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October 1999 Letters To The Editor
IDENTIFYING SUPPORT & RESISTANCE LEVELS
Editor,Bravo! I found Ned Gandevani's article in the July 1999 STOCKS & COMMODITIES, "Identifying Crucial Support And Resistance Levels," the true remedy for my quest. As an S&P day trader, I've been in search of a solid method to identify support and resistance levels in the S&P market. I couldn't agree more with Gandevani's statement that none of the old and linear techniques work in the S&P market. The author's simple and creative concept offers a great practical tool in locating crucial support/resistance levels or common numbers. Great choice and superb article. Thanks again!
Misha Jones, via E-mail
FIDELITY SELECT FUNDS
Editor,I enjoyed your July 1999 article, "A System For Trading Fidelity Select Funds," by Jay Kaeppel. For those who may be interested, hourly charts of all 39 Fidelity Select funds are posted daily at the free Website https://www.SelectSectors.com.
Also posted there are quadratic regression tables sorted by maximum gain per unit risk.
These charts are useful in that the 39 sectors act as a proxy for the market, and in particular, exhibit with clarity the market dynamics of each sector.
Milton Allione, via E-mail
SELL SIGNALS FOR FIDELITY SELECT FUNDS
Editor,About Jay Kappel's article in your July 1999 issue on trading Fidelity Select funds, I was puzzled by the sell signal that Kaeppel explained for the Fidelity funds: "If the fund shows a low of two cents below the 28-week Ema during the previous week, then sell." Wouldn't a fund with an Nav of $80 show 10 times as many sell signals as a fund with an $8 Nav? I mean, $0.02 has different significance depending on the fund's NAV.
Thanks -- it's an interesting system that I hope to implement.
Lynn Bendz, via E-mail
Bozeman, MT
Jay Kaeppel replies:
The reason for the $0.02 offset below the 28-week EMA as a sell signal filter is simply so that the fund must actually drop below the EMA before a sell signal is triggered. The $0.02 trigger is an arbitrary number ($0.01 just didn't seem like enough). In the original test, I started with the rule that a sell signal occurs if the weekly low even touches the prior week's 28-week EMA. What I found (and what has been noted in many other technical works) is that very often a moving average can act as support for prices. On a number of occasions, the low for the week happened to be exactly the same as last week's 28-week EMA, which caused the system to sell some funds prematurely. I did not do any testing other than using no offset and the $0.02 offset. Hope this clears up your question.
UP VOLUME / DOWN VOLUME
Editor,Thanks for your publication. I was wondering if anything has ever been published by you on anything about up volume/down volume as an indicator. Usually on The Nightly Business Report, the up-volume and down-volume numbers are mentioned. Can anything be done with these numbers?
See Arthur Merrill's September 1989 STOCKS & COMMODITIES article, "Volume indices," about the Arms index, which uses advancing issues over declining issues divided by up volume over down volume to predict market direction. Here are some additional articles that discuss using the up and down volume numbers.-- EditorVince Schlezes, via E-mail
Goldstein, Steven B., and Michael N. Kahn [1988]. "Money Flow Analysis," Technical Analysis of STOCKS & COMMODITIES , Volume 6: February.
Hartle, Thom [1994]. "It's All In The Family: Sherman, Marian and Tom McClellan," Technical Analysis of STOCKS & COMMODITIES, Volume 12: June.
Lawlor, John C. [1988]. "Cumulative Volume And Momentum, part 2," Technical Analysis of STOCKS & COMMODITIES, Volume 6: February.
Rusin, Jack [1991]. "An Issue/Volume Weighted Long-Term Arms Index," Technical Analysis of STOCKS & COMMODITIES, Volume 9: October.
Star, Barbara, Ph.D. [1993]. "Volume Variations," Technical Analysis of STOCKS & COMMODITIES, Volume 11: May.
Waxenberg, Howard K. [1986]. "Technical Analysis Of Volume," Technical Analysis of STOCKS & COMMODITIES, Volume 4: February.
Wilbur, Harley D. [1992]. "A Twist On The Arms Index," Technical Analysis of STOCKS & COMMODITIES, Volume 10: November.
CQG USER
Editor,I am a CQG user and have been a regular reader of your excellent magazine for many years. How come you never publish CQG programming code for indicators? After all, there is life after TradeStation, but that is difficult to discern from reading S&C!
