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  Wednesday July 23rd, 2014    

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The Alchemist (05/23/2007)
By Al Thomas
When the market talks - listen

Every investor wants to know which way the market is moving - up or down.

No on really knows what tomorrow will bring much less those who are guessing at next month or next year. Brokers and analysts (that's pronounced with a broad ‘a') come up with complicated formulas.

Economist who know less than all the other experts have those wonderful long Greek formulas. Only another economist will begin to comprehend them and will tell his compatriot where he is wrong.

All fundamental analysts know all about everything except which way the market will go.

Technical analysts are somewhat more correct and seem to come closer to a correct guess. The really good analysts (and there aren't that many good ones) listen to the market. They read their charts and also have some pretty complicated formulas to try to decipher market direction. Most investors and unfortunately too many brokers have no clue on how to read the basics.

The basics for any technical study are charts, MACDs (moving average convergence divergence), stochastics, trend lines, RSI (Relative Strength Index), oscillators, contrarianism, moving averages and many more. Anyone can find all the education he needs by typing in the technical term on Google.com. That is the beginning. It takes time and study to learn how to use these tools.

When you become a master with these technical methods (and you never will) you will only be right about 80% of the time if you are good. Today there are many short cuts to learning - books, online trading tools and personal instruction. Do not buy $3,000 software programs that have 30 parameters until the basics are mastered.

The most important rule is never taking a big loss. When wrong get out immediately. An exit strategy is more important than an entry method.

Using a common sense approach with a few fundamentals and a backup of technical tools it is possible to make money in the stock market. When the news is all bad as it has been in March 2007, yet the market does not break, Mr. Market is telling anyone who wants to listen that it wants to go up. Those who understand some of the technical tools mentioned above can easily see confirmations.

Technicals are the voice of the market. Most don't hear it and few who do receive a garbled message. Finding a broker or financial planner who works with technical analysis will put the investor miles ahead and keep him from losing money during the next bear market - and there will be one. A really smart broker or financial planner will have their clients in cash while the market crashes. Cash is a position. There are few who understand how to use bear funds to make huge profits while Mr. Market speaks in bear tongues.

The market speaks to everyone every day. Those who learn the language profit nicely.

Al Thomas' best selling book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter and receive his market letter at www.mutualfundmagic.com to discover why he's the man that Wall Street does not want you to know. Copyright 2007 All rights reserved

 

 

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