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Article Archive For Martin J. Pring
DownloadIdentifying And Timing With The Special K, Part 2 by Martin J. Pring
ARTICLE SYNOPSIS ...Stocks & Commodities V. 27:01 (28-35): Identifying And Timing With The Special K, Part 2 by Martin J. Pring In part 1, you were introduced to the Special K indicator and its application on the weekly and daily charts. In part 2, we will show you how Special K can be used to identify major trend reversals and for timing pro trend short-term moves. I mentioned in part 1, my favorite method of displaying the Special K uses a calculation (see sidebar) based on daily data and exclusively incorporating simple moving averages like that displayed in Figure 1. As you can see from this chart, the move...
The Special K, Part1 by Martin J. Pring
Do Price Patterns Really Work? by Martin J. Pring
ARTICLE SYNOPSIS ...Stocks & Commodities V. 22:4 (30-37): Do Price Patterns Really Work? by Martin J. Pring How far can you expect prices to go when they break out of a pattern? Here's one technique you can use to find out. Technical analysis focuses on identifying trends early on and riding them until evidence of a reversal appears. Essentially, these trends are periods in which either buyers or sellers are in command, depending on direction. Fortunately for technicians, there is usually a transitional phase or trading range separating up- and downtrends. During these trading ranges, neither side is in contro...
Momentum And Divergence by Martin J. Pring
ARTICLE SYNOPSIS ...Why Do Divergences Need To Be Confirmed By Price? Momentum And Divergence Trading momentum requires several levels of perception. Take a look at its divergence with price. by Martin J. Pring It is a fact that the term momentum is a generic one encompassing all oscillators. It is also a fact that there are many interpretive principles, most of which are common to all momentum series in one way or another. Divergence from price action is a key principle. When using momentum with the overbought/oversold concept, I assumed that the price and momentum peaked and troughed more or less simultaneo...
Relative Strength by Martin J. Pring
ARTICLE SYNOPSIS ...Relative Strength by Martin J. Pring What to short and what to buy -- you should always know the choices the market's giving you. Relative strength measures the relationship between two securities. By security, I am referring to any freely traded entity, be it a market, stock, currency, commodity, and so forth. Note that relative strength, as used here, has nothing to do with J. Welles Wilder's relative strength indicator (RSI). RSI is an indicator that measures a security's price relative to itself over a specific period and is plotted as an oscillator. Relative strength, as discussed here,...
Trading Momentum: Overbought And Oversold Levels by Martin J. Pring
ARTICLE SYNOPSIS ...This veteran trader and market analyst starts a new series, this time discussing the basics of momentum trading. Momentum measures the velocity of a price move and is a generic term that describes the oscillators plotted under the price series of many charts. The same way that the word fruit encompasses apples, oranges, grapes, bananas, and more, momentum embraces a host of individual indicators, such as rate of change, relative strength index (RSI), moving average convergence/ divergence (MACD), and stochastics, as can be seen in Figure 1. Each indicator has different attributes, but the pri...
Analyzing Trends In Momentum by Martin J. Pring
ARTICLE SYNOPSIS ...Quo Vadis? Analyzing Trends In Momentum Momentum pure and simple is fine, but how about the trend of momentum? Here's what it can tell you. by Martin J. Pring Momentum is a generic term that applies to all oscillators, and the principles of momentum interpretation can in general be applied to all oscillators in one way or another. These interpretations are susceptible to overbought/oversold conditions, divergences, and so forth. However, there is an even more useful interpretive technique that can be applied to momentum, and that is to analyze the actual trend of the oscillator. First, it i...
Get A Hold On Investing Volume Basics
ARTICLE SYNOPSIS ...How is volume used in technical analysis and what can it tell us?...
Price Patterns, Part II by Martin J.Pring
ARTICLE SYNOPSIS ...Price Patterns, Part II by Martin J.Pring This veteran market analyst takes a look at the patterns of price formation. Last time, I covered the basics of chart patterns using rectangles as an example. This time, I will expand on the subject by taking a look at several different patterns. To recap some of the major points: 1. Price patterns are clearly definable trading ranges that form on a chart. There are two types --reversal and consolidation. 2. The significance of a pattern is relative to its size; the longer it takes to complete, the more significant the formation is. 3. The minimum ...
Two-Day Price Patterns by Martin J. Pring
ARTICLE SYNOPSIS ...Two-Day Price Patterns by Martin J. Pring Coming at the end of a trend, these two-day patterns are solid signals of a reversal. Here's the last of Pring's three articles on price patterns. Two-day price pattern formations, unlike others we have discussed, take just one or two days to complete and have a relatively short-term significance. I refer to them as "one-" or "two-day" patterns, but the wording could just as easily apply to weekly or monthly bars. I have even referred to this phenomenon on intraday charts as one-or two-bar price patterns, because that is what they are. In retrospect,...
