Successful Stock Signals for Traders and Portfolio Managers, + Website Integrating Technical Analysis with Fundamentals to Improve Performance Wiley Trading Series

Technical analysis is a vital tool for any trader, asset manager, or investor who wants to earn top returns. Successful Stock Signals for Traders and Portfolio Managers lets you combine technical analysis and fundamental analysis using existing technical signals to improve your investing performance. Author Tom Lloyd Sr. explains all the technical indicators you need to know, including moving averages, relative strength, support and resistance, sell and buy signals, candlesticks, point and figure charts, Fibonacci levels, Bollinger Bands, and both classic and new indicators. Merging these technical indicators with fundamental analysis will keep you in a portfolio of outperforming stocks, sharpen your fundamental buy discipline, and put your sell discipline on autopilot.

• Includes case studies applying technical analysis to current trending and hotly debated stocks like Facebook, LinkedIn, and Netflix
• Offers thorough and straightforward guidance on technical analysis for both professional and individual investors
• Covers the vital indicators in the public domain that investors need to know

Whether you're an individual investor who wants to beat the indexes, a trader looking for high-risk, high-return positions, or a portfolio manager who wants to take a fundamental approach, this an ideal guide to technical analysis and indicators.

Preface xvii

Acknowledgments xxi

Chapter 1 Using Moving Averages and Relative Strength Performance to Beat the Index 1

Relative Strength Index, Money Flow Index, Keltner Channels, and Standard Deviation, with Apple Exhibits

Know the Playing Field 1

Apple Computer’s 200-Day Moving Average 3

20-, 50-, and 200-Day Moving Averages 4

Relative Strength versus the S&P 500 Index 6

Keltner Channels 8

Mean Reversion 8

Breakout Signal 9

Apple’s Top at $ 644 9

Relative Strength Index (RSI) 10

Money Flow Index (MFI) 10

Standard Deviation (StdDev) 11

Relative Strength Performance, AAPL: $SPX 11

Supply and Demand 12

Summary 13

Chapter 2 On-Balance Volume, Accumulation/Distribution, Chaikin Money Flow, Pivot Point, Resistance and Support, and Point & Figure Chart, with Apple and Google Exhibits 15

Price and Volume 16

Chaikin Money Flow (CMF) 18

Moving Average Convergence/Divergence (MACD) 18

Value-Added Signals 19

Using Moving Averages 19

Pivot Point, Support and Resistance Points 20

Reverse Head-and-Shoulders Bottom 20

Apple Earnings Report 21

Case Study Questions on Apple 22

Planning for Apple’s Earnings Report 22

You Must Now Make a Decision on Apple before Earnings 25

Answers to the Case Study Questions 25

Summary of the Apple Case Study 30

Google Case Study 30

Summary of the Google Case Study 38

Chapter 3 Bottoms and Tops, Buying and Selling Cycles, and Percentage Price Oscillator (PPO), with IBM and Hewlett-Packard Exhibits 39

Inverted Head-and-Shoulders Bottom 39

Double Top and “V” Bottom 41

Resistance 41

Cycles 42

Writing Puts and Calls 42

The “Cloud Stocks” for the Future 43

Long-Term Investing 43

Buy-and-Hold Strategy Is Problematic 44

Hewlett-Packard Case Study 46

Case Study Answer 47

Percentage Price Oscillator (PPO) 49

My Answer to the Case Study 51

Summary 51

Chapter 4 Sell Signals 53

Double Top, Failed Momentum, 10- and 20-Day Trends, Broken Support, Aroon Oscillator, and Directional Movement with ADX, with Herbalife Exhibits

Technical Signals before a Blowup 53

Technical Signals after a Blowup 54

Double-Top Warning 56

The 10- and 20-Day Moving Average Signals 58

Aroon Oscillator and Directional Movement 59

Comments after the Herbalife Blowup 60

Herbalife Case Study Challenge 62

Answers to the Case Study Questions 64

The Daily Chart Looks More Bearish 65

Summary 67

Chapter 5 Supply and Demand, Candlestick Signals, and Point & Figure Chart, with Facebook Exhibits 69

