Mastering the Stock Market: High Probability Market Timing and Stock Selection Tools

Praise for Mastering the Stock Market

"John Person is one of the most experienced and knowledgeable instructors in the business. He transmits that knowledge in this book, which is full of useful technical analysis techniques."
LAWRENCE G. McMILLAN, author of Options as a Strategic Investment and McMillan on Options

"Person′s book is simple enough for investment beginners to understand and advanced enough for trading veterans to gain new insights. By combining sector and seasonal analysis with technical timing tools, Person offers a well–rounded approach to market timing. His use of exchange–traded funds (ETFs) offers an easier way to implement the strategies explained in the book. Investors should benefit from reading it."
JOHN MURPHY, author of Trading with Intermarket Analysis: A Visual Approach to Beating the Financial Markets Using Exchange–Traded Funds

"There are many books on technical analysis covering every aspect of the art. However, there are not many that put together the entire process like John has with Mastering the Stock Market. If you have already read a lot of technical analysis books, you still need to read this one."
GREG MORRIS, Chairman, Investment Committee and Chief Technical Analyst, Stadion Money Management

Introduction xi

Chapter 1: Stock Indexes and Sectors 1

Stock–Picking Quandary 4

Exchange–Traded Funds 6

The Options Market 14

Why Use Seasonal Analysis? 18

Chapter 2: Seasonal analysis 21

Pondering the Perks 25

Not All ETFs Are Measured Equally 30

Conclusion 58

Chapter 3: Sentiment analysis 59

The AAII Sentiment Survey 60

COT Data 61

Insider Trading Information 62

COT Data Components 63

Can Traders Benefi t and Make Money from This Information? 64

How Can This Information Possibly Be of Any Help to Us? 68

Compelling Evidence 75

Conclusion: COT Option Strategy 76

Chapter 4: Comparative relative Strength 79

What Is It Used For? 79

Creating the Charts 80

Spread Terminology 87

Automating Signals 95

Comparing Market Performance 99

Conclusion 102

Chapter 5: Breadth Studies 105

Trend–Line Analysis 107

Bearish Divergence Signals 114

Bullish Convergence Signals 119

Support and Resistance 121

Indicators and Moving Averages 125

Conclusion 135

Chapter 6: Volume Analysis 137

Hindsight Is 20/20 145

Current Event Analysis 148

Individual Stocks 149

Bearish Divergence 152

Bullish Convergence 154

Selling Climax 155

Exhaustion Tops 156

Trading Patterns 157

Volume and High–Frequency Traders 161

Volume Weighted Average Price 162

Chapter 7: Patterns, Indicators, and Oscillators 165

Candlesticks 166

The Doji 168

Reversal Patterns 169

Continuation Patterns 180

Conclusion: Indicator 101 201

Chapter 8: Scanning for Profits 203

Scanning the Universe 204

Trade Navigator 204

High– and Low–Close Doji Scans 206

Daily Scan Signals 208

Tradestation 212

Conclusion 227

Chapter 9: Pivot Point Analysis 233

Stock Trader s Time Frame 238

Person s Pivots Calculations 248

Fibonacci Combined with Pivot Points 262

Summary 263

Chapter 10: P utting It All Together 265

Position Sizing, Trade Entry Techniques, Risk Management,

Trailing Stops, and Trade Management

Calculating Position Size 267

Profit Targets 269

Stock Replacement Option Strategy 271

Day–Trading Position Sizing 271

Average True Range 272

Twice Baked 275

Order Entry Using PPS 276

Snap–Back Technique 276

Order Types 277

Stop Selection 279

The Exit 281

Expectations 282

Discipline 282

About the Author 285

Index 287

JOHN L. PERSON is a thirty–two–year veteran of the trading industry, having worked as a floor trader, broker, analyst, and founder of NationalFutures.com, an online education site. He developed the Person Pivots (PPS) and other technical indicators that are on several companies′ popular trading platforms, including TD Ameritrade, TradeStation, Open E Cry, NinjaTrader, Tradesignal, and Trade Navigator. Person has taught thousands of traders including members of the largest exchanges, and frequently speaks at industry conferences. He is the author of three nationally and internationally popular trading books as well as three trading courses and a DVD seminar series. Person′s latest book, Commodity Trader′s Almanac, is the authoritative guide to trading the seasonal aspects of the commodity markets and the correlated ETFs and stocks of those markets.