tast content

7/23/2019 TAST Content

http://slidepdf.com/reader/full/tast-content 1/8

Contents

Preface to the Ninth Edition ...............................................................................v

Preface to the Eighth Edition .............................................................................ix

In Memoriam .................................................................................................... xxiii

Prefaces to Previous Editions..........................................................................xxv

Part 1: Technical Theory

Chapter 1 The Technical Approach to Trading and Investing .............3Technical vs. Fundamental Theory — Philosophy of Technical Approach — Drawbacks of FundamentalApproach

Chapter 2 Charts .............................................................................................9Different Types of Charts — Data Required —Arithmetic and Logarithmic Scales

Chapter 3 The Dow Theory .......................................................................13The Forerunner of All Technical Theories — Use of Market Averages — Basic Tenets of Dow Theory —Characteristic Phases of Bull and Bear Trends

Chapter 4 The Dow Theory in Practice...................................................25

Applying Dow Theory to the Averages through 1941 —The 1942 Action — The Bull Market Signal — TheSecondary Correction of 1943 — Bull MarketReaffirmed — The Spring of 1946 — Third PhaseSymptoms — The Bear Market Signal

Chapter 5 The Dow Theory’s Defects......................................................41Second Guessing — The “Too Late” Criticism — TheFifty-Year Record of Results — Little Help in

Intermediate Term Trading

Chapter 5.1 The Dow Theory in the 20th and 21st Centuries...............45Updating the Record of the Dow — Results to 2005 —Reconsidering Dow Theory



Chapter 6 Important Reversal Patterns....................................................55Divergence between Individual Stocks and Averages —Definition of Reversal and Reversal Formation — Time

Required to Build — How Insiders Distribute — TheHead-and-Shoulders Top Pattern — VolumeCharacteristics — Breaking the Neckline — Symmetryand Variations — Measuring Formula

Chapter 7 Important Reversal Patterns — Continued..........................75Head-and-Shoulders Bottoms — Volume and BreakoutDifferences — Multiple Head-and-Shoulders Patterns —Rounding Tops and Bottoms — Trading Activity on

Rounding Turns — Dormant Bottoms — Patterns onWeekly and Monthly Charts

Chapter 8 Important Reversal Patterns — The Triangles ....................99Triangles — The Symmetrical Form — Volume — HowPrices Break Out — A Theoretical Example — Reversalor Consolidation — Right Angle Triangles, Ascendingand Descending — Measuring Implications — OnWeekly and Monthly Charts

Chapter 9 Important Reversal Patterns — Continued........................129Rectangles — Pool Tactics — Relation to Dow Line —Double and Triple Tops and Bottoms — ImportantRecognition Criteria — Completion and Breakout —Triple Tops and Bottoms

Chapter 10 Other Reversal Phenomena...................................................151Broadening Formations — The Broadening Top —Right-Angles Broadening Patterns — Diamonds —

Wedge Formations — The Falling Wedge — RisingWedges in Bear Market Rallies — The One-DayReversal — Selling Climax

Chapter 10.1 Short-Term Phenomena of Potential Importance.............181Key Reversal Days — Spikes — Runaways

Chapter 11 Consolidation Formations .....................................................189Flags and Pennants — Pennant vs. Wedge — Measuring

Formula — Reliability Tests for Flags and Pennants —On Weekly and Monthly Charts — Head-and-Shoulders Consolidations — Scallops and Saucers —Modern vs. Old-Style Markets



Chapter 12 Gaps............................................................................................ 211Which Gaps Are Significant? — Common or AreaGaps — Breakaway Gaps Continuation or Runaway

Gaps — Measuring Implications — Exhaustion Gaps —Island Reversals — Gaps in the Averages

Chapter 13 Support and Resistance..........................................................231Definition of Support and Resistance Levels — HowThey Reverse The i r Roles — Reasons forSupport/Resistance Phenomena — Tests forDetermining Potential — Importance of Volume —Rules for Locating — Implications of a Breakthrough —

Round Figures — Historical Levels — Panic Moves andRecoveries — Pattern Resistance — Support-Resistancein the Averages