See Thom Hartle's August 1996 article, "The Market Facilitation Index," with its accompanying sidebar, "MFI indicators," which implements the MFI in CQG using CQG's User Function Builder. Further, please contact CQG and ask them to check with us about submitting Traders' Tips to STOCKS & COMMODITIES.Ian Robertson, via E-mail
See also the next letter. -- Editor
FORMULAS
Editor,Is there a reason you never publish any formulas for AIQ?
Sarus, via E-mail
Formulas we publish in our Traders' Tips section are supplied to us by the software vendors producing the analysis software. In our articles, any formulas given are usually supplied by the article's author, in whatever software format he or she happens to use for trading. In sidebars to articles, the editors of STOCKS & COMMODITIES often include Excel code and sample Excel spreadsheets demonstrating how to implement a technique described in the article. We use the Excel spreadsheet application to demonstrate techniques because that format is most accessible to a wide number of readers.
We would be delighted if more software vendors, such as AIQ, could be persuaded to submit Traders' Tips to STOCKS & COMMODITIES. --Editor
ANALYSIS THE OLD-FASHIONED WAY
Editor,I am pleased to see a magazine devoted to technical analysis. In my opinion, however, your content is far too focused on software and electronic predicting models. I think that you should focus on trading the way it has been done for more than 100 years -- with human analysis! Please, give me content on trading, not writing software code!
Name withheld, via E-mail
SOFTWARE COMPARISON
Editor,I am looking for software for analyzing stocks and options. Have you done a survey or do you know where I can get some experts' opinions on which software has the most bells and whistles, or a comparison? I can't very well test out all of them, so I need some kind of survey listing the best to worst or some way to reduce the number of choices. I would greatly appreciate it if you could point me in the right direction.
We publish a Bonus Issue at the end of every year containing sections that focus on products and services. The Software Comparison Table lists features and other pertinent information side-by-side on various technical analysis software. This software comparison can also be found at our Website, www.traders.com, in expanded format. We are constantly updating it with new information from software vendors about products.Ken Beach, via E-mail
Our Bonus Issue also contains our Readers' Choice Awards, which lists the products and services across 20 categories (such as data services, options software, and so on) that our readers have voted their favorites.
In addition, next year, in our year-2000 issues, we plan to publish Traders' Resource guides. These monthly special survey sections will focus on a category of product or service relating to trading. The information published in these special sections will also be published at our Website and will be constantly updated.
And last but not least, we publish product reviews in each and every issue of STOCKS & COMMODITIES, which thoroughly review the features and benefits of various trading software. See also the next letter.-- Editor
LOOKING FOR FUNDAMENTAL DATA DOWNLOADING AND SOFTWARE
Editor,Great magazine. I usually take a technical approach to trading. However, at my work, we take a fundamental approach, and we work a lot with income statements and earnings projections. I was wondering if you could refer me to a good source of fundamental data to be fed into my computer, and then software to screen it. I know there is a lot of software out there for loading price history data, and then screening all the stocks for specific types of price movement or technical signals. I would like the same type of feature for downloading fundamental data for all 9,000 stocks and then screening through the database. Any leads?
While we can't offer specific recommendations on products to individual readers, because we can't know each person's requirements and preferences and because we can't possibly be familiar with all the software out there, we do compile information on various software and services and publish it at our Website. We offer a Software Comparison Table at www.traders.com, which includes a search engine and a browsing mode, and we plan to publish special survey sections in upcoming issues of STOCKS & COMMODITIES.David Lollar, via E-mail
In the meantime, if any readers have any suggestions for your particular needs, we'll be happy to pass them along.-- Editor
IN MEMORIAM
Bob Howe of San Antonio, TX, a market technician and creator of Howe's limit rule, passed away on July 16. Howe was a technical analyst for Lincoln Staley, located at the Minneapolis Grain Exchange, in the 1970s. He later moved to New York City, where he worked for Prudential Bache and Monroe Trout. At the time of his death, he was working at Princeton Economics.Stanley Kroll, a writer and commodity operator, passed away on June 7. His 40-year history in the futures industry began with Merrill Lynch in 1959, and he later opened his own commodity clearing firm. His books include Kroll On Futures Trading Strategy and The Technical Trader, among others.
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