Customer Reviews

Technical Analysis: Power Tools for Active Investors

5 star:		(9)
4 star:		(3)
3 star:		(3)
2 star:		(1)
1 star:		(2)

 

 

For novices interested in technical analysis, there is so much material here it might seem overwhelming. But believe me, the effort at exploration is worth it. I've been successfully applying Appel's work since 1984, and this all-encompassing treatise was like looking over his shoulder, soaking in his 30 years of wisdom on the markets.

I was especially interested in the section on the relative strength comparing the performance of the NYSE to the NASDAQ. This area of the book alone is worth the price of admission.

Professionals in the field are likely to be familiar with most concepts in the book. But over the years, I've found many misapply the use of MACD, an excellent indicator Appel invented which has become a staple in technical analysis. All would be advised to read how Appel uses his own invention.

There's something for everyone in this book, novice and professional alike. Few have contributed more to technical studies and money management than Gerald Appel. Don't just put this on your bookshelf--read it, use it and learn from it. It will make you a better investor and trader.

If you are familiar with this author's previous works you will find very little in this book which is new. He discussed the "new low" filter and the several variants of his original MACD indicator more than twenty years ago. MACD was then, and is now, a lagging indicator with dubious utility.

The research that the author cares to share with the book's purchaser is largely stale-dated or inaccurate. For example, where Appel discusses a non-original indicator, such as VIX, he states that it gives only long-term indications and that it has not yet been determined how to use this working tool for shorter-term indications. In fact, VIX is one of the better intermediate-term working tools - you can prove this for yourself! Go to stockcharts.com, run a weekly Sharp-chart of $VIX with a five week RSI. This 5 week RSI indicates bottoms in the weekly $SPX at readings in excess of 60, and tops in the $SPX at readings of 40 or below. Run a comparable chart for the $SPX and compare the weekly swing highs and lows with the 5 week RSI readings on the $VIX. You will find a quite good correlation! (Also, the weekly new low indicator can be used in the same manner to test for market bottoms - simply construct a 5 week RSI and see how well the market bottoms are pointed-out at readings in excess of 60.)

It is somewhat amazing to me how some authors repackage old stuff, which was only moderately useful when it was new, and sell it long after the point of diminishing returns has been passed. This is an OK book for someone just starting out in the markets - but I feel that there are many better ones available, such as by authors, John Murphy, Alexander Elder, and Van Tharp.

I am a mechanical trader using primarily trendline, MACD and Stochastics. That explains why I immediately picked this book up when the tagline "Inventor of MACD" on the front cover entered my eyes. Out of expectation, this book had only one (out of ten) chapter on MACD (but I did learn that the author used 6-19 and 19-39 other than 12-26 as parameters). The rest were on volume, moving average, oscillator type TA tools, plus strategies on fund selection and switching, and trading on seasonal+cyclical factors (Chapter 5 which I like the most, that he explained with solid data why the Nov-Jan period, the pre-election year etc are the best time to enter the market). As a trading book, this is relatively compleat and helpful, though I admit I am biased for my respect to the author. In short, recommended, particularly for those with certain trading experience + TA knowledge and want to acquire more for an edge.

p.s. As a VAS to you and a support to my review above, below pleaes find a summary of "Lessons I (the author) have learned during 40 years as a trader" in the last chapter.

- The news media tend to be the last to know and almost always tend to follow stock market trends rather than to lead them.
- There might be many benefits in attending lectures, meetings....but it is probably best to operate alone.
- It is best to keep your results and performance private.
- Human nature operate against good trading practices. Traders often tend to close out their strongest positions too early and maintain their weakest positions for too long.
- The name of the game is to make a good (but not unreasonable) return for your time and capital, not to feel smart.
- Dont confuse rising stock prices with being a financial genius.
- In-and-out trading will not be as profitable as well considered intermediate term trading.
- It is better to miss a profit than to take a loss.
- It is probably best not to operate at the market opening.
- Do not enter into an invested position without an exit plan
- It is much better to trade with no more capital than you can comfortably risk.
- Three consecutive successful trades makes us feel like a genius. That's when they get us.....
- Make note of some losing transactions....The stock market, at best, is a game of probabilities.
- Be free to simply stand aside until matters clarify.

IMO this book's advice can prove costly.