Chapter 14 Trendlines and Channels.......................................................253Basic Trendlines — How They Form — Arithmetic vs.Logarithmic Scale — Intermediate Uptrends — Tests forTrendline Authority — Validity of Penetration —Throwback Moves — Amendment of Trendlines —Double Trendlines — Trend Channels — Practices toAvoid — Consequences of Penetration — IntermediateDowntrends — Corrective Trends — The Fan Principle

Chapter 15 Major Trendlines .....................................................................281Different Forms of Major Uptrends — Arithmetic andLogarithmic Scaling — Tests for Significance — MajorDowntrends — Major Trend Channels — Trendlines inthe Averages

Chapter 15.1 Trading the Averages in the 21st Century .........................295Power of Trendlines in Trading the Averages —Redrawing the Trendlines as Markets Accelerate

Chapter 16 Technical Analysis of Commodity Charts .........................301Theoretical Application — Commodity Markets of the20th (and 21st) Century Suitable for Technical Trading— Intrinsic Differences Between Stocks andCommodities as Trading Mediums

Chapter 16.1 Technical Analysis of Commodity Charts, Part 2 ............307A 21st Century Perspective



Chapter 17 A Summary and Some Concluding Comments................319Philosophy of Technical Approach — Review of Technical Methods — Need for Perspective — Patience

Chapter 17.1 Technical Analysis and Technology in the 21stCentury: The Computer and the Internet, Toolsof the Investment/ Information Revolution ...................... 325The Computer and the Internet — Tools of theInvestment/Information Revolution — Separating theWheat from the Chaff

Chapter 17.2 Advancements in Investment Technology.........................333

Options and Derivatives — Quantitative Analysis —Futures on Indexes — Options on Futures andIndexes — Modern Portfolio Theory — Importance tothe Private Investor

Part 2: Trading Tactics

Midword .............................................................................................................. 355

Chapter 18 The Tactical Problem ..............................................................359Characteristics of Desirable Speculative Stocks

Chapter 18.1 Strategy and Tactics for the Long-Term Investor .............367What’s a Speculator, What’s an Investor? — Strategy of the Long-term Investor (Hypothetical) — RhythmicInvesting

Chapter 19 The All-Important Details.....................................................375Source of Data — Suggestions on Chart Keeping —Using Computer Technology

Chapter 20 The Kind of Stocks We Want — The Speculator’sViewpoint..................................................................................379Leverage — Swing Habit — Volatility

Chapter 20.1 The Kind of Stocks We Want — The Long-Term

Investor’s Viewpoint...............................................................383Changing Opinions about Conservative Investing —Index Shares and Similar Instruments — Importance of Modern Trading Instruments



Chapter 21 Selection of Stocks to Chart..................................................391Character and Habits — Number — Advantages of Listed Issues

Chapter 22 Selection of Stocks to Chart — Continued ........................395Diversification — Price Range — Swing Power withinGroups — Slow-Moving Groups

Chapter 23 Choosing and Managing High-Risk Stocks: TulipStocks, Internet Sector, and Speculative Frenzies............401Managing Speculative Frenzies and Runaways

Chapter 24 The Probable Moves of Your Stocks...................................419Choosing Stocks which Have the Potential to Move —Volatility

Chapter 25 Two Touchy Questions...........................................................425Use of Margin — Short Selling

Chapter 26 Round Lots or Odd Lots? ......................................................433Extra Cost of Odd Lots — Occasional Advantages —Determining Trade Size and Risk

Chapter 27 Stop Orders...............................................................................435Protective Stops — Computing Stop Levels — Table of Stop Distances — Progressive Stops

Chapter 28 What Is a Bottom — What Is a Top?...................................441The Three Days Away Rule — Basing Points — VolumeSignals

Chapter 28.1 Basing Point Case Analyzed, Illustrated............................446

Chapter 29 Trendlines in Action...............................................................451Buying Stock — Selling Long Stock — Selling StockShort — Covering Short Sales — Additional Suggestions

