May 1997
Letters to the Editor

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NEW HIGHS/NEW LOWS

Editor,
In the January 1997 issue of STOCKS & COMMODITIES, Dennis Meyers discusses his A-D new-high, new-low system. In it, he uses the daily NYSE 52-week new highs and new lows. I find this confusing. Is he using daily figures or is he running a total and then subtracting lows from highs? In either event, I am not sure what I should be recording.

RICHARD G. STREICH
Winter Park, FL
The NYSE 52-week new high and new low data is released each day by the New York Stock Exchange. It is simply the number of stocks that on that day surpassed their previous 52-week high or 52-week low. Most data vendors have the data; you can also find these numbers in The Wall Street Journal on the Stock Market Data Bank page as well as in Barron's in the Market Laboratory: Stocks section. -- Editor


INFLATION & INTEREST RATES

Editor,
The interview with Alex Saitta in your March 1997 issue was terrific. That kind of quantitative historical analysis is exactly what's needed ... please, more of the same. I have two questions:

1) In Figure 9, the relationship between inflation rate and the price of gold is displayed. But the specific statistic used for the inflation rate is not stated. What is it?

2) Let's suppose I would like to replicate and extend Saitta's research, and I don't work at a large (or small) Wall Street house, but rather as an individual in his home office. Are there relatively affordable sources of data available on which to perform this kind of quantitative historical analysis?

JOHN VAN PRAAG
via E-mail
Alex Saitta replies:
We used the monthly consumer price index (CPI) data released by the Bureau of Labor Statistics. We took each month's raw figure and calculated the quarterly percentage change. For example, from the table that follows, the March 1996 CPI was 155.7 and the June CPI was 156.7. The percentage change is thus:




100((156.7-155.7)/155.7) = 0.64%




1996.01 154.4
1996.02 154.9
1996.03 155.7
1996.04 156.3
1996.05 156.6
1996.06 156.7

Editor's note: You can find this sort of data and more at the Federal Reserve Bank of St. Louis's Web site at https://www.stls.frb.org/fred/dataindx.html -- Editor


BY THE NUMBERS

Editor,
The March 1997 issue of STOCKS & COMMODITIES contains a book review on By the Numbers: A Survival Guide to Economic Indicators, which was published by International Financial Press.

For your information, the book is out of print and consequently the publisher is no longer distributing the book. Perhaps in your next issue you could alert subscribers accordingly. Further, if you have an alternate source for the book, I would appreciate your passing it along.

JIM MAZZULLA
via E-mail

Thank you for letting us know. We had received many messages from readers who were also unable to obtain a copy of the book. We are still trying to find another source for the book. If we find any, we'll pass the information along. You can visit the Web site of International Financial Press at https://www.iftt.com -- Editor


PICK THREE

Editor,
I'm a new subscriber (and a new technical analyst convert) and would love to see an article titled something like, "If the experts could only choose three indicators, here are their choices." If you have this article in a back issue, I'd sure enjoy reading it. Such an article would be great for the reader who works full time and only has time to monitor a few indicators (I'm a new MetaStock user at present), and I'd really like to know the technical experts' top two or three recommendations.
STEVE HUGHES
via E-mail
If we polled every expert in the field, each one would surely produce a different list! My recommendation is to review most of the indicators in your charting program and gain a solid working knowledge of them. Then consider using a set of indicators that each measure a different aspect of the market. For example, employ one momentum indicator, one trend indicator and one volume-based indicator to get a complete picture of the market. A simple test of indicator redundancy is to export the daily indicator values for each into Excel, then measure the correlation of the daily values. If two indicators have a very high correlation, then chances are good that the indicators are measuring the same aspect of price action and are redundant; in other words, you're not gaining additional information from using both. -- Editor


FUTURES PRICE SERIES

Editor,
Have you published an article on the most common ways to link monthly futures prices to create long-term price charts? I presently take the last 10 trading days of an expired contract and blend open, high, low and close with my "old" data in the following manner:




10th day    90% old/10% new
 9th day    80% old/20% new
 8th day    70% old/30% new

and so on. How are others doing it? How about the commercial services such as Commodity Price Charts and others?

VINCE SMITH
via E-mail

See the article "Selecting the best futures price series for computer testing" by Jack Schwager in the October 1992 issue of S&C. If you need further information, see Schwager's new book, Schwager on Futures Technical Analysis, published by John Wiley & Sons. For information on purchasing past articles from S&C, see the next letter and our response. -- Editor
 


OBTAINING PAST ARTICLES

Editor,
I recently read your excellent October 1996 review of Option Pro On-Line software. I have only recently begun to read your magazine, so my question concerns the availability of past product reviews appearing in S&C. For example, are reprints available for purchase? Are your reviews available on your magazine's Web site or on a database such as Lexis/Nexis?
DAVE BRADY
Chesterfield, MO
Past S&C articles are available in book form (Technical Analysis of STOCKS & COMMODITIES, Volumes 1-14, corresponding to the publication years 1982-96) or on S&C on CD. For recent articles, single back issues may still be available from our circulation department at $8 prepaid. Call our circulation department at 800 832-4642, or E-mail them at circ@traders.com. We do not offer reprints of single articles from this office. In the future, we may offer articles and product reviews at our Web site. -- Editor
 



GETTING YOUR BALANCE

Editor,
I have enjoyed reading your magazine for the past several years. The knowledge I have received is priceless. The article in the November 1996 STOCKS & COMMODITIES by Robert Krausz titled "Dynamic multiple time frames" has been a very useful tool and the techniques work very well on other tradables.

