ADVFN GUIDE: 101 CHARTS FOR TRADING SUCCESS

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CONTENTS

Book information

Author information

Technical details

Contact information

Sample chapters

ADVFN GUIDE: 101 CHARTS FOR TRADING SUCCESS

Electronic Press Kit

BOOK INFORMATION

Using insider knowledge to reveal the tricks of the trade, Zak Mir’s 101 Charts for Trading Success is the essential guide that explains the most complex set ups in the market.

Charting provides a clear way of predicting price action and hence gaining riches.

Executed correctly using Zak’s methods, charting is a way of delivering high probability percentage trades and investments that remove the task of trawling through company accounts, financial ratios, and interviewing megalomaniac CEOs. Reading the message of the price action shown by the charts gives you a basis to predict where the stock market may be going and what traders are thinking.

Detailing over 80 stock market events 101 Charts will show you what to look for when you make your day-to-day trading decisions; a must for all future investment millionaires.

As the first person to bring charting to the UK, Zak has written an easy to understand, illustrated and essential guide that reveals the tricks of the trade and explains the most complex set ups in the market.

ADVFN GUIDE: 101 CHARTS FOR TRADING SUCCESS

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AUTHOR INFORMATION

Zak Mir is one of the UK’s best-known chartists, having appeared on both CNBC and Bloomberg TV. He runs Zaks-TA.com, the UK’s only serious pure technical analysis website.

Saqib “Zak” Mir was born in Glasgow, Scotland to Pakistani immigrant Doctor parents in 1966. The family moved to London in the early 1970s.

Attending the LSE for only a few weeks before deciding to enter the City, from the early 1990s Zak was a derivatives broker at various companies such as Sucden, Union Cal (later part of Man Group) and Berkeley Futures.

From 2000 the opportunities afforded by the internet and the growth of Technical Analysis led to Zak being Shares Magazine’s first Technical Editor, whilst providing content for TheStreet.co.uk and UKInvest.com. In 2001 he teamed up with Tom Winnifrith and T1PS.com to found Zaks-TA.com.

ADVFN GUIDE: 101 CHARTS FOR TRADING SUCCESS

Electronic Press Kit

TECHNICAL DETAILS

- Price: £4.11

- Format: Kindle Edition

- File Size: 10,615 KB

- Publisher: ADVFN Books

- Sold by:  Amazon Kindle Store

- Language English

- ISBN: 978-1-908756-07-7

ADVFN GUIDE: 101 CHARTS FOR TRADING SUCCESS

Electronic Press Kit

CONTACT INFORMATION

Press Department
ADVFN Books
3rd Floor, 26 Throgmorton Street,
London EC2N 2AN

Email: bookspress@advfn.com

Phone: +44 (0) 207 070 0932

ADVFN Books website: http://www.advfnbooks.com

Contact us and ask for a review copy of 101 Charts for Trading Success

ADVFN GUIDE: 101 CHARTS FOR TRADING SUCCESS

Electronic Press Kit

SAMPLE CHAPTERS

Contents

Sample 1: Introduction. Finding Opportunities

Sample 2: Charts in History. 9/11

Sample 3: Stockwatch: Born in the USA. Apple: The iPod Bull Run

Sample 4: Commodities Corner: The Start of the Supercycle in Gold. Gold 1999-2002

ADVFN GUIDE: 101 CHARTS FOR TRADING SUCCESS

Electronic Press Kit

SAMPLE CHAPTER:

