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Now in it's 9th Edition edited by WHC Bassetti, Robert D. Edwards and John MaGee's book Technical Analysis of Stock Trends is known to many as the bible of technical analysis.  Some may also say it's a full encyclopedia for technical analysis and stock market price analysis. First introduced to us by Helene Meisler, top technical analyst on TheStreet.com's RealMoney.com, Technical Analysis of Stock Trends goes far beyond price, volume, and chart analysis.  The book gives full explanations of the financial market activity of investors and traders that actually causes patterns and trends, thus giving the reader insight into the actual activity of trading and reasoning behind why and how technical analysis works.  While the title is Technical Analysis of Stock Trends, technical analysis can and is applied to all markets including futures, forex, bonds, and commodities, not just stocks.

Later sections in the book covers the actual trading tactics and investing strategy applications of technical analysis such as:

  • how to improve your trading and investment success by analyzing stock trends
  • how to apply the basic principles of charting
  • how to interpret common patterns
  • when to buy, how to use stops
  • how to avoid significant losses by using charts to figure out when and how far prices will fall
  • what to do during speculative frenzies
  • contemporary updates to Dow Theory
  • practical portfolio theory and practice
  • over 500 actual charts examples with analysis where each can be studied as a trading lesson

Check out the table of contents below for the extensive topics covered:

Table of Contents (9th Edition)

Part 1: Technical Theory

Chapter 1: The Technical Approach to Trading and Investing

  • Technical vs. Fundamental Theory
  • Philosophy of Technical Approach
  • Drawbacks of Fundamental Approach

Chapter 2: Charts

  • Different Types of Charts
  • Data Required
  • Arithmetic and Logarithmic Scales

Chapter 3: The Dow Theory

  • The 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

  • Applying Dow Theory to the Averages through 1941
  • The 1942 Action
  • The Bull Market Signal
  • The Secondary Correction of 1943
  • Bull Market Reaffirmed
  • The Spring of 1946
  • Third Phase Symptoms
  • The Bear Market Signal

Chapter 5: The Dow Theory’s Defects

  • Second Guessing
  • The “Too Late” Criticism
  • The Fifty-Year Record of Results
  • Little Help in Intermediate Term Trading

Chapter 5.1: The Dow Theory in the 20th and 21st Centuries

  • Updating the Record of the Dow
  • Results to 2005
  • Reconsidering Dow Theory

Chapter 6: Important Reversal Patterns

  • Divergence between Individual Stocks and Averages
  • Definition of Reversal and Reversal Formation
  • Time Required to Build
  • How Insiders Distribute
  • The Head-and-Shoulders Top Pattern
  • Volume Characteristics
  • Breaking the Neckline
  • Symmetry and Variations
  • Measuring Formula

Chapter 7: Important Reversal Patterns Continued

  • Head-and-Shoulders Bottoms
  • Volume and Breakout Differences
  • Multiple Head-and-Shoulders Patterns
  • Rounding Tops and Bottoms
  • Trading Activity on Rounding Turns
  • Dormant Bottoms
  • Patterns on Weekly and Monthly Charts

Chapter 8: Important Reversal Patterns - The Triangles

  • Triangles
  • The Symmetrical Form
  • Volume
  • How Prices Break Out
  • A Theoretical Example
  • Reversal or Consolidation
  • Right Angle Triangles, Ascending and Descending
  • Measuring Implications
  • On Weekly and Monthly Charts

Chapter 9: Important Reversal Patterns — Continued

  • Rectangles
  • Pool Tactics
  • Relation to Dow Line
  • Double and Triple Tops and Bottoms
  • Important Recognition Criteria
  • Completion and Breakout
  • Triple Tops and Bottoms

Chapter 10: Other Reversal Phenomena

  • Broadening Formations
  • The Broadening Top
  • Right-Angles Broadening Patterns
  • Diamonds
  • Wedge Formations
  • The Falling Wedge
  • Rising Wedges in Bear Market Rallies
  • The One-Day Reversal
  • Selling Climax

Chapter 10.1: Short-Term Phenomena of Potential Importance

  • Key Reversal Days
  • Spikes
  • Runaways

Chapter 11: Consolidation Formations

  • Flags 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

  • Which Gaps Are Significant?
  • Common or Area Gaps
  • Breakaway Gaps Continuation or Runaway Gaps
  • Measuring Implications
  • Exhaustion Gaps
  • Island Reversals
  • Gaps in the Averages

