Successful Stock Signals for Traders and Portfolio Managers: Integrating – Tom K. Lloyd

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DESCRIPTION

A comprehensive guide to technical analysis for both the novice and the professional

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.

TABLE OF CONTENTS

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 Netfl ix 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 Profi tably 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