dors_z02bindex.qxd 1/31/07 4:19 PM Page 375 INDEX Accommodation, markets, Bar charts (versus Point and 309–310 Figure method), 11, 25, 42, 61 Accumulation, 42, 65, 68, 330 Barclays Global Fund Advisors, Advance-Decline Line, 236–238 299, 353 Alcoa (AA), 71, 132–133 Barron’s Weekly, 253 Advanced Micro Devices (AMD), Basketball analogy, 110 profits/probabilities, 59 American Eagle Outfitters, 156 Bearish Catapult formation, American Funds Growth 73–79 (AGTHX), 165 Bearish Resistance Line, 41–42, American Funds New Economy 46–47, 101, 330–331, 340 (ANEFX), 318–319 examples, 126, 136, 307 American International Group Exchange Traded Funds and, (AIG), Dow Jones, 347, 349, 284–285 353 Bearish Signal, 69–70, 81 American Stock Exchange Reversed, 58, 93–94 (AMEX), 299 Bearish Support Line, 41, 45, American Tobacco (BTI), 174 47–48 Apollo Group (APOL), 121 Beazer Homes (BZH), 116 Apple Computer (AAPL), 26, 49, Belief/confidence, 5, 10 88, 124–125 Bell curve, 190 Archer Daniels Midland (ADM), examples (Bullish Percent), 172–173 263–274 Ask Jeeves Inc. (ASKJ), 218 normal distribution, 239 Asset class, 156–159, 350–356 overbought (three standard AT&T (T), 7, 113–115, 146–147, deviations to right), 153, 159COPYRIGHTED MATERIAL239–240, 262–263, 266 Auto parts (AUTO) sector, 170 oversold (three standard Average Weekly Distribution, deviations to left), 239–240, 238–242 258, 262–264, 266–267 regression to mean and, Back testing, 96, 279, 316 238–242 Ballistics (price objectives Sector(s), 262–267 determination), 48–49, 51 standard deviations (six), Bank(s), 169 239–240 375 dors_z02bindex.qxd 1/31/07 4:19 PM Page 376 376 Index Bernanke, Ben, 261 1994 (Stealth Bear Market), Biasiotto, Judd, 17–18 199–201 Big base breakout, 71, 341–342, 1998 (Indices versus Stocks), 344 201–203 Biotech Sector (IBB), 307–308 2000 (The Two-Sided Blumenthal, Earl, 90, 193 Market), 203–206 Bond(s), 102, 258, 279–291 2001 (9/11), 206–207 Bottom fishing, 47, 87, 91 2002 (No Place to Hide), Box sizes, 342–344 208–210 default/standard values, 25–27 2003 (Who Would Have moving through a level, 38, Guessed), 210–212 40–41, 50, 217, 244–245 2006, 212–217 Briggs & Stratton, 119 market indexes (no British Petroleum (BP), 154–155 correlation with), 186, Broadening Top formation, 92–93 188, 226, 363 Brokers: measure of risk (not Point and Figure method, 15, performance), 225 17, 18–19, 52, 61–62, 184 mechanics of, 191–193 relationship to investors, 5, mutual funds, 244–247 64–65, 253–254, 298, 365 Nasdaq Non-Financial Buffett, Warren, 62–63 (BPNDX), 225–227 Bull and Bear Club, 64 Nasdaq/OTC, 177, 203, Bullish Catapult formation, 217–219, 363 73–79 New York Stock Exchange Bullish Percent (most important (NYSE), 177–217, 363 indicator), 73, 253 other equity indicators, All Fixed Income funds 225–245, 247 (BPMU99), 289, 291 risk levels of, 193–194 analogy to polling audience in secondary market indicators, Millionaire quiz show, 223–247 189–191 Optionable Stock Universe bell curves using, 263–265 (BPOPTI), 225–227 bullish at the bottom and S&P 500, 225–231 bearish at the top, Sectors, 249–274 185–187 use of, versus chart of an index, Electric Utility, 256–262 189–191 Exchange Traded Funds, Bullish