CONTENTS

Introduction

Finding Opportunities

Charts in History

1. 9/11

2. The Baghdad Bounce

3. The Flash Crash

4. The Fall Of Lehman Brothers

5. The Wall Street Crash of 1929

6. The FT 30 1973-1974 The Oil Crisis

7. The 1987 Stock Market Crash

8. ERM Exit September 16th 1992

9. Bank of England Gets Its “Independence” May 6th 1997

10. The Nikkei 1990

11. The Shanghai Surprise October 2007 — Nikkei Mark II?

12. The Dot-com Bubble Bursts

13. Dot-com Bubble Case Study: ARM Holdings (ARM): Before the Bubble

14. ARM Holdings: During The Bubble

15. ARM: Ten Years After

16. FTSE 100 Death Cross December 2007

17. S&P Death Cross/Hindenberg Omen H2 2010

Major Markets: Monthly Charts

18. FTSE 100: 1985-2015?

19. Major Markets: S&P 500 From The 1970s Onwards

20. Crude (WTI) Monthly: From The 1980s

21. Gold Monthly Chart: The “Brown Bottom” And Beyond

Stock Watch: The Fall of the Giants

22. RBS Gets Shredded

23. Lloyds Banking: Getting Hitched With HBOS

Stock Watch: Born in the USA

24. Apple (AAPL): The iPod Bull Run

25. Google (GOOG): The Start of Trading

26. Citigroup (C): A Successful Bailout

Bolts from the Blue

27. British Airways Ahead Of 9/11

28. BP: The Curse Of Macondo

29. BP: Out Of Deepwater

30. De La Rue: A License To Print Funny Money

31. African Barrick Gold: As Thick As Thieves

32. Connaught Gets Caught Out

Charting Gifts: At A Glance Winners/Losers

33. Yell (YELL): A Cry For Help April 2007

34. HMV (HMV): Hoarse Master’s Voice February 2006

35. Carphone Warehouse (CPW): It Is Good To TalkTalk March 2010

36. Smith & Nephew (SN.): Everything But The Bid November 2010

37. AIG (AIG): The Greatest Gap Fill Ever?

38. Polly Peck (POLY): The Man From Del Monte Says No

Everyday Charting: Bread & Butter Set Ups/Percentage Trades

Price Trendline Breaks — Upside

39. Burberry (BRBY): Taking The Chequered Flag

Price Trendline Breaks — Downside

40. Game Group (GMG): A Christmas Collapse

RSI Trendline Breaks — Upside

41. Shire Pharma (SHP): The First Signal On M&A?

RSI Trendline Breaks — Downside

42. BAE Systems (BAE.)

Support Above Old Resistance

43. Aggreko (AGK): Technical Power Surge

Resistance Below Old Support

44. French Connection (FCCN): Falling FCUK

Bear Traps

45. Fresnillo (FRES): Multiple Minor Bear Traps

Bull Trap

46. BG (BG.): A Lot Of Bull

47. Gap Up, Buy — WPP (WPP)

48. Gap Down, Sell — Sage (SGE)

49. Gap Fills — Aviva

50. The Exhaustion Gap — Royal Dutch Shell (RDSB)

Charting Challenges: The Falklands Fad Factor

51. Desire Petroleum (DES): Here A Gap, There A Gap

52. Rockhopper: Jumpin’ Jumpin’

53. A Year In The Life: Autonomy — Nice Tech Stock, Shame About The Financial PR 2010

54. A Year In The Life: PartyGaming — Bwinning And Losing

IPO - ology

55. Betfair (BET): A Sell At The Open

56. Ocado (OCDO): A Profits Free Delivery

57. Supergroup (SGP): The Trendy Uptrend

58. Essar Energy (ESSR): Riding The Rollercoaster

Profit Warnings

59. Marks & Spencer (MKS): Sales Slump Warning July 2nd 2008

60. Rentokil (RTO): The Fourth Profits Warning July 25th 2008

61. Robert Wiseman Dairies (RWD): The Sharpest Profits Warning In The West September 16th 2010

62. ICAP (IAP): Follow The Leader February 5th 2010

Bid Rumours: The Chinese Whispers Game

63. Rio Tinto (RIO): Billiton To Bid? 12th May 2007

64. ARM Holdings (ARM): Apple To Bid? June 10th 2010

65. Invensys (ISYS): Bid Rumours — Siemens/GE? September 10th 2010

66. Home Retail Group (HOME): Walmart To Bid April 12th 2010

Bid Situations

67. BSkyB/News Corp: Cable TV

68. Cadbury: Chocs Away

69. Dana Petroleum (DNX): A High Octane Takeover

70. Wellstream (WSM): Going With The Flow

Commodities Corner: The Start of the Supercycle in Gold

71. Gold 1999-2002

72. The Dawn of the Gold Supercycle: Rio Tinto

73. The Dawn of the Gold Supercycle: BHP Billiton (BLT)

The Peak Oil Spike

74. Crude Oil

75. Peak Oil Stocks: Cairn Energy (CNE)

76. Peak Oil Stocks: Tullow Oil (TLW)

Long-distance Stock Charting: Stretching the Timeframes

77. Barclays (BARC): 2000-2010 Weekly Chart

78. BT Group (BT.A): 2000-2010 Weekly Chart

79. Prudential (PRU): 2000-2010 Weekly Chart

80. Vodafone (VOD): 2000-2010 Weekly Chart

Penny Stocks Corner: Jolly Hockey Sticks

81. Niche Group (NGP): Finding Its Place

82. Beowulf Mining (BEM): Who’s Afraid of the Bull Run?

101 Lessons Learnt

ADVFN GUIDE: 101 CHARTS FOR TRADING SUCCESS

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SAMPLE CHAPTER:

