The Visual Investor: How to Spot Market Trends [Hardcover]

John J. Murphy (Author)

Book Description

Publication Date: October 18, 1996

Praise for THE VISUAL INVESTOR

"John Murphy is one of a rare breed: an expert technical analyst who can actually write. This combination of skills helped make his Technical Analysis of the Futures Markets a classic. Now John has written the perfect overview aimed specifically at the stock investor who wants to learn technical analysis. . . . The Visual Investor offers a complete course in technical analysis, lucid enough to be accessible to the novice, yet thorough enough to range well beyond the basics. . . . [It] is must reading for the stock and mutual fund investor who wants to start incorporating technical analysis as a decision-making tool."
--Jack D. Schwager Author, The New Market Wizards and Technical Analysis

"The challenge of technical analysis is that it can be so technical. Now John Murphy, through The Visual Investor, explains everything for the common investor who wants to use technical analysis but doesn't want an overly complicated presentation."
--Thom Hartle Editor, Technical Analysis of Stocks & Commodities magazine

"As my research group relies heavily on market analysis for its research product, we get numerous inquiries from professional investors on where to find books on this topic. John Murphy's The Visual Investor is my first recommendation to the novice investor as well as the investment professional. . . . [It] is the simplest and most helpful first look at markets that I have seen."
--John Kozey III, CFA, CMT Equity Research Director, Bridge Trading Company

Editorial Reviews

From the Publisher

Now in a book aimed at the huge and growing market of individual investors in stocks, bonds, and mutual funds, John introduces readers to the art and science of visual analysis. Clearly and simply he explains the principles of technical analysis in terms that nonprofessionals can understand and shows individual investors how to track the ups and downs of stock prices by visually comparing charts--instead of relying upon abstruse mathematical formulas and rarefied technical concepts. He also introduces readers to his widely acclaimed Intermarket Analysis--a proven analytical approach based on understanding the impact that all the different markets have on each other and what that means to investors. Features dozens of easy-to-read charts and graphs with step-by-step instructions on how to understand and interpret them. Includes leading software demo disks.

From the Inside Flap

"They say a picture is worth a thousand words. Maybe they should have said a thousand dollars. After all, we're talking here about using pictures to make money."
—from The Visual Investor

As the host of CNBC's popular Tech Talk with John Murphy and the author of two landmark books, Technical Analysis of the Futures Markets and Intermarket Technical Analysis, John J. Murphy is one of the leading names in technical analysis today. He now brings his expertise and insight to The Visual Investor, a comprehensive and thoroughly accessible guide to visual analysis. Highlighting its essential components, Murphy takes you through the ins and outs of reading price and volume charts, "pictures" that can help you make sensible investment decisions—and a healthy profit. Special emphasis is placed on sector and global investing through mutual funds. Murphy shows you how to chart and analyze the mutual funds themselves.

Visual analysis enables an investor to analyze a stock or industry group without complicated mathematical formulas and technical concepts. Instead, it tells you—simply and quickly—whether or not the fundamentals of a particular stock are bullish or bearish from the direction in which the price is moving. As Murphy points out, the key to visual analysis is being able to discern whether this stock price is going up or down, not why it is behaving the way it is: "Knowing the reasons behind a stock's movement are interesting . . . [but] all that really matters is a picture, a simple line on a chart."

The Visual Investor brings the complexities of technical analysis into sharp focus, enabling you to make sense of these lines. Providing an in-depth overview, Murphy covers all the fundamentals, from chart types and market indicators to sector analysis and global investing. With actual examples and easy-to-read charts, you'll learn to:

• Spot significant support and resistance levels
• Understand the role volume plays in confirming price action
• Use moving averages to help keep track of trends
• Discern the difference between markets that are trending and those that aren't
• Determine whether a market is overbought or oversold using oscillator systems

To get started on your own visual analysis, The Visual Investor contains a complete resource section that lists important publishing and educational resources, as well as software products and data vendors.

See all Editorial Reviews

Product Details

• Hardcover: 320 pages
• Publisher: Wiley; 1 edition (October 18, 1996)
• Language: English
• ISBN-10: 0471144479
• ISBN-13: 978-0471144472
• Product Dimensions: 9.1 x 6.1 x 1.3 inches
• Shipping Weight: 1.3 pounds
• Average Customer Review: 4.1 out of 5 stars  See all reviews (42 customer reviews)
• Amazon Best Sellers Rank: #511,182 in Books (See Top 100 in Books)

Customer Reviews

Most Helpful Customer Reviews

67 of 70 people found the following review helpful:

5.0 out of 5 stars a clear, thorough, well-written presentation of the subject, October 20, 1999

By 

Ruth Henriquez Lyon (Duluth, Minnesota USA) - See all my reviews
(VINE VOICE)    (REAL NAME)   

This review is from: The Visual Investor: How to Spot Market Trends (Hardcover)

This is the best work I've seen so far on technical analysis. I tried a couple of on-line tutorials, as well as a couple of books, and only ended up confused. This author assumes you know nothing and starts you out from scratch. I understand every sentence; it's also well-written enough that it's interesting. I'm now inspired to go on from here, perhaps with Nisan's Candlestick Charting and Beyond Candlesticks. I highly recommend this book.

