Overview

What is Technical Analysis?

Technical Analysis is the forecasting of future financial price movements based on an examination of past price movements. Like weather forecasting, technical analysis does not result in absolute predictions about the future. Instead, technical analysis can help investors anticipate what is "likely" to happen to prices over time. Technical analysis uses a wide variety of charts that show price over time.

* John Murphy's "Charting Made Easy" is an easy-to-read introduction to Technical Analysis written by John Murphy. It covers all of the basics in John's trademark accessible style. A MUST READ ARTICLE!

* John Murphy's Ten Laws of Technical Trading - John's famous ten (eleven actually!) rules that everyone should know about charting and technical analysis. ANOTHER MUST READ ARTICLE!

* Technical Analysis 101 is a short course in the basic tenets of the field, designed to provide newcomers with a working background of technical analysis and experienced analysts with a quick reminder of the theories behind what they see when they look at a chart.

Overview Articles:

  • Why Analyze Securities? -
    This article examines the three types of market analysts, what they believe about financial markets and why. It will help you understand the big picture when it comes to deciding the "best" way to invest.

  • Technical Analysis -
    This article explains what Technical Analysis is, how it works, and the general steps one should take when using technical charts and indicators to analyze stocks. It concludes with a look at the strengths and weaknesses of using charts to make investment decisions.

  • Fundamental Analysis -
    This article describes Fundamental Analysis and explains the general steps that a fundamental analyst takes when evaluating a stock. It also looks at the strengths and weaknesses of fundamental analysis.

  • Intermarket Analysis -
    This article describes relationships between four key intermarket players: stocks,bonds, the Dollar and commodities. These relationships are then tied into the business cycle and sector rotations within the business cycle.

  • Irrational Exuberance and Behavioral Finance -
    This article describes the findings in Robert Shiller's book, Irrational Exuberance. The 12 precipitating factors of the 2000 stock market bubble are detailed as well as cultural and psychological factors influencing the decision process for investing in stocks.

  • Random Walk versus a Non-Random Walk -
    This article describes the Random Walk Theory of financial markets and its counter part, the Non-Random Walk Theory.

Trading Rules and Guidelines:

  • Gatis Roze's "Trader's Journal" - a collection of short articles by a successful technical trader about his tools, his routines and the lessons he learned over the years.
  • Bob Farrell's 10 Rules - Veteran Wall Streeter Bob Farrell of Merrill Lynch teaches investors to think outside the box with his 10 rules on investing.
  • Multicollinearity - How to avoid having two very similar signals on the same chart.