INTRODUCTION

What attracted me to charting as a method to success on the stock market nearly 25 years ago was a combination of various factors specific to the 1980s. These included privatisations, yuppies and the song “Money for Nothing.” The obsession remained despite things we take for granted today, a lack of a cheap PC, a cheap real-time data feed, and decent content on the Internet. But most of all it was laziness. Charting promised to deliver an at-a-glance way of predicting price action and hence gaining riches. Writing my first book notwithstanding, this lazy characteristic has governed my life, and is expected to do so for what it is left of it. It certainly explains why I only spent six weeks studying economics at the LSE. Although unlike Mick Jagger, doing so has not so far been the springboard to rock 'n' roll immortality.

Executed correctly, charting should be a way of delivering high probability percentage trades/investments that remove the task of having to trawl through company accounts, financial ratios, and interviewing megalomaniac CEOs. This form of technical analysis (as opposed to the fundamental variety I have just described) is at best the only legal form of insider-trading. Indeed, there is nothing quite so satisfying as recommending a stock days before a takeover bid on the basis of its charting configuration alone.

In 101 Charts years of laziness will be suspended in order to deliver an exhaustive guide to making money via identifying price patterns, trends and signals.

101 Charts is a tricks of the trade publication that will hopefully explain some of the most complex set ups in the market as simply as possible and with no mention of logarithms or algebra, or other techno babble that very often plague “expert” investment/trading magazines. The combination of the analysis here is of trend lines, chart patterns, RSI and as much common sense as can be mustered.

It is inevitable that some of the examples as they are skewed toward the present (and the most difficult market conditions) will date well and some embarrassingly badly. For the latter group we have stop losses and more lessons to learn. But the prediction game is one of nothing ventured, nothing gained, and at least to my mind a sitting on the fence opinion is the worst thing that can be offered in the financial markets.

Oh, and the big reason for reading this book, the three T’s. Timing, Timing, Timing. I don’t care if you are Warren Buffet and have never looked at a chart in your life. TA is all about timing and so cannot be ignored.

Even before I begin I would like to address a potential criticism of the format of this book. Hindsight is of course a wonderful thing and therefore it is easy to look smart after an event — say the fall of Lehman Brothers — and boast that it was an obvious eventuality. It was not, that is why it was such a major event and still sends shivers down Wall Street and beyond. But the theory with 101 Charts is to dissect the build-up to such an event and glean the warning signs for collapses, and the first glimmers in the dark before the big rallies. I would suggest that if you cannot interpret a past event in a constructive manner, when trying to anticipate what will happen at the cold, hard right edge of a chart you will not stand a chance of success.

FINDING OPPORTUNITIES

As well as the hindsight factor, there is the issue of having a lookout system in place. Only after the event is it possible to filter the cream of the crop in terms of the best set ups over a given period. 101 Charts is a conglomeration of the greatest charting hits over recent generations, as well as the best of the bunch in the recent past. While there is a risk of some of the set ups going stale, there is a skew towards not only the most difficult/surprise moves of the past, but also the most troublesome situations of the recent past. This is on the basis of my view that the markets are like viruses that constantly evolve to be more and more deadly. The assumption in 2011 is that if a trader who is able to make a decent living now went back to say, 1990 he or she would be the George Soros or Warren Buffett of that time if only on the basis that the massive growth in the amount of money moving around the world and the speeding up of this movement via the internet means that volatility is greater than ever.

If you agree with the idea that the markets move in the direction of greatest collective loss, then the search for a secure methodology is something that every trader should be interested in attaining and hopefully this book will point them in the correct direction.

A point of contention that has to arise in terms of providing examples of charting situations of interest is the way that every day on the stock market there are thousands of set ups and let downs waiting to be traded or avoided. How do you find them? Given the way that my day job is writing on Zaks-TA.com where there is a daily stream of stocks in the news, major markets, and highlights from different sectors I am forced to be eagle eyed at all times. But there are limits. Even the most ardent fan of stocks is probably only going to be familiar with the main indices commodities and say 20 or 30 leading stocks. Out of these at any given time it could be the case that only a handful or even less are presenting compelling opportunities.

Therefore we need technology to provide a helping hand. Particularly useful to me is looking at any financial website where the top ten percentage winners and losers are tabled during the day with ADVFN.com leading the way in the online offering. Indeed, stock screening that really makes the difference, with my preferred methods in terms of software being to use Sharescope (www.sharescope.com) for finding the biggest winners and losers of the recent past and Updata’s (www.updata.co.uk). With Sharescope’s and Updata’s TraderPro software (I have both) you have the ability to identify moving average golden/dead crosses, chart gaps and bearish divergence. Concentrating on mining for just these technical configurations should at least ensure that you are not overwhelmed with potential trading opportunities and can then distil down the best available.