52 of 54 people found the following review helpful:

3.0 out of 5 stars Good starter book but that's it, February 1, 2004

By 

magellan (Santa Clara, CA) - See all my reviews
(HALL OF FAME REVIEWER)    (COMMUNITY FORUM 04)    (TOP 1000 REVIEWER)   

This review is from: The Visual Investor: How to Spot Market Trends (Hardcover)

This is a good starter book for the beginner, although it will be much too basic for the intermediate or advanced trader. But if you're just starting out, the first 133 pages will give you a basic introduction to the different technical indicators and chart reading. The next half of the book deals with the application of the indicators to mutual funds and other topics. I would just read the first 133 pages, and then go on to one of the more advanced texts now that you have some background, as this book by itself isn't enough to give you a good understanding of the subject. Murphy himself has a more advanced book, and Martin Pring also, and many others. Just be advised this is really just the beginning. The book is also a bit overpriced but I will say it's probably the easiest book I've seen recently for getting your feet wet on the subject.

Perhaps the most important part of the book is Murphy's mentioning that the head and shoulders pattern was investigated by the Federal Reserve and found to be statistically significant, and supposedly now is using the indicator to time its currency interventions. However, the real use of technical analysis is not that the patterns mean anything in and of themselves, its having the experience and judgment to know which pattern applies in a given situation that makes them truly useful, and the fact the traders themselves believe in them, so to some extent they become a self-fulfilling prophecy. So the field of technical analysis is itself a combination of art and science.

And actually, the most important aspect of trading is loss control and sell discipline, and understanding position sizing relative to risk and reward, since understanding the technical indicators is actually fairly straightforward, and many charting packages will do that for you anyway, so you don't even know how to understand how they're derived. And the charting packages will generate buys and sells by whatever indicator you want, but remember, it's knowing when to apply a given indicator that's the hard part. Finally, if you're planning on starting in on trading yourself, make sure you read up on and understand what's known as "money management" thoroughly before you set out--such as proper position sizing (not risking too much money on a given trade) and not selling your losers promply--an almost universal mistake among novice traders--and even pros who should (and do) know better. Good luck and happy trading!

38 of 39 people found the following review helpful:

4.0 out of 5 stars Illustrated Technical Analysis Explained., January 25, 2001

By 

M. Karakus (CAMBRIDGE, MA USA) - See all my reviews
(REAL NAME)   

Amazon Verified Purchase

This review is from: The Visual Investor: How to Spot Market Trends (Hardcover)

John Murphy is able to explain technical analysis with illustrations. Technical analysis should be part of the decision-making process when investing for any fund, stock and/or options. This book is able to take you step by step on how to start and continue into the more complex versions of technical analysis.

Mr. Murphy starts in his first section with the basics: Trends, peaks, through, Fibonacci ratio, etc. These explanations are done with illustrations from actual stocks, not from made-up graphs.

His second section explains indicators: Chapters cover lagging and oscillating moving averages, trading envelopes and bands, measuring overbought and oversold conditions, momentum rate of change (ROC), Relative Strength Index (RSI), stochastic indicators and finally but not least the moving average convergence divergence (MACD) indicator. All the indicators mentioned are explained and demonstrated with real stock graphs.

Mr. Murphy in his final section explains "Linkage": He starts with the Market Linkages chapter where he sums up his previous book on intermarket technical analysis by explaining how the three major asset classes - commodities, bonds and stocks relate to each other. He explains how as commodity prices rise, which result in higher interest rates and lower bond prices, and vice-versa. He also talks about oil and gold prices and how they can affect the stock market, since they are related to companies directly. The interesting couple of pages I found were the indexes to watch while following the linkages of the market trends.

I most appreciated the summaries at the end of every chapter.

Overall the book is very educational and filled with helpful information to make proper decisions when selecting your next investment(s). One disappointment was the supplied CD. Mr. Murphy kept referring to the supplied software within the CD, although the CD only linked to his site. On his site you can find many (not free) software tools to help in your technical analysis.

Good stepping-stone and reference book for traders and investors.

Have fun.