Mastering the Stock Market: High Probability Market Timing & Stock Selection Tools
By John L. Person
John Wiley & Sons, Inc.
$90, 292 pages
John Person believes the key to investing is selecting the right stocks in the right sectors at the right time — market timing. To make his trading decisions, he uses corroborating noncorrelated tools, such as sector analysis, seasonal trend analysis, contrarian indicators, price patterns and momentum indicators.
He notes that it is critical to first look at the stock market’s health before putting any dollars at risk. Moreover, it is important to look at the market internals of the major averages for confirmation of trend and relative strength. He suggests tracking daily and weekly advance-decline data for each index in conjunction with trend lines analysis to look for divergences.
Person also urges traders to determine if sectors and stocks have any consistent seasonal trends at particular times of the year, and then to take advantage of that information, if other confirming indicators line up.
Person’s spends much time on favorite tool — pivot point analysis. He has done considerable research on this subject and presents his case for its use. He has found that this approach can uncover specific price levels to enter a trade and aid in filtering out higher probability trade setups by lowering risk and setting profit targets.
One of the most interesting and timely chapters focuses on using scanning software to look for specific trade setups. He shows how to scan for doji’s, momentum, and new daily and weekly signals. The current software allows traders to scan for their own criteria to locate the best trades that meet their criteria. Scanning in real-time likely will become even a more popular method of selecting suitable trades as it develops further and becomes even easier to use.
Person writes in a clear, straightforward manner, and presents charting examples to illustrate his key points. This book’s in-depth explanations will be particularly useful to new traders who are looking for a well laid out, step-by-step approach to technical trading. Moreover, veteran traders are offered trading nuggets and ideas that can help improve their bottom lines.
Leslie N. Masonson is a day trader and the author of “Buy Don’t Hold” and “All About Market Timing.” He can be reached at lesmasonson@yahoo.com.