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Technical Analysis: Power Tools for Active Investors
- By Gerald Appel
- Published Mar 21, 2005 by FT Press.
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- Sorry, this book is no longer in print.
About
Features
Unlike most technical analysis books, Gerald Appel's Practical Power Tools! offers step-by-step instructions virtually any investor can use to achieve breakthrough success in the market. Appel illuminates a wide range of strategies and timing models, demystifying even advanced technical analysis.
Q: "How do you make the study of technical analysis more practical for your students?"
A practical guide- This is simply the most practical, step-by-step guide to profiting from technical analysis. Students can learn the best tools for making money and cutting losses. These instructios are simple, specific, and focused on actual strategies.
Q: "What kind of models do you present in your technical analysis classes?"
Resourceful and useful models- Apple illuminates a wide range of stratefies and timing models. Amonst the models he covers are NASDAQ/NYSE Relative Strength, 3-5 Year Treasury Notes, Triple Momentum, Seasonality, Breadth-Thrust Impulse, and models based on revolutionary MACD techniques.
Q: "How do you offer your students a more in-depth look at techniques in technical analysis?"
Techniques for all technical analysts- Apple covers many techniques for short, intermediate, and long-term investors. Many of these techniques have never before been published! He covers momentum and trend of price movement, time and calendar cycles, predictive chart patterns, relative strength, analysis of internal vs. external markets, market breadth, moving averages, trading channels, overbought/oversold indicators, Trin, VIX, major term buy signals, major term sell signals, moving average trading channels, stock market synergy, and much more.
Q: "How important is real-world experience in investments, trading, and analysis?"
From an expert- Gerald Appel has over 30 years of technical analysis experience and is the leader in technical analysis publications. He is legendary for his experience in technical analysis and market timing, including the creation of MACD (Moving Average Convergence/Divergence), used for models presented in this new text. Appel shares his observations in each chapter, illuminating what his real-world experience has taught him.
Q: "How do you demonstrate how theories in market analysis can be put to use?"
Concepts into action- This text offers a complete course in forecasting future market behavior through cyclical, trend, momentum, and volume signals. This practical, hands-on, and detailed text shows exactly how those methods are used to help technical analysts achieve breakthrough success in the market and make a profit!
Description
- Copyright 2005
- Edition: 1st
- Book
- ISBN-10: 0-13-147902-4
- ISBN-13: 978-0-13-147902-9
Unlike most technical analysis books, Gerald Appel's Practical Power Tools! offers step-by-step instructions virtually any investor can use to achieve breakthrough success in the market. Appel illuminates a wide range of strategies and timing models, demystifying even advanced technical analysis the first time. Among the models he covers: NASDAQ/NYSE Relative Strength, 3-5 Year Treasury Notes, Triple Momentum, Seasonality, Breadth-Thrust Impulse, and models based on the revolutionary MACD techniques he personally invented. Appel covers momentum and trend of price movement, time and calendar cycles, predictive chart patterns, relative strength, analysis of internal vs. external markets, market breadth, moving averages, trading channels, overbought/oversold indicators, Trin, VIX, major term buy signals, major term sell signals, moving average trading channels, stock market synergy, and much more. He presents techniques for short-, intermediate-, and long-term investors, and even for mutual fund investors.
Sample Content
Online Sample Chapter
The No-Frills Investment Strategy
Downloadable Sample Chapter
Table of Contents
Foreword.
Acknowledgments.
Introduction.
The No-Frills Investment Strategy.
Picking the Right Investment Vehicles.
Risk: Reward Comparisons Between More Volatile and Less Volatile Equity Mutual Fund Portfolios
Gain/Pain Ratios
Drawdown: The Measure of Ultimate Risk
The End Result: Less Is More
Changing Your Bets While the Race Is Still Underway
Relative Strength Investing
Testing the Relative Strength Investment Strategy: A 14-Year Performance Record of Relative Strength Investing
Results of Quarterly Reranking and Quarterly Rebalancing (1990-2003)
Buy-and-Hold Results: The Standard & Poor's 500 Benchmark
Increasing the Risk: Maintaining a Portfolio of Somewhat More Aggressive Mutual Funds
Observations
Upping the Ante: The Effects of Applying the Concepts of Relative Strength Selection to a Still More Volatile Portfolio of Mutual Funds
General Observations
A Quick Review of Relative Strength Investing
Summing Up
Two Quick-and-Dirty Stock Market Mood Indicators.
Identifying High- and Low-Risk Investment Climates
The Nasdaq/New York Stock Exchange Index Relative Strength Indicator
The Maintenance and Interpretation of the Nasdaq/NYSE Index Relative Strength Indicator
Observations
Measuring the Market Mood with the Intermediate Monetary Filter
The Monetary Model
The Ingredients
The Calculation and Rules of the Intermediate Monetary Filt
Foreword
Index
Introduction
This book, Technical Analysis , is meant for every investor who has been hurt trusting his brokerage firm, trusting his friendly mutual fund manager, or trusting the latest hot guru. It is meant for every investor who has ever wished for the skills required to deal with an increasingly volatile and uncertain stock market. It is meant for every investor willing to take responsibility for the outcome of his own investments. It is meant for every investor ready to take at least some of the time and to put forth at least some of the effort required for the quest.
