Trend Forecasting with Technical Analysis

[Pages:123]TRADE

SECRETS

Trend Forecasting

WithTechnical Analysis

UNLEASHING THE HIDDEN POWER OF INTERMARKET ANALYSIS TO BEAT THE MARKET

LOUIS B. MENDELSOHN

FORWORD BY JOHN J. MURPHY

Trend Forecasting

With Technical Analysis

Unleashing the Hidden Power of Intermarket Analysis to Beat the Market

BY LOUIS B. MENDELSOHN

Foreword by

John J. Murphy

Titles in the Trade Secrets Series

Trend Forecasting With Technical Analysis: Unleashing the Hidden Power of Intermarket Analysis to Beat the Market by Louis B. Mendelsohn

7 Chart Patterns That Consistently Make Money by Ed Downs

Charting Made Easy by John Murphy The Four Biggest Mistakes in Futures Trading

by Jay Kaeppel The Four Biggest Mistakes in Options Trading

by Jay Kaeppel Bar Chart Basics by Darrell Jobman Trading System Secrets: Selecting a Winning

System by Joe Krutsinger Profit Strategies: Unlocking Trading

Performance with Money Management by David Stendahl Simple Asset Allocation Strategies by Roger Gibson

"Intermarket analysis tools -- that build and expand upon the single-market analysis methods

which defined technical analysis in the late 20th century -- demand serious attention."

-- Louis B. Mendelsohn

Copyright ? 2000 Market Technologies Corporation Published by Marketplace Books

All rights reserved.

"VantagePoint Intermarket Analysis Software," "Market Technologies Corporation" and "ProfitTaker" are trademarks of Market Technologies Corporation. "Synergistic Market Analysis," "Synergistic Analysis" and "Market Synergy" are trademarks of Louis B. Mendelsohn. "Investor's Business Daily" is a registered trademark of Investor's Business Daily, Inc. "Technical Analysis of Stocks & Commodities" is a trademark of Technical Analysis, Inc. "Standard & Poor's 500" is a trademark of The McGraw-Hill Companies, Inc. "S&P 500" and "S&P 100" are registered trademarks of The McGraw-Hill Companies, Inc. "Nikkei Stock Average" and "Nikkei" are registered trademarks of Nihon Keizai Shimbun Inc. "CNBC" is a trademark of National Broadcasting Company, Inc. "CNN" is a trademark of Cable News Network LP, LLLP, a Time Warner Company. The "Nasdaq-100 Index," "Nasdaq-100," "Nasdaq Composite" and "Nasdaq" are registered trademarks of The Nasdaq Stock Market, Inc. "Nasdaq Japan" is a service mark of The Nasdaq Stock Market, Inc. "Futures" is a registered trademark of Futures Magazine Inc.

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The elephant is Digital Imagery ? copyright 2000 PhotoDisc, Inc.

Reproduction or translation of any part of this work beyond that permitted by Section 107 or 108 of the 1976 United States Copyright Act without the permission of the copyright owner is unlawful. Requests for permission or further information should be addressed to the Permissions Department at Traders' Library.

This publication is designed to provide accurate and authoritative information and the views and opinions of the author in regard to the subject matter covered. It is sold with the understanding that neither the publisher, copyright holder, nor the author is engaged in (i) providing commodity trading advice based on, or tailored to, the commodity interests or cash market positions or other circumstances or characteristics of any particular client, or (ii) rendering investment, legal, accounting or other professional services. If trading or investment advice or other expert assistance is required, the services of a competent and appropriately licensed person should be sought.

From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers.

This book, along with other books, are available at discounts that make it realistic to provide them as gifts to your customers, clients and staff. For more information on these long-lasting, cost-effective premiums, please call John Boyer at 800-424-4550 or e-mail him at john@.

ISBN 1-883272-91-2

Printed in the United States of America.

Contents

Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Chapter 1 TRADING IN THE GLOBAL ECONOMY -- Have Your Trading Strategies and Profits Kept Pace? . . . . . . . . . . . . . . . . . . 25

The Markets Are Constantly Evolving . . . . . . . . . . . . . . . . . . . 26 The World's Futures and Equity Markets Are Linked . . . . . . . . 27 Emerging Forces Usher in the New Global Economy . . . . . . . . 29 Market Volatility and Financial Crises Are Here to Stay . . . . . . . 31

Chapter 2 SINGLE-MARKET ANALYSIS -- Trading With Tunnel Vision Can Put You on the Losing Side of a Trade . . . . . . . . . . . . . . . . 35

While Numbers Don't Lie, They Can Be Deceiving . . . . . . . . . 36 The Goal Is to Forecast Market Trend Direction . . . . . . . . . . . 36 You Can Play the Markets, or You Can Time the Markets . . . . . 37 Technical Analysis Has Not Kept Pace With the Markets. . . . . . 38 Traders Need to Take Off Their Blinders. . . . . . . . . . . . . . . . . 41

Chapter 3 INTERMARKET ANALYSIS -- Seizing Trading Opportunities in a Shrinking World . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Intermarket Analysis in the Equity and Commodity Markets . . . 46 No Market Is Exempt From Globalization . . . . . . . . . . . . . . . 49

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