A point that may assure some is the way that of the examples included that were spotted at the time they actually tended to be the more difficult ones rather than the easiest to identify. It could very well be the case that applying the approach of 101 Charts it is the simplest set ups that you benefit from. Ironically, it is the simplest signals — golden/dead crosses/support or resistance breaks that can be the most difficult to follow as they tend to occur at times when sentiment or logic requires a counter intuitive suspension of belief.

ADVFN GUIDE: 101 CHARTS FOR TRADING SUCCESS

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SAMPLE CHAPTER:

CHARTS IN HISTORY

1. 9/11

A key feature of charting is that trading decisions are made solely on the basis of the price patterns and trends you see in front of you. Ideally, you are taking an objective and dispassionate view on the stock or market that is being analysed, something which even at the best of times can be a very difficult thing to do. There is no greater example of this than the immediate aftermath of the September 11th, 2001 attacks.

For those of my parents’ generation, the biggest shared single event of their lives was probably the assassination of President Kennedy. But for those who are now 60 and under, it is 9/11 of which we remember where we were and what we were doing. A decade of geopolitical deterioration has ensued, with little apparent interest in addressing the issues involved. It would appear that the human need to have an enemy is still very much in place, largely because there is money in it, it provides a sense of cultural identity and perhaps most importantly, it is a great booster for political leaders. Of course, alcohol, drugs, junk food and speeding motorists continue to carry a greater mortality than terrorism, or the war against it. But none of these enemies have quite the same cross cultural frisson of opportunity, except maybe the tax raising battle over alleged climate change.

The Set Up

As can be seen from the daily chart of the FTSE 100 for 2001 we were looking at a falling blue chip index going into September, as the unwinding of the dot-com bubble continued for the UK stock market. The seeds of the autumn decline were sown in April/May as bearish divergence was shown in the RSI window, echoing multiple failures at the 6,000 level for the UK index. From August 16th it was possible to draw the line that capped this market going into 9/11, with September 6th witnessing an end of day close below post May 5,200 support. At this point we had a shorting opportunity on the basis of the June resistance line, falling near term moving averages, and the loss of four month support. The floor of the March price channel at 4,250 delivered a one to two month target for the FTSE 100.

Outcome

Conspiracy theorists could argue that equity markets — or at least some participants had an inkling that a terrorist attack was in the offing. But the picture is clouded by the way we were already in bear mode. Usually there is a way of telling whether the market has been genuinely surprised or not. A bolt from the blue shock event (BP (BP.)/Macondo 2010) will deliver an initial low on the day in question — with that support broken as those caught on the hop head for the exit on any initial dead cat bounce. But once these sellers are out — and there is “no one” left to sell, there can very often be a sharp reaction to the upside.

The aftermath of 9/11 essentially followed the bolt from the blue pattern with the FTSE 100 going into a continuation bear flag above 4,700 before a new wave of sellers came in. They fulfilled the March support line projection target of 4,250. But there was more. The September 21st low of 4,219 was over 400 points lower than the September 11th low. However, the RSI on the 11th was 19 and on the 21st 25. This was an instance of massive bullish divergence, a clear buy signal and one that I called at the time. A point to note is that because the Dow was closed between the 10th and the 17th there was no such technical set up, hence the appearance of the FTSE 100 for 9/11.

Conclusion:

The events of 9/11 coincided with a bear phase for equity markets, something which most likely meant that the selling climax which followed caused a sharper rebound in stocks than might have been expected. Nevertheless, a 30% decline from the best levels of 2000 limited the downside.

ADVFN GUIDE: 101 CHARTS FOR TRADING SUCCESS

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SAMPLE CHAPTER:

STOCK WATCH: BORN IN THE USA

Although I have always been more focused towards U.K. stocks, it has to be admitted that especially in the technology area the likes of Apple (AAPL) and Google (GOOG) are where the fundamental and charting excitement really lies. The financial area is no less exciting with Lehman Brothers having already appeared in 101 Charts and Citigroup (C) and AIG among those in the frame in the wake of the economic crisis from 2007 onwards. It therefore seems appropriate to check out some of the heroes at key points in their progress.

24. Apple (AAPL): The iPod Bull Run

Shares in Apple at the end of 2010 are now well over $300. In early 2003 — not that long ago — Apple was trading below $10 and a respectable maker of pretty looking PCs which did not crash as much as those using the Windows operating system from Microsoft. But it was the iPod that delivered the fundamental change at the end of 2001 with the effect starting to kick in from the start of the Baghdad Bounce in March 2003.

