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Technical Analysis, using P&F charts, of the S&P 500 Index (8/1/02):
  

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The below chart is what is called a P&F chart (point and figure chart.)

P&F charts typically display what is regarded as the most significant price movements in a recent market move.  The charts tend to accurately identify support levels and market trend lines enabling traders and investors to find out where to buy and sell securities.  If the market breaks a trend line it might suggest a reversal in market sentiment and could be a key area to make serious $$$.  

In the P&F chart below, an analysis of the S&P 500, it appears as though the market will have a difficult time breaking above 960.  One key element of the charts is time.  As the weeks pass by the red lines will continue to slant down and to the right, reaching lower levels.  Eventually the trend line will be broken but the trends shown below have been occurring since early 2000.  I am guessing that some kind of trend line will be broken when the S&P 500 gets to around 750 - 800 some time in the Fall of 2002.

                        Source: Stockcharts.com

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Book Reviews by Subject

Check out my favorite books on technical analysis:

If you are interested in learning about technical analysis pick up a copy of "the bible" amongst technical analysts.  John Murphy, the author, is a leading expert in technical analysis.

cover 

Pick up a copy of the study guide too if you really want to dive into the subject matter. 

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A great, simple introduction to technical analysis.  Not as complex as the previous books and easy to read.  Chocked full of graphs and explanations.  Written by John Murphy also.

 timely investment related book to pick up some time.  Deflation will become a more common word in the media in the next five years.  Find out what it is and how it affect you before it is too late!



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