Technical Analysis of Stock Trends

Administrators have asked me to point out the most important themes of Technical Analysis of Stock Trends

10th ed.

DOH!

Belaboring the obvious

•TRENDS

The real question

• Do market participants really understand

trends? • If so, why does MPT exist? • If so, why did the portfolio manager for the

Univ of Miami pyramid his holdings of Enron when it was falling like a shot duck?

• If so, why did the mutual fund industry ride the market down to 47% losses in 2008?

Cornerstone of Technical Analysis

• Absolute necessity of understanding trends and the content of Technical Analysis of Stock Trends 10th ed.

The Cornerstone of Technical Analysis

Trends and Patterns

• The truth is that visually trends are very simple. The essential pattern is higher highs, higher lows. (or, vice versa for bear trends)

The bull trend

You cannot make money in the market unless you understand trends

Analysis

• Well you must understand how to manage trends also.

Analyzed

Techniques and Methods • Numerous TA methods exist for managing trends, besides the

trendline • Moving Averages • Pattern Analysis • Breadth and Volume analysis • Wave Analysis

– Elliott – Dow Theory – John Magee Basing Points

• And five or six others I haven’t heard of till this morning or maybe haven’t heard of at all.

No Perfect Method

• But many of the methods can be quite effective –especially at major turning points.

• For example Dow Theory exited the market before the 1929 Hoover crash – and exited the market before the 2008 Bush bear.

• The Magee method gave a number of signals at the top of the 2008 market and the Basing Points method exited and shorted in January 08

1929

A free version of this chart is available on the web

• edwards-magee.com/superchart

• Charts like this may be generated at • Publicharts.com and is a very good idea • A very perspicacious way to see how a system

functions

A brief description of Dow Theory and the Magee Method

The Magee Basing Points Method

How the two major methods worked in the 07-08 top

The Context of the Bush bear market

Uncanny accuracy of long term trendlines

edwards-magee.com right every trend since 1999

• Participants in this event can get a free trial of

our investment newsletter at: • edwards-magee.com/mta-offer • Purchases of Technical Analysis of Stock

Trends 10th ed receive a subscription to the web letter

• Occasionally (erratically– when under extreme public pressure) I give a weekend seminar.

Books by W.H.C. Bassetti available at amazon.com

• The Basing Point system is described in detail in StairStops.

• Zen Simple presents a simple approach to technical investing basically for the newcomer

• Sacred Chickens, the Holy Grail and Dow Theory presents a replacement to Dow Theory for long term investors.

• Signals demonstrates how E&M enters and exits the market.

More books and courses

• 10 Trading Lessons uses market events for teaching purposes, particularly examining bottoms.

• Golden Gate University: My graduate seminar (open to auditors) is given from May to August. GGU is the most important exponent of technical analysis with a complete program –from Edwards & Magee to Wyckoff. It also offers a home to TSAASF the oldest TA society in the country if not in the world. (tsaasf.org)

Illustration of dynamic trendlines

Basing Points since 2009