual Tools Are Universal
The Stock Market Leads the Economy
Prices Lead the Fundamentals
Sector Investing
Exchange-Traded Funds
Final Thoughts
APPENDIX A: Getting Started
Find a Good Web Site
Use the Readers Choice Awards
StockCharts.com
Chart School
Online Bookstore
Investor's Business Daily
Stock Scans
Bullish Percent Indexes
DecisionPoint.com
McClellan Breadth Indicators
APPENDIX B: Japanese Candlesticks
Candlestick Patterns
Bullish Engulfing Pattern
Stock Scan Candlestick Patterns
Recommended Reading
APPENDIX C: Point-and-Figure Charting
Triple and Quadruple Signals
How to Vary P&F Charts for Sensitivity
There's No Doubt about P&F Signals
Recommended Reading
Index
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