Point and Figure Charting E-Book

Thomas J. Dorsey

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Wiley Trading Series
• Sprache: Englisch

Seitenzahl: 699

Veröffentlichungsjahr: 2013

Beschreibung

An up-to-date look at point and figure charting from one of the foremost authorities in the field If you're looking for an investment approach that has stood the test of time--during both bull and bear markets--and is easy enough to learn, whether you're an expert or aspiring investor, then Point and Figure Charting, Fourth Edition is the book for you. Filled with in-depth insights and expert advice, this practical guide will help you grow your assets in any market. In this reliable resource, the world's top point and figure charting expert, Tom Dorsey returns to explain how traders and investors alike can use this classic technique--borne out of the irrefutable laws of supply and demand--to identify and capitalize on market trends. * Describes, step-by-step, how to create, maintain, and interpret your own point and figure charts with regard to markets, sectors, and individual securities * Explains how to use other indicators, including moving averages, advance-decline lines, and relative strength to augment point and figure analysis * Reveals how to use this approach to track and forecast market prices and develop an overall investment strategy * Skillfully explains how to use point and figure analysis to evaluate the strength of international markets and rotate exposure from country to country Today's investment arena is filled with a variety of strategies that never seem to deliver on what they promise. But there is one approach to investment analysis that has proven itself in all types of markets, and it's found right here in Point and Figure Charting, Fourth Edition.

Leseprobe

CONTENTS

Cover

Half Title

Series Page

Title Page

Copyright Page

Acknowledgments

Part I: Learn the Point and Figure Methodology

Chapter 1: Introduction

Point and Figure Charting: A Lost Art

Beginning with the Basics

Finding the Safe Harbor

Why Does This Method Make Sense, and Where Did It Originate?

Why You Should Use Point and Figure Charts

In the Beginning

On Taking Risks in Life*

Chapter 2: Point and Figure Fundamentals

Basic Tenets of a Point and Figure Chart

Updating a Point and Figure Chart

Practice Chart: ABC Corporation

Mutual Fund Charting

Exchange-Traded Funds

Trend Lines

Chapter 3: Chart Patterns

Recording the Battle between Supply and Demand

History Repeats Itself

Increasing Your Odds of Success

Chart Patterns

Are You Color Blind? Flash of Genius

Chapter 4: Foundations of Relative Strength

Different Types of Relative Strength

How to Calculate Relative Strength

How to Interpret the RS Chart

Examples of Relative Strength Changes for Stocks versus the Market

Where's the Relative Strength Been or Not Been?

Spotting Positive Divergences

Changes in Relative Strength Column from Long Tails Up or Down

Coming Full Circle with Relative Strength

Examples of Peer Relative Strength Changes for Stocks

Putting It All Together with Technical Attributes

Summary

Chapter 5: Advanced Relative Strength Concepts

Sector Relative Strength

Sector Relative Strength Calculation

Sector Relative Strength Interpretation

Examples of Sector Relative Strength Changes

Sector Relative Strength Applied to Exchange-Traded Funds

Sector ETF Relative Strength Calculation and Interpretation

Examples of Sector ETF Relative Strength

Drilling Down: Subsector Relative Strength

Relative Strength Applied to Asset Classes

Using Relative Strength to Determine International Exposure

Got Global? Measuring Overseas versus United States

Where in the World to Be?

Mutual Funds: The Same Relative Strength Tools Apply

The Fund Score

Stock versus Stock Relative Strength

The Pepsi Challenge, Taste Buds Aside

Relative Strength Matrix Concept

DWA Relative Strength Chart Matrix

DWA Sector Seven Index Model Universe and Portfolio Rules

DWA Sector Seven Index Model Historical Testing Information

Stock-to-Stock Matrix

Summary

Chapter 6: Primary Market Indicators for Gauging Risk

Do You Have an Operating System?

How the Bullish Percent Concept Developed over Time

Why Use the Bullish Percent versus a Chart of an Index?

Mechanics of the Bullish Percent

NYSE Bullish Percent Risk Levels

Lessons from the Bullish Percent

1987—The Crash

1990—Kuwait Invasion

1994—Stealth Bear Market

1998—Indexes versus Stocks

2000—The Two-Sided Market

9/11/2001

2002—No Place to Hide

2003—Who Would Have Guessed?

2007—The Setup

2008—A Fateful Year

2009—Finding a Bottom

2010–2011

2012 and Beyond

Bullish Percents around the World

Chapter 7: Secondary Market Indicators

Other Equity Indicators

Chapter 8: Sector Rotation Tools

Sector Analysis with Bullish Percent Indexes

Electric Utility Bullish Percent

Favored Sector Status

Summary

Part II: The Point and Figure Methodology— A Complete Analysis Tool

Chapter 9: Fixed-Income Indicators

Chapter 10: Utilizing the Exchange-Traded Fund Market

Timing Is Everything

History of Exchange-Traded Funds

Today's Exchange-Traded Fund Market

Exchange-Traded Fund Evaluation: Know What Is Inside

What Does the Future Hold?

