January 2002 Letters To The Editor

or return to January 2002 Contents

The editors of S&C invite readers to submit their opinions and information on subjects relating to technical analysis and this magazine. This column is our means of communication with our readers. Is there something you would like to know more (or less) about? Tell us about it. Without a source of new ideas and subjects coming from our readers, this magazine would not exist.

Address your correspondence to: Editor, STOCKS & COMMODITIES, 4757 California Ave. SW, Seattle, WA 98116-4499, or e-mail to editor@traders.com. All letters become the property of Technical Analysis, Inc. Letter-writers must include their full name and address for verification. Letters may be edited for length or clarity. The opinions expressed in this column do not necessarily represent those of the magazine. -Editor

BALANCE OF MARKET POWER

Editor,

In "Balance Of Market Power" (S&C, August 2001), author Igor Livshin constructs an oscillator based on three types of rewards. But I think it lacks one more type of reward: today's open minus yesterday's close; that is, overnight action on digesting news by market participants. Without this, the oscillator may interpret the situation incorrectly.

Suppose the Nasdaq opened down with a gap of 100 points, then rallied from the open 50 points, and closed at the high of the day. Say the situation repeated five days in a row. Calculating the oscillator's value based on the four intraday values (today's open, high, low, close) will indicate a very bullish bias, when in reality the price was dropping like a stone.

Anna Mozhaeva, via e-mail Russia

Ivor Livshin replies:

This suggested addition to the BMP formula would cover the after-the-market-close activity (specifically, gaps). However, I personally would not include this part in the BMP calculation for the following reasons:

 
1. Gaps happen relatively seldom, and their impact on multiple days' (say, 14 days) aggregate value of the BMP indicator is minimal. I can't ever remember seeing five gaps in a row.

2. Very often, the overnight activity is wrong and has a short-lived impact on the market direction.


POSITION TRADING THE S&P

Editor,

Clifton Mitchell's article "Position Trading The S&P" in the October 2001 S&C uses linear regression to predict short-term trend changes of the Standard & Poor's 500. The following list of articles and follow-up letters to the editor from past issues of S&C may be of interest to those readers who wish to further pursue Mitchell's teachings.

  • "The End Point Moving Average" by Patrick E. Lafferty (October 1995)

  • Follow-up letter to the editor: "End Point Moving Average" (February 1996)

  • "Smoothing Techniques For More Accurate Signals" by Tim Tillson (January 1998)

  • Follow-up letter to the editor: "Smoothing Techniques" (March 1998)
  • [and "T3 Indicator," Letters to S&C (August 1998)-Editor]


  • "How Smooth Is Your Data Smoother?" by Patrick E. Lafferty (June 1999)

  • Follow-up letter to the editor: "Excel Code For Trend-Following Method" (December 1999)
     [and "More Responsive Moving Averages," Letters to S&C (June 2000), and
     "More Responsive Moving Averages And End Point Moving Average," Letters to S&C (August 2000) -Editor]


  • "More Responsive Moving Averages" by Joe Sharp (January 2000)

  • Follow-up letters to the editor: "Searching Traders' Tips" (March 2000), and
     "More Responsive Moving Averages" (June 2000), and "More Responsive Moving Averages And End Point Moving Average" (August 2000)

    • Hugh Logan, via e-mail

    CUP AND HANDLE

    Editor,

    In the September 2001 S&C, you published an interesting article by Rick Martinelli and Barry Hyman, "Trading Within The Cup." The article presented an algorithm for using pattern recognition for a modified cup and handle. The article also referred to Stan Weinstein's stage recognition chart system.

    I'm starting to develop a rudimentary exploration using MetaStock 6.52 (I have been a longtime user of Equis's software and also a longtime reader of your magazine), and I was hoping that you were planning on presenting an exploration of your own in your Traders' Tips column. Any plans toward this? Have you already published one for MetaStock users, which I could find in archives or elsewhere?

    Fred Naef, via e-mail

    Sorry, we have not published a MetaStock exploration on the cup and handle. Please contact Equis International at equis.com.-Editor

    CHARTING SERVICE

    Editor,

    I was wondering if you offer a chart service in which paper copies of charts are mailed out to clients on a weekly basis. If you don't, do you know of anyone who does?

    Melany, via e-mail

    We don't sell charts, but try Chartcraft (30 Church St., New Rochelle, NY 10801, 914 632-0422, usinfo@chartcraft.com, www.chartcraft.com). Chartcraft offers long-term historical charts and offers a weekly chart service.-Editor

    POINT & FIGURE CHARTING SOFTWARE

    Editor,

    Can you recommend software that can build point & figure charts with intraday data (15-minute charts) for equities and commodities?

    Guillermo Velez, via e-mail

    We simply are not familiar with all the specific features of all the charting software products available. There are several programs that plot point & figure charts, but offhand, we don't know which ones build 15-minute charts. For starters, go to the Software category of the Traders' Resource at our website, Traders.com. Use the search facility there to plug in the parameters "intraday" for data type and "point & future" for chart type.
     For more on point & figure charting, see David Penn's article in this issue, "Point & Figure Charting."-Editor

    ERRATA

    On page 59 of the November 2001 S&C, we inadvertently dropped a line of text from the sidebar. The first line of text in the sidebar should have read: "As it stands now, the spreadsheet computes the differences..." We regret the error.

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