Peaks And Troughs by Martin J.Pring
ARTICLE SYNOPSIS ...Peaks And Troughs by Martin J.Pring The oldest ways of chart analysis had to work in the days before computers (B.C.).There Ős no reason they shouldnŐt work now. HereŐs a look at peaks and troughs, a classic form of chart analysis that worked B.C. and work now. I have always thought that, in general, the simplest techniques work the best. High up in this category, and perhaps the most underrated, is the concept of peak and trough analysis, a technique first brought to our attention as a tenet of Dow theory. While the theory itself has lost much of its luster in recent years, the peak and tr...
Trendline Basics by Martin Pring
ARTICLE SYNOPSIS ...Trendline Basics by Martin Pring The trend of prices is the feature that is most sought after in technical analysis, yet surprisingly simple constructs can get you right with the market. Here, veteran trader and analyst Martin Pring takes you through the basics of creating and interpreting trendlines. Trendlines are a simple but highly effective tool. In technical analysis, we assume prices move in trends, and that once begun, a trend continues. Therefore, you, as a technician, must be concerned with identifying a price reversal at an early stage and riding it until the evidence proves the t...
Using The Simple Moving Average by Martin J.Pring
ARTICLE SYNOPSIS ...Using The Simple Moving Average by Martin J.Pring Moving averages are the mainstay of technical analysis, and at the heart of moving averages is the perennially useful simple moving average. It can help smooth out random fluctuations in the financial markets, offering a better look at the trend. Technical analysts agree that prices move in trends, and that once under way, trends tend to continue. However, a quick glance at any freely traded financial market suggests that while trends do exist, there is a substantial amount of random noise that makes identifying trend reversals a challenging ...
Volume Basics by Martin J.Pring
ARTICLE SYNOPSIS ...Volume Basics by Martin J.Pring How is volume used in technical analysis and what can it tell us? Most of the indicators used in technical analysis are based on pricing data. We either use the prices themselves, a statistical manipulation of the prices with moving averages, or oscillators of some kind. Volume, though, is an independent variable and can therefore be extremely useful in confirming price action. There are many ways of using volume, such as the construction of oscillators, on-balance volume lines, and the designing of indicators using both volume and price. I will discuss some o...
Price Patterns, Part I by Martin J. Pring
ARTICLE SYNOPSIS ...Price Patterns, Part I by Martin J.Pring This veteran market analyst takes a look at the principles of price formation, one of the basics of technical analysis. In my recent articles, I have covered many basics of technical analysis, ranging from peak and trough analysis all the way to moving averages. What I haven't covered is one of the most widely used concepts of technical analysis: price patterns. This time, I'll take a look at the principles of price formations, together with some of the most common varieties. Next time, I'll examine one- and two-day patterns, because they can be extre...
Picking Out Your Trading Trend by Martin J.Pring
ARTICLE SYNOPSIS ...Pick Out Your Trading Trend by Martin J.Pring There are three kinds of trends: short, intermediate, and long term. This veteran trader and analyst explains how you can spot them and use them. Technical analysis assumes that all the knowledge, hopes, and fears of both active and inactive market participants are reflected in one thing: the price. Even if I am in a cash position, I am still influencing the price because it would be higher if my cash were invested. Thus, prices are determined by psychology. This would just be an interesting observation, except that psychology moves in trends,and...
The Pring Money Flow Indicator by Martin Pring
ARTICLE SYNOPSIS ...The Pring Money Flow Indicator by Martin Pring Interest rates often lead the stock market. Here's a technique to compare the yield on three-month commercial paper to the Standard & Poor's 500, creating an indicator for the stock market. Over the past several years, the concept of intermarket relationships has gained in popularity. The analyses for these relationships are calculated using the comparison of one series against another, a good example being gold against the dollar. It is possible to derive useful indicators that take advantage of these relationships. A key intermarket relation...
Reverse Divergences and Momentum by Martin J. Pring
ARTICLE SYNOPSIS ...An oscillator's failure to confirm the higher high or the lower low of the market is a red flag to most technical traders. Is there a message when the price diverges from the indicator? This veteran technician thinks there is. Technical analysts are constantly comparing prices and indicators to see whether they are moving in gear or if there are discrepancies. It's when discrepancies appear that an alert to a probable change in trend is given. Most traders are familiar with the concept of momentum indicators experiencing positiveandnegativedivergences with price. For instance, as you can see ...