Candlestick Sell Signal for Facebook 69

Failed Facebook versus Lucky LinkedIn 70

Portfolio Managers Prefer Fundamental Analysis 71

The Facebook IPO Game 72

Facebook Selloff 73

Facebook Dives Because of Supply 74

Traders Look for Inefficient Markets 75

Facebook Secrets Took Price Down 76

Facebook: The Rush to Sell on the First Day 77

Facebook Price in Search of a Bottom 78

Why Is Price Going Down? 79

Seeing Demand/Supply on the Chart 80

Waiting for Buy Signals 81

Picture of a “Busted IPO” 82

Point & Figure Chart Shows Continued Selling 83

On-Balance Volume 86

Accumulation/Distribution 86

Summary Picture of Supply and Demand 88

Facebook’s First Earnings Report 88

CMF Signal 89

MFI and MACD Signals 90

Gravestone Doji Candlestick Signal 90

Pivot Point Support/Resistance Levels 91

Day–Trading Signals 91

Tremendous Supply Overhang 93

Summary 93

Chapter 6 Breakout Signals 95

Ascending Triangle, Bullish Rectangle,Double Bottom, and Falling Wedge,with Microsoft, Lululemon, and Home Depot Exhibits

Double Bottom and Bullish Rectangle Breakout 95

What Is Wrong with Microsoft? 96

What Caused Microsoft to Break Out? 98

Falling Wedge Signals Double Bottom 100

Candlestick Hammer a Bullish Reversal Signal 100

Case Study: Home Depot Ascending Triangle 101

Summary 104

Chapter 7 Relative Strength Index, Stochastic, and MACD, with Lululemon Exhibits 105

Case Study: Lululemon before Earnings Are Reported 108

What Are You Ready to Do? 110

Answer to the Case Study 111

Now Are You Ready to Sell Call Options? 112

False Sell Signals in the 200-Day and Relative Strength 117

Summary 120

Chapter 8 Blow-Off Top, Trend Line Reversal, Channel Breakout, and Fan Lines, with Green Mountain Coffee Exhibits 121

Why Study Stocks that Blow Up? 121

How to Make Money When a Stock Crashes 122

Blow-Off Top and Trend Reversal 122

Sell Signals before the Fall 123

Selling Short after Einhorn’s Presentation 126

The Fatal Sell Signals 127

Bottom Fishing Green Mountain a Year Later 128

Looking for Buy Signals 130

Trading the Dead Cat Bounce 132

Summary 134

Chapter 9 Classic Top, Death Cross, Double Bottom, Bull Trap, and Dead Cat Bounce, with Netflix Exhibits 135

Classic Top: End of a Long-Term Uptrend 135

You Must Have a Sell Discipline 136

Death Cross, Dead Cat Bounce to a Bull Trap, Double Bottom 138

Buy Signals to Double Your Money on the Dead Cat Bounce 139

Dead Cat Bounce Up Fails 141

Broken “W” Bottom—Negative Surprise 144

Second Dead Cat Bounce and Second Failure 147

Summary 148

Chapter 10 Gaps, Divergences, Breakdowns and Breakouts, Oscillators, with Research In Motion Exhibits 149

Apple versus Research In Motion, Stock Pairs Hedging 149

The Fall of Research In Motion from $148 to $ 35 151

Negative Divergence 152

Double Bottom, Dead Cat Bounce, Double Top, Capitulation 154

Oversold/Overbought Oscillator 155

Trading the Dead Cat Bounce 155

Research In Motion Breakout Buy Signals 156

Research In Motion’s Double-Top Dive from $88 to $ 6 160

Research In Motion: All Signals Bearish for Three Years 161

Summary 163

Chapter 11 Relative Strength, Elliott Wave, and Fibonacci Levels, with Priceline Exhibits 165

Guidelines for Success 165

Priceline Five-Year Performance versus Apple 166

Case Study Challenge for Priceline 167

Fundamental Models 168

Priceline Short-Term Daily Chart Signals 169

Priceline Long-Term Weekly Chart 171

Answer to the Priceline Case Study 175

My Postmortem Article on MarketWatch.com 176

Proactive before Earnings 178

Elliott Wave Targets a $440 Downside Test 179

Summary 180

Chapter 12 Evolution of Technical Signals from A to Z, with LinkedIn Exhibits 183

LinkedIn IPO Successful 184

LinkedIn Selloff after Doubling the First Day 184

Practice with the LinkedIn Signals 186

Do You Buy LinkedIn on Weakness? 186

LinkedIn Case Study Challenge 189

Wall Street Price Targets for LinkedIn 190

What the Quants Are Saying 191

What the Charts Are Saying About Demand and Supply 193

Your Decision Required before LinkedIn Earnings Are Announced 196

Answers to the LinkedIn Case Study 197

Summary 202

Chapter 13 Using the 200-Day Moving Average and Relative Strength to Rotate In and Out of Winners, with Starbucks Exhibits 203

Portfolio Managers Create Price Trends 205

What Do Portfolio Managers Look At? 206

What Do Traders Look At? 207

Monthly Chart for Portfolio Managers 207

Leading Sell Signals 209

What Will the Weekly Chart Do for the Portfolio Manager? 211

Positive Up Arrows in Exhibit 13.3 213

How Do You Trade Starbucks Short Term? 214

Day Trading Starbucks after Good Earnings 217

Summary 222

Chapter 14 Technical Signals for Your Buy and Sell Discipline, from Stochastics to the 200-Day Moving Average, with Chipotle Mexican Grill Exhibits 223