Chapter 30 Use of Support and Resistance ............................................461Formulating a Rule for Buying — When a Support Fails— Placing Stop Orders — Software for Determining

Support-Resistance

Chapter 31 Not All in One Basket............................................................467Diversification — Its Cost and Benefits — Trading IndexShares



Chapter 32 Measuring Implications in Technical Chart Patterns......469Reactions vs. Primary Moves

Chapter 33 Tactical Review of Chart Action ..........................................473Dow Theory — Head-and-Shoulders — Multiple Head-and-Shoulders — Rounding Tops and Bottoms —Triangles — Broadening Tops — Rectangles — DoubleTops and Bottoms — Diamonds — Wedges — One-DayReversals — Flags and Pennants — Gaps — Supportand Resistance — Trendlines

Chapter 34 A Quick Summation of Tactical Methods .........................501

When to Get Out — When to Get In

Chapter 35 Effect of Technical Trading on Market Action .................505Many Types of Investors — Technicians a MinorityGroup — Persistence of Ingrained Evaluative Habits

Chapter 36 Automated Trendline: The Moving Average ....................507Sensitizing Moving Averages — Crossovers andPenetrations

Chapter 37 “The Same Old Patterns” ......................................................513Repetitive Character of Market Behavior Over theYears — Additional Chart Examples Covering MarketAction up through 2005

Chapter 38 Balanced and Diversified.......................................................577The “Not All” Principle — The Evaluative Index —Reducing Risk and Anxiety — Identifying Bull and BearMarket Tops and Bottoms with the Magee Evaluative

Index

Chapter 39 Trial and Error..........................................................................585Putting Experience to Work

Chapter 40 How Much Capital to Use in Trading ................................587

Chapter 41 Application of Capital in Practice .......................................591Using Composite Leverage According to the Market’s

Condition — Overall Strategy

Chapter 42 Portfolio Risk Management..................................................597Finding the Sensible Risk Posture — Overtrading andUndertrading — Controlling Risk per Trade — Risk of a Single Stock — Risk of a Portfolio — Pragmatic



Portfolio Theory — Pragmatic Portfolio RiskMeasurement — Pragmatic Portfolio Analysis — TheMagee Method of Controlling the Risk

Chapter 43 Stick to Your Guns..................................................................609

APPENDIX A Chapters A–D

Chapter A The Probable Moves of Your Stocks(Chapter 24 from the Seventh Edition) ..............................611Relative Sensitivity — The Market Reciprocal — Normal

Range-for-Price-Volatility

Chapter B A Discussion of Composite Leverage(Chapter 42 from the Seventh Edition) ..............................613Overtrading and a Paradox — The Composite LeverageIndex of a Single Stock — Composite Leverage of aPortfolio — Investment Account Policy — NegativeComposite Leverage

Chapter C Normal Range-for-Price Indexes

(Appendix B, Fifth Edition) ..................................................619

Chapter D Sensitivity Indexes of Stocks(Appendix C, Fifth Edition) ..................................................621

Appendix B .........................................................................................................629Section 1: The Mechanics of Building a Chart(Chapter 23 from the Fifth and Seventh Editions)Section 2: TEKNIPLAT Chart Paper

Appendix C Technical Analysis of Futures Charts(Chapter 16 from the Seventh Editionby Richard McDermott) .........................................................639Applications for the Use of Chart Patterns and OtherIndicators in the Trading of Futures/Derivatives —Moving Averages, Bollinger Bands, Stochastics, andOthers

Appendix D Resources...................................................................................669Important Internet Sites — References for Further Study— Investment Oriented Sites — The Sharpe Ratio —Calculating Volatility — Gambler’s Ruin — Essence of Fundamental Analysis — Useful Software and SpecificInternet Technical Analysis Sites



Appendix E Example of Trading Manual: Original TurtleTrading Systems and Procedures.........................................681

List of Illustrations and Text Diagrams........................................................703

Index of Charts by Stock Name .....................................................................722

Glossary ............................................................................................................... 743

Bibliography ....................................................................................................... 769

Index ..................................................................................................................... 773

tast content

Documents