Timing the Market: How To Profit in the Stock Market Using the Yield Curve, Technical Analysis, and Cultural Indicators

430 Pages·2005·15.22 MB·English

by  Deborah Weir

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Timing
the
Market
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Timing
the
Market
How to Profit in
the Stock Market
Using the Yield Curve,
Technical Analysis, and
Cultural Indicators
DEBORAH J. WEIR
John Wiley &Sons, Inc.
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Copyright © 2006 by Deborah J. Weir. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
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Library of Congress Cataloging-in-Publication Data:
Weir, Deborah J.
Timing the market : how to profit in the stock market using the yield
curve, technical analysis, and cultural indicators / Deborah J. Weir.
p. cm.—(Wiley trading series)
Includes bibliographical references and index.
ISBN-13: 978-0-471-70898-8 (cloth : alk. paper)
ISBN-10: 0-471-70898-4 (cloth : alk. paper)
1. Investment analysis. 2. Speculation. 3. Stock price forecasting. I.
Title. II. Series.
HG4529.W454 2005
332.6—dc22
2005012275
Printed in the United States of America.
10 9 8 7 6 5 4 3 2 1
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To my husband, the last Renaissance man, for his loving support
Michael B. Weir, LLB and USMC, Retired
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Contents
Acknowledgments xi
Introduction xiii
PART I Yield Curve Analysis 1
CHAPTER 1 Demystifying the Investment World 3
CHAPTER 2 Back of the Envelope Forecast Model 10
CHAPTER 3 Money Markets Matter 32
CHAPTER 4 Long-Term Bonds Give Advance Warning 41
CHAPTER 5 Expected Returns for the Stock Market 51
CHAPTER 6 Bond Quality Spreads 60
CHAPTER 7 Federal Funds Rates 69
CHAPTER 8 Summary of Yield Curve Analysis 84
PART II Technical Analysis 95
CHAPTER 9 Market Breadth: Advancing Issues
in the Dow 98
CHAPTER 10 The Volatility Index 107
CHAPTER 11 The Put/Call Ratio 113
CHAPTER 12 Moving Averages 121
CHAPTER 13 Using Moving Averages: The MACD Line 130
vii
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viii CONTENTS
CHAPTER 14 Leverage: Short Positions and Margin Debt 139
CHAPTER 15 Summary of Technical Analysis 146
PART III Cultural Indicators 157
CHAPTER 16 Changing Standards of Feminine Beauty 159
CHAPTER 17 Demographics 169
CHAPTER 18 Corporate Spending 182
CHAPTER 19 War and Rumors of War 197
CHAPTER 20 Summary of Cultural Indicators 217
PART IV Choosing Investments 231
CHAPTER 21 Asset Classes 233
CHAPTER 22 Mutual Funds 246
CHAPTER 23 Exchange-Traded Funds 258
CHAPTER 24 Security Selection 265
CHAPTER 25 Final Summary 280
PART V Capitalism at Work 293
CHAPTER 26 Outrageous Wall Street Stories 294
CHAPTER 27 America! America! God Shed His
Grace on Thee 310
APPENDIXES 321
2.1 Yield Curves and the S&P 500 Index, 1960–2004 322
2.2 Chapter 2 Return Calculations 334
3.1 U.S. Treasury Bill Spreads, 1960–2004 335
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Contents ix
3.2 Chapter 3 Return Calculations 347
6.1 Speculative Bond Spreads (Ba1 and Lower
Rated), 1991–2003 348
7.1 Federal Funds Rates during 1987, 1998,
2001 Bear Markets 351
7.2 Chapter 7 Return Calculations 353
8.1 Ten-Year Note Total Return Index, 1960–2004 354
9.1 All 30 Dow Industrial Stocks Fell on July 19,
2002 355
9.2 Chapter 9 Return Calculations 356
16.1 Playmate of the Year, S&P 500 Index, and
the Russell 2000 Index, 1960–2000 357
16.2 Monthly Playmates and the S&P 500 Index,
1982–2004 358
19.1 Gross Domestic Product and War, 1800–2004 361
19.2 S&P 500 Index and War, 1800–2004 367
19.3 War in Iraq and the S&P 500 Index, 1990–1991 369
19.4 War in Iraq and the S&P 500 Index, 2002–2003 370
19.5 Chapter 19 Return Calculations, 1960–2002 371
20.1 Part Three Return Calculations, 1960–2005 372
21.1 Changes in Housing Prices, 1970–2004 373
21.2 Returns Including Treasury Bills, 1960–2004 374
21.3 Year-End Prices of Gold, 1800–2004 375
21.4 Returns Including Gold, 1974–2004 377
21.5 Euro Exchange Rates and U.S. Business
Cycles, 1969–2004 378
23.1 Gold and Nasdaq Return Calculations, 1974–2004 379
23.2 Nasdaq Composite, 1984–2005 380
24.1 Nasdaq and Centex Return Calculations,
1990–2005 382
24.2 Nasdaq and Placer Dome Return Calculations,
1990–2005 389
Sources and Suggested Reading 397
Index 401
About the Author 413
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