Resistance Line, 41, 301–302 45–46 first signal, 187–188 Bullish Shakeout formation, history/development of, 85–87 185–188 Bullish Signal, 68–69, 81 lessons from: Reversed, 94–96 1987 (The Crash), 183, Bullish Support Line, 41–47, 194–196, 236, 323 75–76, 131, 134 1990 (Kuwait Invasion), chart patterns, 80–81, 85, 101, 197–199 229, 281, 307 dors_z02bindex.qxd 1/31/07 4:19 PM Page 377 Index 377 examples of, 126, 229, 231, 285, High Pole Warning formation, 330–331 90–91 Percent Positive Trend (trading increasing success, 59–63 above), 268–271 Law of Supply and Demand and, Burlington Industries (textiles), 55–57 64–65 Long Tail Down, 87–90 Burlington Northern (railroad), Low Pole Warning formation, 65 91–92 Burlington Resources (BR), 154 pattern recognition, 97–98 BusinessWeek, 280 Quadruple Top, 72 Buy signal. See Signal(s) Quintuple Top, 72 repetition in, 57–58 Campbell’s (CPB), 174 Spread Triple Top and Bottom, Capital Appreciation, 82–85 opportunities for (Exchange Stop-Loss Points, 76, 87, Traded Funds), 353–356 100–101, 335–336 Capitalization weighted, versus Triangle formation, 79–81 equal weighted, 107, 143, Triple Bottom Sell Signal, 150, 158, 163, 302–303 72–73, 81–82 Cash Index Participation (CIP) Triple Top, 70–72, 81 unit, 297–299 Chartcraft, 217 Catapult formations (Bullish Chartist, The, 235 and Bearish), 73–79 Chase Manhattan (CMB), 145 Cavuto, Neil, 205, 265 Chevron Texaco (CVX), 154–155 Centex, 71 Cialdini, Robert B., 220 Channel, trading, 46 Cisco Systems, 7, 8, 153, 189, 205 Chart patterns, 58, 63–65 Citigroup, 101, 145, 303–304 Bearish Catapult formation, CNBC, 56, 96 77–79 Coca-Cola (KO), 71, 109, 117, Bearish Signal, 69–70 118, 141, 156, 159, 167, 168, Reversed formation, 93–94 172 Broadening Top formation, Cocoa, 324, 326, 348 92–93 Coffee, 324, 348 Bullish Catapult formation, 73, Cohen, A.W., 14, 17, 77, 82, 186, 77 193–195 Bullish Shakeout formation, and Stock Market Timing, 16 85–87 Cohen, Abbey, 184 Bullish Signal, 68–69 Colgate-Palmolive (CL), 172 Reversed formation, 94–97 Collective solution hypothesis, Catapult formation 190–191 (Bullish/Bearish), 73–79 Columbine Capital, 140 trading tactics using, 73–77 Comcast (CMCSA), 118 Diagonal Triple Top, 81–82, Commodities, 117, 324–331 92–93 as asset class, 350–356 Double Bottom/Top, 65–68, diversification, 350–352 192, 194, 238, 269 inflation, 352–353 dors_z02bindex.qxd 1/31/07 4:19 PM Page 378 378 Index Commodities (continued) Copper, 324, 329, 338 beyond trading, 346–349 versus Commodity Market, 339 compared to stocks (non- Corning (GLW), 114, 148 correlated comparison), 352 Correction/crash, markets and, Crash of 1987, 323–324 7–11, 22, 83, 118–121, evaluating opportunities in, 147–148, 254–255, 317, 323–356 321–322 examples of, 323–325, 333–334 Covered writing, 64, 300 Exchange Traded Funds Craftsman (world-class) status, (opportunity for capital 20, 255 appreciation), 353–356 Crash of 1987, 183, 194–196, 236, future contracts: 323–324 chart patterns, 331–333 Cummins Engine, 119 risk management, 333–335 spot charts, 328–329 Dalbar study, 321–322 stop-loss points, 335–336 Danaher (DHR), 112 trading, 327–328 Dell Computer Corporation trend lines, 330–331 (DELL), 112 