Chapter 11: Evaluating the Commodity Market for Opportunities*

Futures Contracts

Moving Beyond Trading

Invest in Commodities as an Asset Class

Summary

Chapter 12: Trading Options Using Point and Figure

Call Definitions

Put Definitions

Selling Puts—the Underwriter

Puts as Insurance Policies

Rule of Thumb for Deltas

Part III: Apply the Point and Figure Methodology to Your Investment Process

Chapter 13: Portfolio Construction and Management

Steps for Constructing an Investment Portfolio

Team Builder

Conclusion

About the Web Site

Index

POINT AND FIGURE CHARTING

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POINT AND FIGURE CHARTING

The Essential Application for Forecasting and Tracking Market Prices

FOURTH EDITION

Thomas J. Dorsey

Cover image: Francesco Sapienza Cover design: Paul McCarthy Back cover flap image: Kyle LaFerriere

Copyright © 1995, 2001, 2007, 2013 by Thomas J. Dorsey. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources believed to be reliable (“information providers”). However, such information has not been verified by Dorsey, Wright & Associates, LLC (DWA) or the information provider and DWA and the information providers make no representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein. DWA and the information provider accept no liability to the recipient whatsoever whether in contract, in tort, for negligence, or otherwise for any direct, indirect, consequential, or special loss of any kind arising out of the use of this document or its contents or of the recipient relying on any such recommendation or information (except insofar as any statutory liability cannot be excluded). Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice.

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ISBN 9781118445709 (Cloth) ISBN 9781118662342 (ebk) ISBN 9781118799369 (ebk)

PART I

LEARN THE POINTAND FIGURE METHODOLOGY

CHAPTER 1

Introduction

■ Point and Figure Charting: A Lost Art

I would never have thought we would be embarking on the fourth edition of this book when I wrote the first edition. I know now that this will not be the last edition either. Technology has significantly changed the way we approach technical analysis and the way we implement the art of portfolio management. The Internet has provided a delivery system we could not have imagined when I was a stockbroker at Merrill, Lynch, Pierce, Fenner & Smith in the 1970s. What I mean by that statement is that computers can now do most of the work for you. We have taught the computer to do exactly what we used to do by hand 25 years ago. The operative word there is taught. The computer can only do what we tell it to do. Somewhere in the future it might do its own thinking, but at this writing, it has to be told. Think about medical technology for a second. I have a friend who is going to be operated on next week by a robot. To me this is The Jetsons revisited. The Jetsons was an animated sitcom that debuted in 1962. It was about a Space Age family living in the future (the exact opposite of the animated sitcom The Flintstones, which was a family living in the Stone Age). Much of what was depicted in that weekly show has come to pass. Think of how automobiles can now parallel park by themselves. Robots can perform operations on humans but only under the eye of a trained surgeon. We have gotten to the point where a surgeon-guided computer can actually perform the operation with more skill than an unassisted human, just like computers can outplay world-class chess players as “Big Blue” did against Gary Kasparov and later the computer “Watson” outplayed the best contestants on the TV game show Jeopardy. The computer does exactly what it is told with no emotion and no mental or physical fatigue (if you don't think mental and physical fatigue come into play with regard to portfolio management, think again). Google has transformed how we deal with ordinary medical conditions that used to require us to see a doctor for advice. Today, most people simply “Google” the symptoms and thousands of informational pages instantly appear. It still amazes me. Naturally, if the online remedy didn't work, you would go to your doctor, but only after you searched the Internet for a solution. Investing is the same today. On our system you could search for, say, a list of high-dividend stocks in the Oil Service and Utility sectors. Then you could simply click a button and the DWA Matrix system would perform an extensive “relative strength arm-wrestling contest” among all the stocks, and then order the list from best relative strength to worst relative strength in the group. It would only take a matter of minutes to perform these tasks. Then an investor could click a button to buy at the market the top 5 or 10 on the list. After that, a program could be set to sell any stock that dropped to a certain level on that relative strength list and replace it with a purchase of the next strongest stock. Think I'm kidding? The technology is already here at Dorsey, Wright & Associates (DWA). It is amazing to me that we have this capability relative to where we were only 10 years ago. In a matter of minutes you could create a good income-producing portfolio ready for investing. But without reading this book carefully, you would not understand the underlying concepts used in this computer search. This book is the first rung of the ladder on your climb to becoming a world-class investor. Questions you will learn to answer before you take full control of your investments include: