Float Analysis - Powerful Technical Indicators Using Price and Volume

z  Float Analysis - Powerful Technical Indicators Using Price and Volume Float Analysis Powerful Technical Indicators Using Price and Volume TEAMFLY Team-Fly ® Founded in 1807, John Wiley & Sons is the oldest independent publishing company in the United States.With offices in North America, Europe, Australia and Asia, Wiley is globally committed to developing and marketing print and electronic products and ser- vices for our customers’ professional and personal knowledge and understanding. The Wiley Trading series features books by traders who have survived the market’s ever changing temperament and have prospered—some by reinventing systems, others by getting back to basics.Whether a novice trader, professional or somewhere in-between, these books will provide the advice and strategies needed to prosper today and well into the future. For a list of available titles, please visit our Web site at www.WileyFinance.com. A Marketplace Book Float Analysis Powerful Technical Indicators Using Price and Volume Steve Woods John Wiley & Sons, Inc. Copyright © 2002 by Steve Woods, Marketplace Books. All rights reserved. Published by John Wiley & Sons, Inc., New York. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 750-4744. Requests to the publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 605 Third Avenue, New York, NY 10158-0012, (212) 850-6011, fax (212) 850-6008, E-Mail: PERMREQ@WILEY.COM. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering professional services. If professional advice or other expert assistance is required, the services of a competent professional person should be sought. This title is also available in print as ISBN 0-471-21553-8 [print version ISBN/s—include cloth and paper ISBNs, if both are available]. Some content that appears in the print version of this book may not be available in this electronic edition. For more information about Wiley products, visit our web site at www.Wiley.com To the woman who lit up my life and convinced me that anything was possible, my wife, Martha. And to the two beautiful daughters she gave me, Catherine and Toby. “Most good ideas sparkle in simplicity.” — Estée Lauder ix Table of Contents Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .xi Introduction — W. D. Gann: The Inspiration for Float Analysis . . . . . xiii CHAPTER ONE — Watching the Float: The New Look of Price and Volume Charts and Their Relationship to a Stock’s Future Price Direction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 The Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 A Float Turnover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 The First Discovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Scenario One — The Smart Money and the Losing Money . . . . . . . 5 Scenario Two — The Yin and Yang of Float Analysis . . . . . . . . . . . . . 9 The Importance of the Discovery of Float Turnovers at Bottoms and Tops. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 In Search of a Breakout Buy Point: A Case History of Xicor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 A Simple Random Sample Experiment . . . . . . . . . . . . . . . . . . . . . . . 29 CHAPTER TWO — Ten Breakthrough Discoveries That Will Change the Way You Analyze Stock Charts . . . . . . . . . . . . 47 The Multiple Float Turnover Formation . . . . . . . . . . . . . . . . . . . . . . 49 The Bottom Formation and the Top Formation . . . . . . . . . . . . . . . . 51 The Base of Support within a Correction Formation. . . . . . . . . . . . 53 The Strong Sideways Base of Support in an Up-Trend Formation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 The Overhead Base of Support Formation . . . . . . . . . . . . . . . . . . . . 57 The Slow Extension Formation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 The Fast Extension Formation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 The Upright Flag Formation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 The Inverted Flag Formation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 The Weak Base of Support Formation . . . . . . . . . . . . . . . . . . . . . . . . 69 . z  Float Analysis - Powerful Technical Indicators Using Price and Volume Float Analysis Powerful Technical Indicators Using Price and Volume TEAMFLY. exciting and prof- itable for you as it has been for me. — Steve Woods xvIntroduction Float Analysis Powerful Technical Indicators Using Price and Volume