Chapter 13: Support and Resistance

  • Definition of Support and Resistance Levels
  • How They Reverse Their Roles
  • Reasons for Support/Resistance Phenomena
  • Tests for Determining Potential
  • Importance of Volume Rules for Locating
  • Implications of a Breakthrough
  • Round Figures
  • Historical Levels
  • Panic Moves and Recoveries
  • Pattern Resistance
  • Support-Resistance in the Averages

Chapter 14: Trendlines and Channels

  • Basic Trendlines
  • How They Form
  • Arithmetic vs. Logarithmic Scale
  • Intermediate Uptrends
  • Tests for Trendline Authority
  • Validity of Penetration
  • Throwback Moves
  • Amendment of Trendlines
  • Double Trendlines
  • Trend Channels
  • Practices to Avoid
  • Consequences of Penetration
  • Intermediate Downtrends
  • Corrective Trends
  • The Fan Principle

Chapter 15: Major Trendlines

  • Different Forms of Major Uptrends
  • Arithmetic and
  • Logarithmic Scaling
  • Tests for Significance
  • Major Downtrends
  • Major Trend Channels
  • Trendlines in the Averages

Chapter 15.1: Trading the Averages in the 21st Century

  • Power of Trendlines in Trading the Averages
  • Redrawing the Trendlines as Markets Accelerate

Chapter 16: Technical Analysis of Commodity Charts

  • Theoretical Application
  • Commodity Markets of the 20th (and 21st) Century Suitable for Technical Trading
  • Intrinsic Differences Between Stocks and Commodities as Trading Mediums

Chapter 16.1: Technical Analysis of Commodity Charts, Part 2 A 21st Century Perspective
Chapter 17: A Summary and Some Concluding Comments

  • Philosophy of Technical Approach
  • Review of Technical Methods
  • Need for Perspective
  • Patience

Chapter 17.1: Technical Analysis and Technology in the 21st Century: The Computer and the Internet, Tools of the Investment/ Information Revolution

  • The Computer and the Internet
  • Tools of the Investment/Information Revolution
  • Separating the Wheat from the Chaff

Chapter 17.2: Advancements in Investment Technology

  • Options and Derivatives
  • Quantitative Analysis
  • Futures on Indexes
  • Options on Futures and Indexes
  • Modern Portfolio Theory
  • Importance to the Private Investor

Part 2: Trading Tactics

Midword
Chapter 18: The Tactical Problem

  • Characteristics of Desirable Speculative Stocks

Chapter 18.1: Strategy and Tactics for the Long-Term Investor

  • What’s a Speculator, What’s an Investor?
  • Strategy of the Long-term Investor (Hypothetical)
  • Rhythmic Investing

Chapter 19: The All-Important Details

  • Source of Data
  • Suggestions on Chart Keeping
  • Using Computer Technology

Chapter 20: The Kind of Stocks We Want

  • The Speculator’s Viewpoint
  • Leverage
  • Swing Habit
  • Volatility

Chapter 20.1: The Kind of Stocks We Want

  • The Long-Term
  • Investor’s Viewpoint
  • Changing Opinions about Conservative Investing
  • Index Shares and Similar Instruments
  • Importance of Modern Trading Instruments

Chapter 21: Selection of Stocks to Chart

  • Character and Habits
  • Number
  • Advantages of Listed Issues

Chapter 22: Selection of Stocks to Chart

  • Continued Diversification
  • Price Range
  • Swing Power within Groups
  • Slow-Moving Groups

Chapter 23: Choosing and Managing High-Risk Stocks: Tulip
Stocks, Internet Sector, and Speculative Frenzies

  • Managing Speculative Frenzies and Runaways

Chapter 24: The Probable Moves of Your Stocks

  • Choosing Stocks which Have the Potential to Move
  • Volatility

Chapter 25: Two Touchy Questions

  • Use of Margin
  • Short Selling

Chapter 26: Round Lots or Odd Lots?

