Walter Deemer - Deemer on Technical Analysis: Expert Insights on Timing the Market and Profiting in the Long Run

Copyright 2012 by Walter Deemer. All rights reserved. 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.

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from Walter

To Bobbie

from Susan

To Mark

PART I
WHY TECHNICAL ANALYSIS?

CHAPTER
WHO IS THE AVERAGE INVESTOR AND WHATS WITH THE HANDBASKET?

CHAPTER
WHAT IS TECHNICAL ANALYSIS, AND WHY USE IT?

CHAPTER
HOW HARD IS IT? CAN I DO IT?

PART II
PRINCIPLES AND USES OF TECHNICAL ANALYSIS

CHAPTER
PRINCIPLESSUPPLY/DEMAND AND SENTIMENT

CHAPTER
USESTIMING AND SELECTION

PART III
CHARTING TECHNIQUES AND PATTERNS

CHAPTER
THE IMPORTANCE OF CHARTSA VISUAL CONFLUENCE OF PRICE, TIME, AND EMOTION

CHAPTER
SOME IMPORTANT LONG-TERM CHARTS

CHAPTER
MEANS AND MEAN REVERSION

PART IV
CYCLES AND WAVES

CHAPTER
MARKET-BASED CYCLES

CHAPTER
CYCLES NOT BASED ON MARKET PRICES

CHAPTER
TOPS AND BOTTOMS

PART V
INDICATORS

CHAPTER
TREND INDICATORS

CHAPTER
MARKET SECTORS AS INDICATORS

CHAPTER
MONETARY INDICATORS

CHAPTER
CONTRARIAN AND SENTIMENT INDICATORS

PART VI
INVESTING 101

CHAPTER
SELECTING INDIVIDUAL STOCKS

CHAPTER
WARNING INDICATORS

CHAPTER
WILD CARDS

PART VII
ADVICE FOR THE PERPLEXED

CHAPTER
WHAT TO BUY WHEN THE MARKETS FALLING

CHAPTER
MANIAS, PANICS, AND BUBBLES

CHAPTER
WALL STREET IS NOT YOUR FRIEND

CHAPTER
HAS WALL STREET CHANGED INVESTING INTO GAMBLING?

PART VIII
EVERYTHING ELSE

CHAPTER
RULES TO LIVE BY

CHAPTER
CALL ME LUCKY

Ive worked on Wall Street since I started at Merrill Lynch in 1963and I have been a full-time technical analyst since 1964. During that time, Ive been lucky enough to have worked withand learned fromsome of the best technical analysts of all time. Some of them are household names, such as Bob Farrell, but others, although they were revered in institutional circles, are virtually unknown by the general public (e.g., Stan Berge).

This book shares the lessons Ive learned from the great teachers Ive worked withas well as some lessons Ive learned myself through long experience. (Experience is the best teacher in the stock market, too.) The book is not, however, just another exhaustive treatise on technical analysis; others have already written them better than I ever could. Nor is it a complete book on investing. The space we had to work with was far from infinite, and difficult choices on what to include and what to leave out had to be made. But I think everyone, from seasoned professional money managers to the public investor, who deserves a lot more credit than Wall Street usually gives him or her, will find some illuminatingand, I hope, profitablenuggets of investment wisdom in these pages.

Ive been thinking about this book for a long time, and as I neared retirement, I thought that its time had finally come. I desperately needed someone to help me write it, though, and Susan Cragin, the wife of a money manager I knew through some mutual friends and a published author (Nuclear Nebraska), said that shed be interested in coauthoring it. Our original title was Dont Call It Luckbut I was very, very lucky to have had Susan to work with; she was unceasingly cheerful and creative throughout, and without her, there would be no book.

After 47 years on Wall Street, I retired in December 2010. But the stock market is in my blood, so I still write comments whenever I have something to say and send them to some long-term clients and friends who are kind enough to supplement my Social Security checks once in a while.

Old technicians never die; they just chart away.

We would like to thank our wonderful agent, John Willig of Literary Services, and Mary Glenn, Morgan Ertel, Daina Penikas, Sara Hendricksen, and Tania Loghmani, all of McGraw-Hill Professional.

Our spouses, Bobbie Deemer and Mark Ungewitter, have provided comments and suggestions, proofreading expertise, and love and support. Mark has also provided many of the charts found in this book. In addition, Ron Griess of The Chartstore.com provided us with charts specifically created for this book. Stephen Pope, June Blake, and Penny Wolfe provided invaluable comments and proofreading. Wine HQ provided computer support and Diane Gallagher provided Walters photo under a very tight deadline.