The stock market tends to condition investors to make the wrong decisions at the wrong times. For instance, the stock market explosion of the late 1920s convinced investors that the only path for stocks was up, and that the prospects of stocks rising indefinitely justified even the high levels of margin leverage that could be employed at the time.
Investors plowed in, the stock market collapsed, and, thereafter, the public remained fearful of stocks for 20 years, although the stock market actually reached its lows during 1931 and 1932. In the mid-1990s, the Standard & Poor's 500 Index was king and index mutual funds were the royal coach. Between 1996 and 1998, huge inflows of capital were injected into Standard & Poor's 500–based index mutual funds, such as those sponsored by Vanguard. The largest inflows took place just before a serious intermediate market decline in mid-1998. The market advance that followed that decline was headed not by the Standard & Poor's 500 sector of the stock market, but by speculative areas of the Nasdaq Composite: technology sectors (Internet issues and the like) that, in some cases, sold for hundreds of dollars per share, even though many companies had no earnings whatsoever. And then came the crash, in March of 2000. The Nasdaq Composite ultimately declined by more than 77%.
So, investors returned to the sanctity of total return, value, earnings, and dividends, not the worst strategy during the bear market that took place between 2000 and 2002, but definitely not the best of strategies when the new bull market more clearly emerged during the spring of 2003. The play returned to technology and the Internet, with growth back in and total return back out. (During the first nine months of 2004, however, technology issues once again lost market leadership to value- and income-oriented market sectors.)
The point, of course, is that the typical investor follows and does not lead trends, is late rather than early, and is a crowd-follower rather than a self-director. According to Dalbar, Inc., a financial services research firm, the average equity fund investor realized an annualized return of 5.32% between 1984 and 2000, while the Standard & Poor's 500 Index rose at a rate of 16.3% per annum. Matters become even worse when comparisons are updated through July 2003. The average investor was ahead by only 2.6% per year for the 1984–2003 period, compared to annualized returns of 12.2% for the Standard & Poor's 500 Index.
This book has been prepared to help investors achieve better than average performance—considerably better, we believe.
The structure of Technical Analysis has been designed to provide information and investment tools, some of which can be put to work immediately, by both sophisticated and relatively unsophisticated stock market investors. I will share with you, right at the start, my favorite techniques for picking mutual funds and ETFs (securities that trade on the stock exchange and act similarly to market index mutual funds but provide greater investment flexibility at lower ongoing internal management fees, though, possibly, with some initial commission expense, which is often involved with mutual funds as well).
We move from there to some of the basic tools stock market technicians use to track and predict market behavior. A certain amount of statistical calculations is required in applying some of the "practical power tools" you will be learning—nothing truly complex. I have placed a strong emphasis on the "practical" in "practical power tools." The KISS (Keep It Simple, Stupid) principle is observed throughout the book—at least, to the best of my ability.
For example, in Chapter 1, "The No-Frills Investment Strategy," I show you two indicators that, together, should require no more than five or ten minutes for you to post and maintain each week—that's right, each week, not each day. These have a fine history of helping investors discriminate between favorable and unfavorable market climates. Nothing in the stock market can ever be guaranteed for the future, of course, but you will see how powerful these two simple indicators have been during more than three decades of stock market history in supplementing your selections for market investment with straightforward but surprisingly effective market-timing strategies.
Even if you go no further, you will have already acquired a useful arsenal of tools for improved investment results. By this time, you might well have become ready for additional, more involved technical tools that I have found over the decades to be more than useful in my own investment decisions. These include, for example, T-formations, special time-based patterns of market movement that frequently provide advance notice of when market turning points are likely to occur. In a subsequent chapter, you learn about the application of moving average trading channels, a technique for employing certain patterns of past market behavior to predict likely patterns for the future.
Finally, you get my personal take on Moving Average Convergence-Divergence (MACD), an indicator that I invented in the late 1970s and, since then, has become one of the most widely followed of market-forecasting tools employed by technical analysts, private and professional. You will learn how to maintain the MACD indicator and how to interpret it for time frames ranging from 15 minutes (for day trading) to many years (for long-term investing).
Each of these indicators alone can be quite powerful, particularly as you develop the facility for combining various elements of your trading strategy for disciplined decision-making, higher returns, and less risk. Synergy helps the cause. I will show you many ways to achieve this synergy.
All in all, Technical Analysis is about the best stock-market timing tools that I have learned in nearly 40 years of studying, trading in, and writing about the stock market. These are real tools, practical tools, tools that my staff and I employ every day in tracking the stock market and investing our own and our clients' capital. These are tools that you, yourself, can begin to employ almost immediately.
There will be some additional interesting side trips and excursions along the way, but I think that we will conclude the description of our itinerary at this point. The time has come to begin the journey....
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