Index Correlation Example, 349 Delta, 78, 317 market index(es), 346–349, 355 Depository Receipts weightings of, 348 (SPDRs/SPY), S&P, 226–227, Relative Strength (RS), 336–340 299, 349 support/resistance, 340–346 Diagonal Triple Top (Bullish big base breakout, 342 Signal), 81–82, 92–93 changing box size, 342–344 Distribution corresponds to a top momentum, 344–346 (resistance), 65 price objectives, 340–342 Diversification, 350–352 trading, 325–326, 346–350 Dodge & Cox Stock (DODGX) Commodity-Based Index Funds, fund, 165 355 Dominion Resources, 119 Commodity Research Bureau Dorsey, Wright, & Associates (CRB) Futures Index, (DWA): 346–347 background of, 177–182 Comprehensive Capital, 190 Dow Jones Secondary Oil Index, Computer: 154–155 performance of models versus Drug Index, 143–144 people, 292 Equal Dollar-Weighted Sector power of, 15, 48, 63, 105, 316, Indices, 169 320 Food Sector Index (DWAFOOD), technological advances with, 172 60–61, 254, 275 information available from, 366 Confidence, 5, 6, 8 International Matrix, 314–316 Consumer Reports, 105–106 Metals Non-Ferrous Index Continuous Commodity Index (DWAMETA), 132 (UV/Y), 338, 346–347 Money Management (see Contrarian view, 253, 284 Money Management) dors_z02bindex.qxd 1/31/07 4:19 PM Page 379 Index 379 Oil Service Index (DWAOILS), 80/20 Rule (Pareto’s Principle), 128–130, 155 103–104 Relative Strength Chart 80-40-60 Rule, Percent of Stocks Matrix, 169–171 above Their Own 30-Week Retail Index, 143–144 Moving Average, 236, 237 Secondary Oil Companies Electric Utility Bullish Percent, Index versus SPXEWI, 155 256–262 Sector Index, 169, 171 Emerson Electric (EMR), 123 Software Index (DWASOFT), 271 Emotional Intelligence, 356 study on sector rotation, Energy sector, 129, 153–156 251–253 Equal weighted, versus Telecom Sector Index, 146 capitalization weighted, 107, Dot-com companies, 6, 71, 205 143, 150 ,158, 163, 302–303 Double Bottom, 65–68, 192, 194, Equities, versus Fixed Income, 238, 269 290 with lower top, 69 E-Toys, 218 Double Top, 65–68, 192, 194, Euro FX, 343–345 238, 269 Exchange Traded Funds (ETFs), 6, with rising bottom, 68 216, 300–320 with support, 68 broad market indices (no Dow, Charles, 11–12, 16, 62, 65 correlation), 226 Dow Jones, 7, 62, 212, 218, 297 comparison of, 304–305 AIG Commodity Index (DJAIG), evaluation of, 301–320 347–349, 353 trend charts, 306–308 bond index(es), 279–284 examples of, 307–308 20 Bond Average, 280 fixed income, 284–285 future of, 320 Corporate Bond Index history of, 297–299 (DJCORP), 281–282 international, 159–162, index funds, 153–155, 159, 304–305, 313–317 226, 313 Overseas versus United iShares, 150–153, 303–304, States: EFA versus SPX 310–313 RS, 161 Nasdaq stocks in, 218 iShares, 40, 315–316 Relative Strength, 107 market indicators, 226–227 trading bands and, 49, 239 mutual funds, 162–164, 317–320 Drug sector, 303 opportunity for capital Duke Energy (DUK), 123 appreciation (commodities), 353–356 Eastman Kodak, 7, 112 Point and Figure Method, Economics in One Lesson, charting, 40–41 (Hazlett), 55 Relative Strength, 150–156, Economist, The 153, 160–161, 310–313 284 advanced concepts of, 313–320 Edison, Charles, 34 resources/web sites, Edison, Thomas,