I have a question about how to calculate the resistance and support bands on Treasury bonds. I know that the gap between the two resistance and support bands should be about equal, but when I do my calculation, the gap between the two resistance bands is wider than the gap between the two support bands.
 

I need help on how Krausz did his calculation in the example given in the article. I was going to write him directly myself, but his address is not given at the end of the article.

MODESTO MELO
Oakdale, LA

If we don't provide an author's address or phone number at the end of an article, it's because the author has not given us permission to list either.

Regarding your question about support and resistance bands, Figure 1 on page 38 of the November 1996 issue explains how to calculate them. First, calculate the weekly balance point. For example, if the high, low and close were 101, 99 and 100, then the weekly balance point would be found by:





 (101+99+100) / 3 = 100
The first support zone is 50% of the week's range, subtracted from the balance point:




100-(0.5(101-99)) = 99
The second support zone is found by:




100-(0.618(101-99)) = 98.76
The first resistance zone is found by:




100+(0.5(101-99)) = 101
The second resistance zone is found by:




100+(0.618(101-99)) = 101.24
I hope this helps. -- Editor
 


WINNERS' CIRCLE

Editor,
I have been a subscriber for many years. Over the past few years, I have noticed many of your advertisers posting notices in their ads claiming that their products were a "winner of the Readers' Choice Award for the past x years."

As a service to your readers, could you publish a list of the possible awards and a list of the winners for the past few years, all in one place so that we could evaluate the validity of the advertisers' claims?

GEORGE W. SMITH JR.
via E-mail
We publish the results of our Readers' Choice Awards annually in our Bonus Issue. The Readers' Choice Awards list the results of our annual reader survey on investment-related products and services. In this section, we compile and present our readers' votes for the best products and services across 20 different categories, including data services, trading software, trading system software, and software for artificial intelligence, statistical analysis, options analysis, downloading and portfolio management. Possible award levels are winner, first runner-up, finalist, semi-finalist and honorable mention. When reproducing our award logo in their advertisements, advertisers are supposed to list the award level, the year of the award, the category of the award and the name of the product receiving the award.

The Bonus Issue is free to current, paid subscribers of STOCKS & COMMODITIES. The 1997 Bonus Issue, which contains the 1996 awards listings, was mailed to subscribers in January and will be mailed to new paid subscribers throughout the year. -- Editor
 


ARITHMETIC VS. SEMILOGARITHMIC

Editor,
I know there is no consensus on which scale -- arithmetic or semilogarithmic -- is better for plotting charts, but I have noticed that some analyses give different results depending on which I use; for example, trendlines can look very different on each type of scaling. This might be a good topic for beginners.
JOHN GIATROPOULOS
via E-mail
Thank you for the article suggestion. -- Editor
 


GENERIC FORMULAS NEEDED

Editor,
I am offering a suggestion for the Traders' Tips feature.

Many of the systems covered in your magazine could be implemented in a spreadsheet program such as Excel. Where appropriate, why not give the formulas needed to implement the system in a spreadsheet for those who do not have the suggested dedicated software and who are "mathematically challenged"? Thanks. I enjoy your magazine.

JIM DAWSON
via E-mail
 


PROGRAMMER WANTED

Editor,
Just a note of thanks for all of your hard work and a great publication. Keep up the good work.

I am interested in finding a programmer who is knowledgeable about Omega Research's Easy Language programming language, but who also is experienced in Visual Basic and the language of Excel spreadsheets. Specifically, I am looking for someone who could write a conversion program for numerically transforming Easy Language systems or indicators into the Excel format, so I can apply all your great ideas on indicators to my spreadsheets via an actual file.

Do you know of anyone who is capable of such ingenuity? I love your magazine.

ERIC BENNOS, M.D.
via E-mail
I don't believe we have any working relationships with programmers who can meet your needs. I recommend that you review our Classifieds and Market Place sections for programmers. -- Editor
 

TRADERS' TIPS

Readers have let us know how much they appreciate the programming code contributed by various developers of technical analysis software for implementing some of the strategies presented in this magazine.

However, due to production difficulties, Traders' Tips does not appear in this issue but will return next month. -- Editor

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