Technical Analysis and Stock Market Profits is a seminal work in the field of technical analysis written by Richard W. Schabacker. Originally published in 1932, this book is often considered the foundational text of modern technical analysis.
The author explains that the purpose of the book is to present a rational and practical method to understand and take advantage of the predictable behavior of investors and markets. He proposes that by using historical price patterns and trends, it is possible to more accurately predict future market movements.
Schabacker introduces numerous fundamental concepts, including trendlines, chart patterns, reversal patterns, continuation patterns, and volume analysis. These concepts, although they may seem rudimentary today, were groundbreaking at the time and continue to be used widely.
The book dissects various types of charts, such as line charts, bar charts, and point and figure charts, explaining their construction and interpretation. Schabacker delves into the details of numerous chart patterns, describing how they are formed and how traders can use them to enhance their market analysis and trading decisions.
Moreover, Schabacker’s work also goes beyond pure chart analysis, touching on areas like Dow Theory, market breadth, cycles, and contrarian investing. He emphasizes the importance of price action but also underscores the role of investor psychology and sentiment in driving market trends.
Despite its age, “Technical Analysis and Stock Market Profits” remains relevant and insightful. It is hailed for its clarity and detail, and many contemporary practitioners of technical analysis continue to reference Schabacker’s work. The book is recommended for both novice and experienced traders who are interested in understanding the foundational principles of technical analysis.