Essential Technical Analysis
Tools and Techniques to Spot Market Trends
Technical analysis can be applied to any market or any stock. Also to any market sector index by your studying the chart of that market segment, for example, the semiconductor and oil stock indexes. Or if you are ready to purchase a mutual fund, it’s possible to obtain and analyze historical data on the daily closing fund values for major mutual funds. You may also evaluate the stock market as a whole in the way that Charles Dow ana- lyzed it. Is the Dow Transportation average lagging the Dow-Jones Indus- trial average, suggesting a slowdown, not in manufacturing, but in shipments, a business area that experiences an economic downturn the fastest? Perhaps this observation would cause you to wait and see if the fa- mous Dow theory barometer confirmed a continuation of a market trend, thereby avoiding a big risk by reducing your equity holdings or by waiting to put more money into stocks.