Advance Breakdowns And Breakouts In Oscillators by Martin J. Pring
ARTICLE SYNOPSIS ...Advance Breakdowns And Breakouts In Oscillators by Martin J. Pring Oscillators have always been a popular tool for traders. Here are some guidelines from a leading market analyst on various ways to apply this widely used technique. I think of momentum as a generic term that embraces all kinds of oscillator-type indicators. Stochastics, the relative strength index (RSI), the moving average convergence/divergence (MACD) and my own KST system are all statistical variations of price data, which appear as oscillators when plotted on a graph. Some are relatively smooth, such as the stochastic ind...
Gold And The Business Cycle by Martin J. Pring
ARTICLE SYNOPSIS ...Gold And The Business Cycle by Martin J. Pring Well-known market analyst Martin Pring takes a look at the relationship between the price of gold and the business cycle. Why do major swings in the price of gold occur? Over the years, many views have been put forward as to the causes of major swings in the price of gold. The news media consistently tries to link price movements of financial markets to news events. Indeed, it seems rational that market participants make decisions based on the latest-breaking news. In the case of gold, the assumption is often made that the fear factor is at wor...
The Inflation/Deflation Phases Of The Stock Market Cycle by Martin J. Pring
ARTICLE SYNOPSIS ...The Inflation/Deflation Phases Of The Stock Market Cycle by Martin J. Pring Veteran analyst Martin J. Pring explains how the commonly known four-year stock market cycle actually contains lesser- known inflation/deflation phases, the knowledge of which would be very advantageous for asset allocation. Many stock market participants are aware of the so-called four-year stock market cycle, which encompasses primary bull and bear markets. However, it is not commonly known that each cycle can be roughly divided into an inflationary phase and a deflationary phase -- an important distinction for ass...
Internal Market Momentum by Martin J. Pring
ARTICLE SYNOPSIS ...Internal Market Momentum by Martin J. Pring Breadth momentum analysis takes momentum analysis, traditionally gleaned from price and volume, a step further by examining a particular market in closer detail. Market analyst Martin Pring delves into three categories of breadth momentum indicators in this excerpt from his new book, Martin Pring on Market Momentum. Typical momentum indicators are constructed from price or volume data related to a specific security. However, a market comprises an aggregate measure of a number of different components. A stock market, for instance, consists of a uni...
The Volume Oscillator by Martin Pring
ARTICLE SYNOPSIS ...The Volume Oscillator by Martin Pring Price and volume is important for technical analysis of markets. Here's how noted author and technician Martin Pring presents two of his favorite ways of looking at volume. Most technical indicators we deal with are derived from price data. After all, moving averages, relative strength index (RSI) and moving average convergence/divergence (MACD) as well as all the others are really techniques for manipulating the same data but in different forms. That is why it is often a good idea to also monitor some measure of volume, as volume is a variable that is...
Summed Rate Of Change (KST) by Martin J. Pring
ARTICLE SYNOPSIS ...Summed Rate Of Change (KST) by Martin J. Pring In the August Stocks & Commodities, noted technician Martin Pring presented smoothed rate of change indicators as a method to identify both the trend and reversals of trend in the markets. He pointed out that different rate of change measurements could lag important market turns due to the presence of different time cycles. Here, Pring presents his method of combining various rate of change indicators for enhanced trend and reversal of trend identification. Previously, I pointed out that price trends in financial markets are influenced by the in...
Identifying Trends With The KST Indicator by Martin J. Pring
ARTICLE SYNOPSIS ...Identifying Trends With The KST Indicator by Martin J. Pring The direction of price is influenced by different time cycles. Important market turns occur when a number of these cycles are changing direction. The KST indicator is an oscillator designed to identify market turns based on the existence of these time cycles. Here, noted author Martin Pring presents the application of different-length KSTs to identify important market moves. Last time, I introduced the KST indicator, which is an oscillator that combines several smoothed rates of change and then weights them according to their time ...
KST And Relative Strength by Martin J. Pring
ARTICLE SYNOPSIS ...KST And Relative Strength by Martin J. Pring In previous articles, technician and author Martin Pring has analyzed the KST indicator, an oscillator designed to identify market turns based on time cycles. This month, he explains how to use the KST in gauging the relative strength of stocks. In the September STOCKS & COMMODITIES, I introduced the KST, a momentum indicator constructed m a weighted summed rate of change. To recap, four different smoothed rates of change (ROC) are combined into one oscillator. This captures the under lying price movements of several different market cycles as ref...
Rate of Change by Martin J. Pring
ARTICLE SYNOPSIS ...Rate of Change by Martin J. Pring Respected and well-known technician and author Martin Pring debuts as a STOCKS & COMMODITIES author, writing about the rate of change oscillator, a simple method of figuring advances or declines in a given period. The rate of change (ROC) is perhaps the simplest form of oscillator or momentum to understand and calculate. It measures the speed of an advance or decline over a specific time span and is calculated by dividing today's level by a level n periods ago and multiplying the result by 100. For example, an annualized (or 12-month) ROC is calculated by di...
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