Constance M. Brown - Technical Analysis for the Trading Professional, Second Edition

Strategies and Techniques for Todays
Turbulent Global Financial Markets

SECOND EDITION
CONSTANCE M. BROWN, CMT

Copyright 2012 by Constance M. Brown. 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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Written by a brilliant trader for only those seasoned traders who are willing to work at their analysis of the markets in a disciplined way, this book contains the most advanced methodology Ive ever seen!

Connie Browns credentials come in the form of nine years on the front line as a research analyst and fund trader. She is herself a disciplined professional, who has grown to the point where she is a force to reckon with in the financial markets. At the same time, she publishes a daily bulletin on the Dow, the S&P, and Bonds. This is faxed to some of the worlds most sophisticated, large traders. Her predictions as to price objectives and trend of the market are unequaled anywhere in the industry.

There are 14 separate chapters in this book, each a separate subject. Six of these subjects have been written on before, and these chapters serve as improvements on old indicators. There are, also, 15 major breakthroughs in technical analysis! Seven of these breakthroughs are newnever-before-revealed material! Eight more dissect, change, and improve old concepts.

In her discussion of Stochastics and of RSI as oscillators, she introduces the concept that oscillators do not necessarily fluctuate between 0 and 100 and that all signals do not fall within the traditional default overbought and oversold bands. The oscillator may actually travel within a larger or a narrower range that can be pinpointed with precision. To correct what the writer perceives as a flaw in commercial software packages, she suggests the use of an upper resistance band and a lower support band within this range to help identify signals that might otherwise have been missed. She also introduces the concept that this effective signaling band may travel up and down within the range, and that it may expand or contract. She suggests that the trader should adjust this effective signaling range to compensate for the idiosyncrasies of strongly trending bull and bear markets, and even suggests some better parameters! This alone would change the way we look at oscillatorsand, consequently, our entry timing.

But this inventive young trader does not stop there. She goes on to discuss the application of moving averages over oscillators, third-generation indicators created by applying oscillators on oscillators, and filtering indicators with variants of different lengths. She introduces the Composite Index she created to accompany RSI.

In a theme she returns to frequently, she kids the Stochastics Default Clubboth the uneducated public that accepts the default values in software and tries to use them to trade without a clue as to why, and the educated but lazy trader who knows better but does it anyway. She remedies this deficit by giving a great deal of attention to procedures for determining and inputting the proper data to construct responsive, customized indicators. She makes a passionate case for keeping a flexible state of mind.

To the subject of cycles, Connie introduces the concept of growth and decay, which leads to asymmetrical cycles, and the application of a weighted factor to them, versus Fibonacci cycles. She explains the use of charts with differing time cycles to perfect cycle timing.

Approaching the subject of market price objectives, this writer naturally turns to the Elliott wave, her starting point in the industry. For some, the Elliott wave is frustrating in the extreme because the wave count appears to change when a larger cycle begins. Understanding their frustration, Connie agrees that some people are wave-deaf; just as a tone-deaf person cannot hear the music, they cannot perceive the beauty of the composition because they are caught up in counting the beats and analyzing the notations. She stresses that it is necessary to understand the structure, but more important to keep a sense of proportionality to the analysis.