Sincere - All About Market Indicators

MICHAEL SINCERE

Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved. Printed in the United States of America. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher.

ISBN: 978-0-07-175043-1

MHID: 0-07-175043-6

The material in this eBook also appears in the print version of this title: ISBN: 978-0-07-174884-1, MHID: 0-07-174884-9.

All trademarks are trademarks of their respective owners. Rather than put a trademark symbol after every occurrence of a trademarked name, we use names in an editorial fashion only, and to the benefit of the trademark owner, with no intention of infringement of the trademark. Where such designations appear in this book, they have been printed with initial caps.

McGraw-Hill eBooks are available at special quantity discounts to use as premiums and sales promotions, or for use in corporate training programs. To contact a representative please e-mail us at bulksales@mcgraw-hill.com.

This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that neither the author nor the publisher is engaged in rendering legal, accounting, securities trading, or other professional services. If legal advice or other expert assistance is required, the services of a competent professional person should be sought.

From a Declaration of Principles Jointly Adopted by
a Committee of the American Bar Association and
a Committee of Publishers and Associations

Trademarks: McGraw-Hill, the McGraw-Hill Publishing logo, All About, and related trade dress are trademarks or registered trademarks of The McGraw-Hill Companies and/or its affiliates in the United States and other countries and may not be used without written permission. All other trademarks are the property of their respective owners. The McGraw-Hill Companies is not associated with any product or vendor mentioned in this book.

TERMS OF USE

This is a copyrighted work and The McGraw-Hill Companies, Inc. (McGraw-Hill) and its licensors reserve all rights in and to the work. Use of this work is subject to these terms. Except as permitted under the Copyright Act of 1976 and the right to store and retrieve one copy of the work, you may not decompile, disassemble, reverse engineer, reproduce, modify, create derivative works based upon, transmit, distribute, disseminate, sell, publish or sublicense the work or any part of it without McGraw-Hills prior consent. You may use the work for your own noncommercial and personal use; any other use of the work is strictly prohibited. Your right to use the work may be terminated if you fail to comply with these terms.

THE WORK IS PROVIDED AS IS. McGRAW-HILL AND ITS LICENSORS MAKE NO GUARANTEES OR WARRANTIES AS TO THE ACCURACY, ADEQUACY OR COMPLETENESS OF OR RESULTS TO BE OBTAINED FROM USING THE WORK, INCLUDING ANY INFORMATION THAT CAN BE ACCESSED THROUGH THE WORK VIA HYPERLINK OR OTHERWISE, AND EXPRESSLY DISCLAIM ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. McGraw-Hill and its licensors do not warrant or guarantee that the functions contained in the work will meet your requirements or that its operation will be uninterrupted or error free. Neither McGraw-Hill nor its licensors shall be liable to you or anyone else for any inaccuracy, error or omission, regardless of cause, in the work or for any damages resulting therefrom. McGraw-Hill has no responsibility for the content of any information accessed through the work. Under no circumstances shall McGraw-Hill and/or its licensors be liable for any indirect, incidental, special, punitive, consequential or similar damages that result from the use of or inability to use the work, even if any of them has been advised of the possibility of such damages. This limitation of liability shall apply to any claim or cause whatsoever whether such claim or cause arises in contract, tort or otherwise.

* * * * *

To my amazing mother, Lois, who asked for so little, but accomplished so muchI miss the unique way she viewed the world.

* * * * *

The Opening
Every Indicator Tells a Story

Chapter 1
Reverse Psychology

Chapter 2
By the Numbers

Chapter 3
Lets Get Technical

Chapter 4
Outside the Box

Chapter 5
Fred Hickey: The Contrarian

Chapter 6
Linda Raschke: The Technician

Chapter 7
Trading Psychologist Brett Steenbarger and Psychiatrist Alexander Elder, Creator of the Force Index

Chapter 8
Price and Volume

Chapter 9
High-Frequency Trading

Chapter 10
Effective Volume

Chapter 11
Timely Advice

Chapter 12
Where to Get Help

The Closing
All Signals Are Go!

Why did professional trader and Market Wizard Linda Raschke move completely out of the stock market three days before a major crash? And what motivated Fred Hickey, a Barrons Roundtable participant and editor of a monthly investment newsletter, to send out an alert to his subscribers three months before an October crash? And why did economist Bernard Baumohl recommend going long in the midst of one of the greatest recessions since the Great Depression?

Is it luck or is it really possible to forecast what the market will do next? By the time you finish All About Market Indicators, youll have an answer.

In this book, youll be taking an entertaining and educational journey. Along the way, youll meet a lot of fascinating people with different opinions about how to use market indicators. Some of the people youll meet use indicators to trade and invest, others create their own, and many do both. Ive included an all-star lineup of experts willing to share their knowledge and insights. Im sure you wont be disappointed.

Fortunately, you wont need an advanced degree in mathematics, psychology, or economics to use these indicators. As I said in my previous book, Understanding Options, you dont need to know how an engine is built to drive a car. Its the same with market indicators. Although a few of the indicators have been built using complicated algorithms, most are easier to use than driving a car. In fact, some of the most reliable indicators are the simplest. With that in mind, lets keep our focus on the main goal: to help you make or protect money by learning how to properly use market indicators.

A note to experienced traders: This book is different from other books written about the stock market. If youre looking for traditional trading books with dozens of signals, look in for suggestions. My book is aimed at helping traders and investors who are unfamiliar with market indicators quickly get started. In addition, which is why this book is so different, Ive included dozens of interviews with experts who shared their insights about trading with indicators. I believe youll find the interviews invaluable.