But why not judge for yourself? For many years the author edited an investment news letter entitled Systems and Forecasts which his son now manages. Check out Hulbert's ranking of investment news letters to see how S&F has done compared to its competitors. Significantly, neither the book nor its jacket mentions the newsletter.

The accolades of othr writers on technical analysis reminds me of Arthur Koestler's old book called The Call-Girls (highly recommended and available through Amazon)about an inbred group of Academics who spend much of their time touting each others work. In this case I believe the homage is a gesture of respect to a technical anayst no longer young.

One among manny objections I have to this book it that it barely mentions that moving average indicators (like the author's MACD)
are meant for trending markets but usually don't work in trading markets- an oversight as easy to make as it can be expensive.

I have traded for over 20 years but strictly as a hobby.

If longevity is a key to greatness, Gerald Appel has achieved it. When I got into the business in the mid-seventies, he was an admired technical analyst. His publication, Systems and Forecast, was required reading. The inventor of MACD, he has lived to see his technique used by virtually every serious investor and trader; it is included in most trading programs.

With Technical Analysis, this accomplished technician and money manager, offers a complete course in forecasting future market behaving using cyclical, trend, momentum and volume signals.

His techniques are suitable for investors of all suits - be they short-, intermediate- or long-term. Even mutual fund investors will benefit.

It is rare that a successful money manager of Appel's stature shares his secrets with the public. If you are a serious investor or trader, you can only benefit from time spent with this master and his ideas.

In my opinion, the title of this book should be "Topics in Technical Analysis". This book covers some aspects of technical anaysis and each part is very wellwritten. Especially MACD is well covered than any other book in TA. A good source for intermediate and advanced readers.

To quote Dr. Alexander Elder from the foreward:

"The only thing you need to bring to reading this book is a commitement to market work. What you need to succeed is right here, on the table in front of you. It will be curious to see how many people actually take this knowledge and work with it to become successful traders and investors."

My experience with the techniques decribed in this book confirm this assertion. From the VIX, to the Moving average trading channel, and the MACD signalling the market bottom. All of the techniques described worked flawlessly in the recent market correction in January of 2008. I guess I have to say thank you Gerald Appel for sharing the insights you have gained over 30+ years of trading. I'm not sure I would have been generous enough to do that. Why would he give away his secrets that he worked so hard to develop? To quote Dr. Elder from the Foreward again:

"I recently visited Jerry and asked why he wrote this book. He laughed, "I enjoy seeing my picture on book jackets....It feels good to get your ideas out into the world, leave a little of your imprint around. I have never lost anything by giving ideas away. If people find it useful, it makes me feel good."

Trading is hard work. This book is a very good investment but only if your willing to invest the time and effort necessary to learn it and apply it.

The content of this book is very usefull for middle to experienced traders. Gerald has a very clear approach and written information, with useful hints on Technical Analysis. He starts with a Mutual funds analysis and evaluation overview. Very useful for the ones are managing funds or are planning to do so. After it, he goes to some new Chart readings and a lot of analysis over historical stock indexes. He cover some traditional charting readings as triangle, Head and shoulders and others. He explainings about market cycles, T Formations on charts to preview end of cycles and the MACD chapter, itself, it's a mandatory read to the ones who apply MACD on their daily analysis. He presents MACD with different timeframes and reading with 2 o 3 different MACDs to initiate and finalize trades, very usefull ans interesting. In the end of each chapter, he prepared an resume of all the chapter and its hints...very nice and fast for consulting....It's a nice book for reading and consulting over the years.

Gerald uses an easy to read and casual writing style with meaningful insight into technical analysis.
He builds your confidence as you work through the book and eventually you become empowered enough to work effectively within the USA equity markets.
This book has helped me create my trading system that is producing a successful trading account currently and will allow me to make necessary trading system changes into the future.
The years of work outlined in this book along with substantial backtesting create real power tools for investors now and into the future.

Since reading George A book, I was able to fine tune my system/charts.
I trade equities, and Futures.

I use stochastics and Mcds + OBV.
I was able to fine tune the settings from the information on this book.
I added Envelops (Moving averages 21 days) - a lot better than Bollinger Bands.
This is a must book to completely research if you are serious about trading.

Thanks - George

Anthony Ferrari