Murphy - Technical analysis of the financial markets: a comprehensive guide to trading methods and applications

JOHN J. MURPHY

NEW YORK INSTITUTE OF FINANCE

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Portions of this book were previously published as Technical Analysis of the Futures Markets (New York Institute of Finance, 1985).

Copyright 1999 by John J. Murphy

All rights reserved.

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First edition: January 1999

Library of Congress Cataloging-in-Publication Data

Murphy, John J.

Technical analysis of the financial markets / John J. Murphy.

p. cm.

Rev. ed. of: Technical analysis of the futures markets. c1986.

Includes bibliographical references and index.

ISBN: 978-1-101-65919-9

1. Futures market. 2. Commodity exchanges. I. Murphy, John J.

Technical analysis of the future markets. II. Title.

HG6046.M87 1999 98-38531

332.644dc21 CIP

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Version_2

To my parents,
Timothy and Margaret
and
To Patty, Clare, and Brian

John J. Murphy has been applying technical analysis for three decades. He was formerly Director of Futures Technical Research and the senior managed account trading advisor with Merrill Lynch. Mr. Murphy was the technical analyst for CNBC-TV for seven years. He is the author of three books, including Technical Analysis of the Futures Markets, the predecessor to this book. His second book, Intermarket Technical Analysis, opened up a new branch of analysis. His third book, The Visual Investor, applies technical work to mutual funds.

In 1996, Mr. Murphy founded MURPHYMORRIS, Inc., along with software developer Greg Morris, to produce interactive educational products and online analysis for investors. Their Web site address is:

www.murphymorris.com.

He is also head of his own consulting firm, JJM Technical Advisors, located in Oradell, New Jersey.

Thomas E. Aspray () is a Capital Market Analyst with Princeton Economic Institute Ltd., located in Princeton, New Jersey. Mr. Aspray has been trading markets since the 1970s. Many of the techniques he pioneered in the early 1980s are now used by other professional traders.

Dennis C. Hynes () is Managing Director and cofounder of R.W. Pressprich & Co., Inc., a fixed income broker/dealer located in New York City. He also serves as the firms Chief Market Strategist. Mr. Hynes is a futures and options trader and a CTA (Commodity Trading Advisor). He has an MBA in Finance from the University of Houston.

Greg Morris (). In August 1996, Mr. Morris teamed with John Murphy to found MURPHYMORRIS Inc., a Dallas-based firm dedicated to educating investors.

Fred G. Schutzman, CMT () is the President and Chief Executive Officer of Briarwood Capital Management, Inc., a New York-based Commodity Trading Advisor. He is also responsible for technical research and trading system development at Emcor Eurocurrency Management Corporation, a risk management consulting firm. Mr. Schutzman is a member of the Market Technicians Association and is currently serving on their Board of Directors.

I had no idea when Technical Analysis of the Futures Markets was published in 1986 that it would create such an impact on the industry. It has been referred to by many in the field as the Bible of technical analysis. The Market Technicians Association uses it as a primary source in their testing process for the Chartered Market Technician program. The Federal Reserve has cited it in research studies that examine the value of the technical approach. In addition, it has been translated into eight foreign languages. I was also unprepared for the long shelf life of the book. It continues to sell as many copies ten years after it was published as it did in the first couple of years.

It became clear, however, that a lot of new material had been added to the field of technical analysis in the past decade. I added some of it myself. My second book, Intermarket Technical Analysis (Wiley, 1991), helped create that new branch of technical analysis, which is widely used today. Old techniques like Japanese candlestick charting and newer ones like Market Profile have become part of the technical landscape. Clearly, this new work needed to be included in any book that attempted to present a comprehensive picture of technical analysis. The focus of my work changed as well.