Technical Analysis Articles

Introduction

• Back to the Basics: The Fundamentals of Technical Analysis
  Technical Analysis Column: The foundation of technical analysis rests on the overall trend. A review of the basics.

• Why Technical Analysis Matters
  Chart watching can help investors make better decisions. A six-step process can take a stock from an idea to a decision to buy or sell.

Chart Types

• Illuminating Trends: An Intro to Japanese Candlestick Charting
  In order to draw candlestick charts, you must have open, high, low, and close price data. Without open prices, it is impossible to create true candlestick charts.

• Point & Figure Charts Revisited
  Technical Analysis: Point & figure charts can be tricky to construct. A step-by-step example shows how to plot the X's and O's for one stock over a two-week period.

• Analyzing Supply and Demand Using Point and Figure Charts
  Technical Analysis: The usefulness of point and figure charts lies in their ability to filter out short-term price fluctuations that occur during longer, more established trends.

• Different Perspectives: A Look at Charting Techniques
  Technical Analysis Column: Bar, point & figure, candlestick, and equivolume are all chart types that can offer different perspectives on a stock's price and volume trends.

• A Time-Honored Approach to Charting: Point & Figure Analysis
  Technical Analysis Column: Using simple rows of Xs and Os to analyze stock price movement--the basics of point-and-figure charting.

• Chart Basics Using Bars, Point & Figure and Candlesticks
  Technical analysis today comes to us under various and sundry names and disguises, ranging from the granddaddy of technical analysis, Dow's theory, to a plethora of more exotic forms. However, in its simplest form, technical analysis is the study of the market action itself.

Pattern Analysis

• Predicting Short-Term Trends: The Cup-With-Handle Pattern
  Technical Analysis: The cup-with-handle is a bullish continuation pattern that is formed by a corrective movement in price--the handle--which follows an upward trend in prices.

• Using Triangle Patterns to Determine Price Movement
  Technical Analysis: Over time, peaks and troughs on a price chart may narrow, forming a triangle pattern of two converging trendlines. How to read triangle patterns for possible clues to future price trends.

• Recognizing Chart Patterns: A Guide to Spotting Price Trends
  Technical Analysis: The main purpose of using stock charts is to identify trends, and trendlines are one of the simplest tools. How to spot patterns in price charts.

• A Look at the Patterns Helps to Differentiate Stock Winners and Losers
  Technical Analysis Column: Fundamental factors ultimately determine the fate of a stock, but technical analysis can help identify those that are in the process of becoming winners or losers,

• The Importance of Gaps: It's Where They Fall within a Trend That Counts
  Technical Analysis Column: The science of gaps--interpreting the significance of price ranges where no transactions take place.

• The Same Patterns Remain Even When the Market Index Changes
  Technical Analysis Column: Speed resistance lines can help identify expected market support and resistance levels. Applying Dow Theory's 1/3-2/3 concept to the Nasdaq composite.

• Pattern Analysis: Using Triangles to Spot Trends in Low-Priced Stocks
  Technical Analysis Column: Analyzing patterns in stock price movement can reveal potential buying and selling opportunities. Using triangles to judge patterns in low-priced stocks.

• Deciphering the Trend: It's All a Matter of Perspective
  Nearly every investor has heard of that venerable stock market saw, "The trend is your friend." It makes sense. The trouble is, though, for most investors, deciphering the trend is often an effort in futility. However, it does not have to be so, as trends have identifiable characteristics, patterns that repeat time and time again.

Technical Indicators

• Arms' Ease of Movement: Adding Volume to the Equation
  Technical Analysis: Equivolume is a method that places price activity and trading volume on an equal footing. Volume analysis is useful in identifying levels of support and resistance as well as points where these levels are broken.

• Monitoring the Smart Money by Using On-Balance Volume
  Technical Analysis: The OBV tracks the activity of smart money--large traders and investors who have inside details regarding the company's fundamentals--so you can benefit from their information without actually knowing it.

• ID'ing When to Buy and Sell Using the Stochastic Oscillator
  Technical Analysis: Stochastics work best with those securities that are currently rading within a particular range and may prove useful in identifying buying and selling points.

• Measuring Internal Strength: Wilder's RSI Indicator
  Technical Analysis: Wilder's relative strength index measures a stock's price relative to itself over time. Its popularity lies in its versatility in identifying market extremes and illustrating points of divergence that may signal a reversal of trend.

• The MACD: A Combo of Indicators for the Best of Both Worlds
  Technical Analysis: The moving average convergence/divergence, better known as the MACD, combines the characteristics of the trend-following moving average with an oscillator, which is more responsive in choppy markets.

