Page 105 - THE MARKET WHISPERER

THE MARKET WHISPERER 10 3

A stock’s chart incorporates
all its history and points
to its future.

How to Read Millions of People’s Thoughts

The trader’s main working tool is the chart or graph. A chart’s function
is to present stock price history and indicate its future direction via
conclusions based on the past: a kind of financial crystal ball where there
is no present, and only the past exists. A nanosecond beforehand is already
the past, a second forward is the future. When deciding whether to buy
or sell a stock, we cannot be satisfied with only the current price. We
must review where that price came from and conclude which direction
it is heading. We need to investigate when sellers stopped its rise in the
past (resistance lines) and when buyers saved it from crashing (lines of
support). Using this and other information, we need to determine how
it will behave in the future and at what prices certain actions may occur.
We will use as many charts as our computer screens allow to follow the
various stocks, sectors and important market indices. Currently, I use
nine screens and am considering adding another, but that is mostly to
watch the amazed looks on faces of people walking into my work room.

SMART A stock’s chart is an integration of fundamental knowledge
MONEY with the addition of a healthy dollop of human psychology.

Charts can be weekly, presenting information over several weeks; daily,

presenting several days; or intraday, presenting data for the same day at
different intervals such as on a one-minute or fifteen-minute basis. These

charts provide the trader a look deep inside the market and trace the price
changes, which are the outcomes of the constant tug-of-war between