Contents Cover Series Title Page Copyright Dedication Foreword Introduction Chapter 1: Stock Indexes and Sectors STOCK-PICKING QUANDARY EXCHANGE-TRADED FUNDS THE OPTIONS MARKET WHY USE SEASONAL ANALYSIS? Chapter 2: Seasonal Analysis PONDERING THE PERKS NOT ALL ETFS ARE MEASURED EQUALLY CONCLUSION Chapter 3: Sentiment Analysis THE AAII SENTIMENT SURVEY COT DATA INSIDER TRADING INFORMATION COT DATA COMPONENTS CAN TRADERS BENEFIT AND MAKE MONEY FROM THIS INFORMATION? HOW CAN THIS INFORMATION POSSIBLY BE OF ANY HELP TO US? COMPELLING EVIDENCE CONCLUSION: COT OPTION STRATEGY Chapter 4: Comparative Relative Strength WHAT IS IT USED FOR? CREATING THE CHARTS SPREAD TERMINOLOGY AUTOMATING SIGNALS COMPARING MARKET PERFORMANCE CONCLUSION Chapter 5: Breadth Studies TREND-LINE ANALYSIS BEARISH DIVERGENCE SIGNALS BULLISH CONVERGENCE SIGNALS SUPPORT AND RESISTANCE INDICATORS AND MOVING AVERAGES CONCLUSION Chapter 6: Volume Analysis HINDSIGHT IS 20/20 CURRENT EVENT ANALYSIS INDIVIDUAL STOCKS BEARISH DIVERGENCE BULLISH CONVERGENCE SELLING CLIMAX EXHAUSTION TOPS TRADING PATTERNS VOLUME AND HIGH-FREQUENCY TRADERS VOLUME WEIGHTED AVERAGE PRICE Chapter 7: Patterns, Indicators, and Oscillators CANDLESTICKS THE DOJI REVERSAL PATTERNS CONTINUATION PATTERNS CONCLUSION: INDICATOR 101 Chapter 8: Scanning for Profits SCANNING THE UNIVERSE TRADE NAVIGATOR HIGH-AND LOW-CLOSE DOJI SCANS DAILY SCAN SIGNALS TRADESTATION CONCLUSION Chapter 9: Pivot Point Analysis STOCK TRADER'S TIME FRAME PERSON'S PIVOTS CALCULATIONS FIBONACCI COMBINED WITH PIVOT POINTS SUMMARY Chapter 10: Putting It All Together CALCULATING POSITION SIZE PROFIT TARGETS STOCK REPLACEMENT OPTION STRATEGY DAY TRADING POSITION SIZING AVERAGE TRUE RANGE TWICE BAKED ORDER ENTRY USING PPS SNAP-BACK TECHNIQUE ORDER TYPES STOP SELECTION THE EXIT EXPECTATIONS DISCIPLINE About the Author Index Founded in 1807, John Wiley & Sons is the oldest independent publishing company in the United States. With offices in North America, Europe, Australia, and Asia, Wiley is globally committed to developing and marketing print and electronic products and services for our customers' professional and personal knowledge and understanding. The Wiley Trading series features books by traders who have survived the market's ever changing temperament and have prospered—some by reinventing systems, others by getting back to basics. Whether a novice trader, professional or somewhere in-between, these books will provide the advice and strategies needed to prosper today and well into the future. For a list of available titles, visit our website at www.WileyFinance.com. Cover image: Paul McCarthy Cover design: © iStockphoto/blackred Copyright © 2013 by John L. Person. All rights reserved. Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada. 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Stocks—Charts, diagrams, etc. 2. Investment analysis. I. Title. HG4638.P474 2013 332.63'2042—dc23 2012026739 To my loving wife Mary, my best friend and supporter.