Price Jumps on the Analyst Upgrade 225

Day Trading the News 226

Trading Systems 227

Trading Information 228

Day-Trading Buy Signals 228

Sell Signals on the Short-Term Daily Chart 230

Buying at the Bottom 230

Change in Character from Bull to Bear 232

Selling at the Top 232

Hammer Candlestick Reversal Signal 235

Counting Down with Fibonacci and Elliott 236

Optimize Entry Level after Fundamental Buy Signal 236

Waiting for the Bottom 238

Summary 239

Chapter 15 Using Money Flow, Trend Lines, RSI, Stochastic, MACD, and Buy/Sell Signals to Rotate In and Out of Losers, with J.P. Morgan and Goldman Sachs Exhibits 241

J.P. Morgan and Goldman Sachs versus the Regulators 242

J.P. Morgan Buy/Sell Signals 243

Signals for Stocks in a Trading Range 245

Buying the Bottom for a Trade 247

Trader’s Buy Signals 247

Portfolio Manager’s Buy/Sell Signals 248

Goldman Sachs, Best of Breed 252

Goldman’s Latest Sell Signal 252

Is the Goldman Sachs Bottom at $86 or $43? 255

Summary 257

Chapter 16 Day Trading Using Candlesticks, Real-Time Volume and Price, RSI, MFI, MACD, and 20- to 50-Minute Moving Averages, with Salesforce Exhibits 259

What Is the World of Trading? 259

Trading Technology 261

How Has Technical Analysis Changed? 262

Trading Profitably 263

Case Study in Trading Salesforce.com 264

Answers to Monday’s Day-Trading Example 267

Time for the Second Trade on Monday— What Will You Do? 270

Answer to the Second Trade on Monday 271

Third Trade for Monday 272

Answer to Monday’s Third Trade 272

Tuesday’s Day-Trading Case Question for You to Answer 275

Answer to Tuesday’s Case Study Challenge 275

There Is Much More to Day Trading 279

Summary 279

Chapter 17 Investors Need Reliable Signals 281

50- and 200-Day Moving Averages, Money Flow,Relative Strength, and Directional Movement,with Apple, Home Depot and Wal-Mart Exhibits

Finding Great Stocks Such as Apple 282

Dow 30 Stocks 284

Home Depot—Anatomy of a Buy 286

Technical Analysis with Fundamentals 290

Wal-Mart—Anatomy of a Buy on Weakness 291

Summary 294

Chapter 18 Traders Need Stocks to Trade 295

Using Candlesticks, Volume, 10-Minute Chart,Stochastic, MACD, and RSI, with Gamestop,Green Mountain Coffee, and JCPenney Exhibits

Traders Are Early Birds 296

Traders Are Opportunistic 297

Traders Have a List of Longs and Shorts 298

Gamestop on the Long List but It’s a Trading Short 298

Trading the Positive Surprise in Green Mountain Coffee 303

Why No Short Squeeze in Green Mountain Coffee? 306

Preparing a Trader’s Short List 306

Summary 308

Chapter 19 Winning in the Stock Market Using Technical Analysis, S&P 500 Index, SPY, and Reading the Market, with SPY Exhibits 309

What Is the Current Status of the Market? 310

Elliott Waves 312

Using the Stock Trader’s Almanac 312

Identifying Tops in the Market 313

Is This a Market Top? 314

Percentage Price Oscillator’s Buy/Sell Signals 314

Moving Average Convergence Divergence’s Buy/Sell Signals 316

Know Sure Thing Buy/Sell Signals 317

Keltner Channels Buy/Sell Signals 317

Closer View of the Monthly Chart 318

Switching to the Weekly Chart (Exhibit 19.3) 321

The Daily Chart Everyone Uses First 323

The Day Trader Is Trying to Dodge the Fiscal Cliff News 325

Day-Trading 5-Minute Chart (Exhibit 19.5) 326

Trader’s Buy Signals (Blue Line in Exhibit 19.5) 328

Trader’s Sell Signals (Red Line on Exhibit 19.5) 330

Summary 331

About the Companion Website 333

About the Author 335

Index 337

THOMAS K. LLOYD SR. has spent twenty-five years as a consultant teaching professional portfolio managers how to use technical analysis. He holds an MBA in accounting and formerly taught an investing course at St. John’s University using an integrated fundamental and technical approach. His articles have appeared in numerous media outlets, including Technical Analysis of Stocks and Commodities magazine, SeekingAlpha.com, and MarketWatch.com.