The Set Up

In the late 1990s you could have picked up Apple shares for around four dollars, with a peak in the wake of the dot-com bubble over $30. Three years later and the shares were back to the $7 zone. As is usually the case that before every major move there is a countermove offered in order to shake off those who correctly anticipated it, and more importantly to ensure no one is in there by accident. In the case of Apple this came via a bear trap below $6.50 in April. In fact, what is incredible here is how many classic technical signals are at play in the wake of the bear trap.

Outcome

The first buy signal here at Apple is that we were treated to bullish divergence in the RSI window between the $6.46 and $6.36 lows in mid-April. Those who were not tempted to bottom fish could have then waited for the black 200 day moving average then under $7.40 to be broken. This was not only broken on May 5th, but there was a gap above the 200 day line. Such gaps are one of the strongest buy signals in the TA armoury, and considering that this turnaround at Apple was a once in a lifetime event, lives up to this tag. As if this was not enough May 15th delivered a golden cross between the 50 and 200 day moving averages, and then one of the most robust of technical buy signals. This was followed by a higher low above both the 50 and 200 day lines, acting as a final confirmation that a sustained move to the upside was likely to follow. Taking this situation forward there was a bounce off the 200 day line in December 2003 just below $10, a continuation signal. There followed two unfilled gaps in 2004, another 200 day bounce in March 2006, with the sell signal finally coming in May 2006 at $63 when the 200 day line was finally lost. All this was not too bad for such simple analysis.

Payoff

I could go on with the Apple story, which is a great one technically, in protest at the lack of flash support for iPhones and iPads which is a disaster for anyone wanting to look at Beatles.com and most (currently) financial trading websites. Nevertheless, the multiple buy signals seen in spring 2003 for Apple were transformational, and have been repeated on many occasions before and since. Single digit penny shares in oil & gas explorers and precious metals groups are where you might expect to see an Apple style turnaround at the moment.

ADVFN GUIDE: 101 CHARTS FOR TRADING SUCCESS

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SAMPLE CHAPTER:

COMMODITIES CORNER: THE START OF THE SUPERCYCLE IN GOLD

71. Gold 1999-2002

Although it may appear that cover in commodities is not strictly on topic as far as a guide to stock market success is concerned, I would argue that one of the best ways of trading alterations in the likes of gold and oil is via exploration companies in the respective areas. For instance, the gearing effect can really kick in as far as the relationship between the underlying commodity and stocks in the sector. If Gold rallies from $1,000 an ounce to $1,400 an ounce, a rise of 40%, a basket of Gold stocks might double or triple over this period. Of course, a similar fall in Gold would see stocks in the relevant sector decline by a half or a third — so you need to get your timing right as the magical effect of operational gearing is a two edged sword.

The Set Up

The charting seeds of the great bull run in Gold that we are currently experiencing were sown right at the end of the millennium in 1999. While it may be wrong to suggest that this was an easy situation to get in on at the ground floor, it was not obvious enough to the then Chancellor of the Exchequer Gordon Brown to prevent him selling the bulk of the UK’s gold reserves over the next three years. What we see on a daily chart of the metal are lower price lows was the metal starting in June 1999 contrasting sharply with higher highs in the RSI window — an extended bullish divergence oscillator buy signal.

This would normally be a reason to get involved, if only on a short-term basis. However, the break above the 50 day moving average and subsequently the 200 day moving average then at $274 suggested that we should maintain a keen interest in this market. This is over and above the fact that there was a near vertical move for Gold in September and October. While there was still some months and consolidation either side of the time of the 200 day moving average to endure, the technical splash of early autumn 1999 really did smack of the smart money getting into position.

Outcome

It is a sad fact of the financial markets that most government intervention to support or defend levels delays psychological or otherwise, or work betting against. George Soros illustrated this in shorting Sterling on a massive basis as the UK attempted to remain in the ERM in 1992, and Japan attempting to weaken the yen in order to defend the cause of its exporters remains an ongoing cue to buy the Japanese currency on dips. But the big prize goes to Gordon Brown in providing such a brilliant, unwitting buy signal, albeit one that was based on the hubris of the time that inflation was dead along with the boom/bust cycles of the economy.

Press Department
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3rd Floor, 26 Throgmorton Street,
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Email: bookspress@advfn.com

Phone: +44 (0) 207 070 0932

ADVFN Books website: http://www.advfnbooks.com

Contact us and ask for a review copy of 101 Charts for Trading Success