In the pages that follow we are going to be looking at some unique methods of analysis that can help to make trading more successful and therefore more fun. When I say traders I am thinking primarily of those who buy individual stocks and hold them for a period of days, or at most a few weeks. All the examples we look at will be concerned with that time frame. That is not to say the methodology is not applicable to other time frames, it is. But our emphasis will be on short term trading. If we can think of the market movements as consisting of tides, waves and ripples, we are going to be looking at the waves. Day traders may want to apply the ideas to the ripples. Long-term investors can look at the larger picture and use the methods to take advantage of the large tidal movements. In addition, we will not be looking at options trading, just the underlying stocks. But anyone wanting to trade options must be able to understand where the underlying stock appears to be headed. Every principle in the pages that follow is a tool for the options trader as well.

This book is about technical analysis. Moreover, it is about one particular type of technical analysis. You will not see anything about earnings, or dividends or cash flows. Nowhere will we mention management or products or competition or sales. Search all you want but you won’t find another mention of price to earnings ratios. All we are going to be concerned with is price and volume. We are going to look at the past, and try to anticipate the future, and we are going to do so without ever looking at a single fundamental factor.