  • Extra Cost of Odd Lots
  • Occasional Advantages
  • Determining Trade Size and Risk

Chapter 27: Stop Orders

  • Protective Stops
  • Computing Stop Levels
  • Table of Stop Distances
  • Progressive Stops

Chapter 28: What Is a Bottom — What Is a Top?

  • The Three Days Away Rule
  • Basing Points
  • Volume Signals

Chapter 28.1: Basing Point Case Analyzed, Illustrated
Chapter 29: Trendlines in Action

  • Buying Stock
  • Selling Long Stock
  • Selling Stock Short
  • Covering Short Sales
  • Additional Suggestions

Chapter 30: Use of Support and Resistance

  • Formulating a Rule for Buying
  • When a Support Fails
  • Placing Stop Orders
  • Software for Determining Support-Resistance

Chapter 31: Not All in One Basket

  • Diversification
  • Its Cost and Benefits
  • Trading Index Shares

Chapter 32: Measuring Implications in Technical Chart Patterns

  • Reactions vs. Primary Moves

Chapter 33: Tactical Review of Chart Action

  • Dow Theory
  • Head-and-Shoulders
  • Multiple Head and Shoulders
  • Rounding Tops and Bottoms
  • Triangles
  • Broadening Tops
  • Rectangles
  • Double Tops and Bottoms
  • Diamonds
  • Wedges
  • One-Day Reversals
  • Flags and Pennants
  • Gaps
  • Support and Resistance
  • Trendlines

Chapter 34: A Quick Summation of Tactical Methods

  • When to Get Out — When to Get In

Chapter 35: Effect of Technical Trading on Market Action

  • Many Types of Investors
  • Technicians a Minority Group
  • Persistence of Ingrained Evaluative Habits

Chapter 36: Automated Trendline: The Moving Average

  • Sensitizing Moving Averages
  • Crossovers and Penetrations

Chapter 37: “The Same Old Patterns”

  • Repetitive Character of Market Behavior Over the Years
  • Additional Chart Examples Covering Market Action up through 2005

Chapter 38: Balanced and Diversified

  • The “Not All” Principle
  • The Evaluative Index
  • Reducing Risk and Anxiety
  • Identifying Bull and Bear Market Tops and Bottoms with the Magee Evaluative Index

Chapter 39: Trial and Error

  • Putting Experience to Work

Chapter 40: How Much Capital to Use in Trading
Chapter 41: Application of Capital in Practice

  • Using Composite Leverage According to the Market’s Condition
  • Overall Strategy

Chapter 42: Portfolio Risk Management

  • Finding the Sensible Risk Posture
  • Overtrading and Undertrading
  • Controlling Risk per Trade
  • Risk of a Single Stock
  • Risk of a Portfolio
  • Pragmatic Portfolio Theory
  • Pragmatic Portfolio Risk Measurement
  • Pragmatic Portfolio Analysis
  • The Magee Method of Controlling the Risk

Chapter 43: Stick to Your Guns

APPENDIX A Chapters A–D

Chapter A: The Probable Moves of Your Stocks (Chapter 24 from the Seventh Edition)

  • Relative Sensitivity
  • The Market Reciprocal
  • Normal Range-for-Price-Volatility

Chapter B: A Discussion of Composite Leverage (Chapter 42 from the Seventh Edition)

  • Overtrading and a Paradox
  • The Composite Leverage Index of a Single Stock
  • Composite Leverage of a Portfolio
  • Investment Account Policy
  • Negative Composite Leverage

Chapter C: Normal Range-for-Price Indexes (Appendix B, Fifth Edition)
Chapter D: Sensitivity Indexes of Stocks (Appendix C, Fifth Edition)

Appendix B

  • Section 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 Edition by Richard McDermott)
  • Applications for the Use of Chart Patterns and Other Indicators in the Trading of Futures/Derivatives
  • Moving Averages, Bollinger Bands, Stochastics, and Others

Appendix D Resources

  • Important Internet Sites
  • References for Further Study
  • Investment Oriented Sites
  • The Sharpe Ratio
  • Calculating Volatility
  • Gambler’s Ruin
  • Essence of Fundamental Analysis
  • Useful Software and Specific
  • Internet Technical Analysis Sites

Appendix E

  • Example of Trading Manual: Original Turtle
  • Trading Systems and Procedures

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