In This Issue
See How Simplicity Has Sharpened John Murphy's Skills
Reports and Expiration Notices
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by Jim Wyckoff
"My work has gotten better due to simplifying my approach," John J. Murphy, the veteran technical analyst, author and CNBC resident technical analyst, told a group of equities and futures traders attending the Technical Analysis Group (TAG) XVIII trading conference sponsored by Dow Jones Telerate in New Orleans.
Murphy said he relies heavily on five or six "useful" technical indicators, including relative strength indicators, trendlines, moving averages, Bollinger bands, classic chart patterns such as triangles and double tops, and Fibonacci retracement levels.
"You must trade a combination of technical signals, not just one" indicator, said Murphy. He said that many times he'll set up a "good" column and a "bad" column regarding technical studies. If the "good" column has the overwhelming evidence supporting a selected trade, Murphy will enter the trade. But if the evidence supporting a trade is not strong enough, he'll bypass the trade.
Murphy correctly called the topping of the U.S. semiconductor stock index (SOX) during mid-summer (of the year this story was written). His reasoning was plain and simple: the SOX uptrend line was broken, followed by a double-top formation. "The first sign of a top is breaking of an uptrend line," he said.
On moving averages for individual stocks, Murphy likes to use the 50-, 100-, and 200-day moving averages. If the 200-day moving average on an individual stock is broken on the downside, "big trouble" is in store for that stock. Also for stock sectors, he said if a 50-day moving average breaks down, "that sector is in trouble."
Charting a stock market sector divided by the S&P 500 is a favorite method the veteran technician uses to determine if a given sector is underperforming the broad market. (Examples: SOX index divided by S&P 500 index, or NASDAQ index divided by the S&P 500 index.)
Another good technical indicator is the Moving Average Convergence Divergence (MACD), said Murphy. The MACD uses exponential moving averages, as opposed to the simple moving averages used with an oscillator. Gerald Appel is credited with developing the study.
Longer-term technical signals are more powerful than shorter-term signals, said Murphy. "Longer-term charts give you the value of perspective," he said.
Many traders consider Murphy's book, "Technical Analysis of the Futures Markets" to be the bible of technical analysis. Murphy heads his own consulting firm, based in Oradell, N.J.
Jim has an excellent daily newsletter where he reviews different markets, alerts you for potential trades and much more. Included is his great bi-weekly newsletter with charts and a little longer term outlook. We recommend checking out his website, educational CDROM, and services at Jim Wyckoff
Disclaimer:
Trading commodity futures and options involves substantial risk of loss. The recommendations contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results. This is not a solicitation of any order to buy or sell, but a current futures market view provided by Cannon Trading Inc. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgment in trading!
Source: Moore Research Center, Inc.
| Date | Reports | Expiration & Notice Dates |
|---|---|---|
| 04/26 Thu |
7:30 AM CDT - USDA Weekly Export Sales
7:30 AM CDT - Initial Claims-Weekly 9:00 AM CDT - Help-Wanted Index(Mar) 9:30 AM CDT - EIA Gas Storage 3:30 PM CDT - Money Supply |
LT: May Natural Gas Options(NYM)
Apr Feeder Cattle(CME) Apr Feeder Cattle Options(CME) Apr Gold(CMX) Apr Silver(CMX) Apr Platinum(NYM) Apr Palladium(NYM) |
| 04/27 Fri |
7:30 AM CDT - GDP-Adv(Q1) 7:30 AM CDT - Chain Deflator-Adv(Q1) 7:30 AM CDT - Employment Cost Index(Q1) 9:00 AM CDT - Michigan Sentiment(Apr) |
FN: May Natural Gas(NYM)
|
| 04/30 Mon |
7:30 AM CDT - Personal Income & Spending(Mar)
7:30 AM CDT - Core PCE Inflation(Mar) 8:45 AM CDT - Chicago PMI(Apr) 9:00 AM CDT - Construction Spending(Mar) |
FN: May Wheat(CBT)
May Oats(CBT) May Soybeans(CBT) May Soy Meal & Soy Oil(CBT) May Corn(CBT) May Rough Rice(CBT) May Gold(CMX) May Silver(CMX) May Copper(CMX) May Platinum(NYM) May Palladium(NYM) LT: Apr Fed Funds(CBT) Apr Live Cattle(CME) May Sugar(NYBOT) May Heating Oil(NYM) May RB Unleaded Gas(NYM) May Lumber Options(CME) |
| 05/01 Tue |
9:00 AM CDT - Pending Home Sales(Mar)
9:00 AM CDT - ISM Index(Apr) 4:00 PM CDT - Auto & Truck Sales(Apr) |
FN: May Orange Juice(NYBOT)
May Sugar(NYBOT) |
| 05/02 Wed |
9:00 AM CDT - Factory Orders(Mar)
9:30 AM CDT - API & DOE Energy Stats |
|
| 05/03 Thu |
7:30 AM CDT - Productivity-Prel
7:30 AM CDT - USDA Weekly Export Sales 7:30 AM CDT - Initial Claims-Weekly 9:00 AM CDT - ISM Services(Apr) 9:30 AM CDT - EIA Gas Storage 3:30 PM CDT - Money Supply |
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* Please note that the information contained in this letter is intended for clients, prospective clients, and audiences who have a basic understanding, familiarity, and interest in the futures markets.
** The material contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results.
*** This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgment in trading!