• An Intro to Moving Averages: Popular Technical Indicators
  Technical Analysis: In essence, moving averages are "bending trendlines." They are popular because of their relative simplicity and their ability to confirm a trend or announce the reversal of a trend.

• CBOE's Volatility Index (VIX)
  An explanation of the so-called "fear gauge" and how it has fared in recent years.

Technical Analysis & Chart Resources

• Top Charting Web Sites
  Discover two of the best technical analysis and charting Web sites in this new column.

Additional Articles

• How to Test and Interpret Trading System Performance
  Technical Analysis: Many forces are at work when you trade a system—commissions, slippage, protective stops, idle interest, margin, and short trading can all influence a trading system's performance results.

• Using Moving Averages in a Systematic Trading Strategy
  Technical Analysis: The advantage to using moving averages in a trading system is that you will tend to be on the "right" side of the market. However, you will always be entering or exiting positions after the trend has reversed itself.

• It's Not Too Early for Investors to Get Ready for the January Effect
  Technical Analysis Column: Although most of the upside action does happen in January, the time to get positioned for the January effect is in October.

• Composition Changes Prompt Another Look at the DJ Utilities Average
  Technical Analysis Column: While not a perfect indicator, the Dow Jones Utilities average has moved lower prior to major market drops. When the utilities are in a sell mode, keep your cards close to your vest.

• Everyone Loves a Winner, But Should They? A Look at the "Loser" Approach
  Technical Analysis Column: Where better to find companies poised for a turnaround than lists of poor-performing stocks? Searching for the next winners among last year's losers.

• Back to the Basics: The Fundamentals of Technical Analysis
  Technical Analysis Column: The foundation of technical analysis rests on the overall trend. A review of the basics.

• Fall Declines Offer Investors Low-Priced Stock Opportunities
  Labor Day traditionally signals the end of summer. On Main Street vacations end, the swimming pools close, and kids go back to school. On Wall Street, analysts return to their desks.

• Following the Tracks of the Dow Transports May Give Clues to the Market
  Who cares about the transports? That was the question I was asked in a radio interview on May 17. The producer of the program asked me what topic I would like to discuss, and when I said the Dow Jones transports, the young man was puzzled I chose a topic on which there was so very little interest. The radio producer, needless to say, is not the only observer who has so little regard for the transports.

• Using Sell Signals to Improve Results
  Cutting losses, protecting gains and looking for sell signals in individual stocks can make a big difference in investing results.

• The Big Picture: How to Decipher What the Market Is Saying
  A look at some key market indicators that provide a lens into how the market is behaving--and what it is saying right now.

• At Hand Once Again: The Season to Consider the January Effect
  With the market approaching the last quarter of the year, one of the most widely discussed anomalies of the stock market, the January effect, is once again fast approaching. While just how useful the January effect is for the individual investor will probably remain hotly debated in some quarters, my own work as well as other studies show that the January effect, if taken in the proper context, is a factor that investors can and should exploit.

• Technical Clues From An Uncommon Source: The Dow Jones Utilities
  The Dow Jones utilities average is generally not considered one of the basic barometers of the stock market. While the industrials and transports are barometers in that their price action reflects the ebb and flow of future earnings, the regulated growth characteristics of the utilities lessen their significance as an overall barometer of future business activity.

• An Investor's Roadmap for Finding and Buying Low-Priced Stocks
  'Buy low, sell high' is the time-honored proverb of investing. Investors who wind up ahead of the game have successfully bought low enough often enough, while investors who wind up out of the game have bought high and sold low once too often.

• The Market Timing Approach: A Guide to the Various Strategies
  Over the past few years the application of market timing by individual investors, as well as registered investment advisers, has accelerated rapidly. Contributing to the growth of timing has been the proliferation of computer capabilities, the availability of data, and the growth of mutual funds.

• Two Technical Analysis Rules Pass Academic Muster
  Technical analysis has long been looked down upon in many influential circles. Academicians publish countless articles "proving"; that technical analysis lacks merit. Technical analysis has also not been highly thought of by modern Wall Street analysts trained at the leading business schools, and skeptical journalists have not exactly been favorable to technical analysis, either.

• Dow' s Theory and the Averages
  Charles H. Dow will always hold a unique position in the history of the financial markets. He was one of the preeminent journalists of his day, as co-founder of Dow Jones & Company, and the first editor of The Wall Street Journal and later Barron's. He also devised the first index to measure the trend of the market and penned some basic principles of stock market behavio—known as the Dow Theory—that laid the foundation on which much of technical analysis is based today.