Introduction

I had no idea when Technical Analysis of the Futures Markets was published in 1986 that it would create such an impact on the industry. It has been referred to by many in the field as the“Bible”of technical analysis. The Market Technicians Association uses it as a primary source in their testing process for the Chartered Market Technician program. The Federal Reserve has cited it in research studies that examine the value of the technical approach. In addition, it has been translated into eight foreign languages. I was also unprepared for the long shelf life of the book. It continues to sell as many copies ten years after it was published as it did in the first couple of years.

It became clear, however, that a lot of new material had been added to the field of technical analysis in the past decade. I added some of it myself. My second book, Intermarket Technical Analysis (Wiley, 1991), helped create that new branch of technical analysis, which is widely used today. Old techniques like Japanese candlestick charting and newer ones like Market Profile have become part of the technical landscape. Clearly, this new work needed to be included in any book that attempted to present a comprehensive picture of technical analysis. The focus of my work changed as well.

While my main interest ten years ago was in the futures markets, my recent work has dealt more with the stock market. That also brought me full circle, since I began my career as a stock analyst thirty years ago. That was also one of the side effects of my being the technical analyst for CNBC-TV for seven years. That focus on what the general public was doing also led to my third book, The Visual Investor (Wiley, 1996). That book focused on the use of technical tools for market sectors, primarily through mutual funds, which have become extremely popular in the 1990s.

Many of the technical indicators that I wrote about ten years ago, which had been used primarily in the futures markets, have been incorporated into stock market work. It was time to show how that was being done. Finally, like any field or discipline, writers also evolve. Some things that seemed very important to me ten years ago aren't as important today. As my work has evolved into a broader application of technical principles to all financial markets, it seemed only right that any revision of that earlier work should reflect that evolution.

I've tried to retain the structure of the original book. Therefore, many of the original chapters remain. However, they have been revised with new material and updated with new graphics. Since the principles of technical analysis are universal, it wasn't that difficult to broaden the focus to include all financial markets. Since the original focus was on futures, however, a lot of stock market material has been added.

Three new chapters have been added. The two previous chapters on point and figure charting (Chapters 11and 12 ) have been merged into one. A new Chapter 12on candlestick charting has been inserted. Two additional chapters have also been added at the end of the book. Chapter 17is an introduction to my work on intermarket analysis. Chapter 18deals with stock market indicators. We've replaced the previous appendices with new ones. Market Profile is introduced in Appendix B. The other appendices show some of the more advanced technical indicators and explain how to build a technical trading system. There's also a glossary.

I approached this revision with some trepidation. I wasn't sure redoing a book considered a“classic”was such a good idea. I hope I've succeeded in making it even better. I approached this work from the perspective of a more seasoned and mature writer and analyst. And, throughout the book, I tried to show the respect I have always had for the discipline of technical analysis and for the many talented analysts who practice it. The success of their work, as well as their dedication to this field, has always been a source of comfort and inspiration to me. I only hope I did justice to it and to them.

John Murphy