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Letters to the Editor
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I have read some of the articles by Thomas Bulkowski, particularly, "On rising wedges" and "Ascending and descending triangles." I found them very interesting and accurate. I'd like to see more of his articles in the future.
HOMER TSAIvia E-mail
I have four questions regarding Victor Sperandeo's April 1997 article, "The essence of market profits." In the article, he refers to the MLM index, which was previously known as the Barra-MLM index. First, where can I get access to the MLM index? Second, what does "MLM" stand for? Are there any mutual funds that base their fund on the system-driven MLM index? Finally, what books, periodicals or software treat the MLM index?
MICHAEL SCOTTAccording to the article "The importance of indices or benchmarks," published by Barclay Trading Group Ltd. at its Web site (www.fairfield.com/barclay/barclaynextpage.html#top, 515 472-3456), the MLM index was created by Mount Lucas Management Corporation, a CTA and investment management firm based in Princeton, NJ. For more information, try contacting Barclay Trading Group Ltd. or visit its Web site.Editorvia E-mail
I do, however, take offense to the sweeping generalizations contained in his segue early in the article. He quotes "trading legend" Larry Williams as saying, "All that other technical analysis stuff out there doesn't work very well in daytrading," and also quotes Barry Haigh (from a 1986 book) with a similar opinion. From these two unsubstantiated statements, Smith concludes that "computerization doesn't work in daytrading stock futures."
I submit that the master premise of your magazine is that computerization does work, and there are many, many studies that support this premise.
In my view, the reason most daytraders are not as successful as they should be is that psychological factors prevent traders from executing well-tested trading methods and models.
The age-old nemeses of fear and greed contribute far more to the downfall of the futures trader. It appears to me that a subjective approach such as Smith's would fall prey to these problems to an even greater extent than an objective computerized method.
PETER R. ANDERSONvia E-mail
First, great-looking Web site. Congrats!
Second, we are a CPA firm that needs to get historical quotes on stocks, bonds (corporate and munis) and anything else that is listed publicly. Does your site offer this service, and if so, how do we subscribe? If it does not, do you know of any sites or services available that will fit our needs?
GREG BINDERMany data vendors advertise in our magazine. To locate ads for historical data, check the Advertising Index toward the back of each issue under the heading "Data services." See also our 1997 Bonus Issue, which presented our Readers' Choice Awards across 20 categories of products, one of which was data services. Further, see our reviews of Momentum historical stock market reference data (June 1996), Quotes Plus (July 1996), InterQuote Internet quote service (September 1996), Quote Monkey (November 1996) and A-T Attitude for the Internet (May 1997) for reviews of just a few of the many data services available in many varieties; try searching the Internet for other Internet-based data vendors.via E-mail
We don't sell historical data, although you can access delayed quotes at our Web site (www.traders.com), courtesy of Quote.com.Editor
I am interested in getting a reprint of the article by Richard Goedde titled "Timing a stock using the regression oscillator" or a copy of the March 1997 issue in which it was printed. I saw an excerpt of the article in the abstracts at your Web site. Are past abstracts also available online?
MIKE COLECall our circulation department at 800 832-4642 to order a copy of the March 1997 issue of STOCKS & COMMODITIES ($8) or order it from our Web site at https://www.traders.com. Abstracts of all past STOCKS & COMMODITIES articles can be found at our Web site. Under the Search section, click on Back Issue Archive.Editorvia E-mail
In searching the article abstracts at your Web site for past articles of interest, I noticed that a search of "Trader Vic" Victor Sperandeo produces quite a number of references. I was curious to find out more about this man.
hoy@arlington.netMy first suggestion is to read the interview I conducted with him for the December 1993 STOCKS & COMMODITIES (available in our Volume 11 book, listed below). Other articles we've published by Sperandeo are listed below, as well as the two books he's written, which were published by John Wiley. You can view abstracts of these STOCKS & COMMODITIES articles at our Web site (www.traders.com).Editorvia E-mail
Being a skeptic, I was very interested in the article "Lunar cycles and trading" by Jeffrey Owen Katz and Donna McCormick in your June 1997 issue. While trying to analyze the performance summary on page 45, however, I found myself unable to understand the results listed. How could a system that averages 11 days per trade on one contract show such large dollar values? For a average winning trade of $746.24 over 11 days (average number of bars in winners), the price of silver would have to average a gain of $67.84 per day, which seems impossible. Since all the summaries in the article seemed off to me, I checked the article written by the same authors in your April 1997 issue titled "Seasonality and trading" and found even stranger summaries. For instance, how could an intraday system (Figure 4 on page 53 of the April issue) have a $7,550 winning trade on only one contract in just one day?
Could you please explain where I'm going wrong?
MARK GINSBERGYou are not taking into account the tick value of a contract. For example, the silver contract calls for delivery of 5,000 ounces of silver; therefore, a 10-cent move is $500.Editorvia E-mail
The article by Paul and Carole Huebotter in the April 1997 S&C ("The new Dow strategy in 1996-97") was a very revealing study of Dow intricacies. I found the article mentally stimulating.
Using America Online and the data provided in the article, I created three portfolios. The first portfolio was made up of the 10 stocks selected by the system. The second portfolio consisted of the next 10 stocks and then the third portfolio contained the remaining 10. An equal amount of money ($1,000) was used to invest in each equity.
To satisfy my curiosity, I wanted to see if this mechanical system was viable. The results from previous years seem to prove that the system was very profitable.
Here are the results for 60 trading days in 1997 (annualized returns):
This is a short study and I realize that more data is needed, but maybe there's more here than meets the eye.I'm enclosing a table [not showned.] listing the 30 DJIA stocks in the order of their annualized gain so far this year, including the data from the article. The table also shows into which portfolio each stock was placed. Several things are apparent. Eight of the 10 were 1.0 or less in the normalized yield column. Eight out of 10 stocks show yields or expected yields of 2.8 or less. The other two stocks have two of the highest normalized yields and both have somewhat low prices.
Could it be that the top 10 had already reached their pinnacle and were somewhat overbought, while the second tier is approaching a renewed impetus? Using trend analysis and other charting tools in my TC 2000 program seems to show that I should be able to refine my selections and greatly improve the results. Have I discovered a new planet, or is it just a piece of lint on my telescope's lens?
Being a relative neophyte to the technical analysis field, I'm hopeful that you, a learned reader, or the article's authors can shed some insight on this study.
You have a great publication and I look forward to each issue.
JIMMY HANNIGANFor sharing discussion on technical analysis techniques, a user group can be a terrific resource. Contact Stan Harley of the Market Analysts of Southern California at 805 484-4258, or contact major software vendors for user groups in your area.EditorNewport Beach, CA