If traders rely on technical trading systems, they need to know the size
of slippage, or the difference between estimated and actual transaction costs
with the difference composed of price differences plus commission costs.
These authors used the trading record of a technically oriented money manager
to determine slippage for the fund’s transactions using 11 commodities,
stop orders and market-if-touched orders.
By Thomas V, Greer, B. Wade Brorsen and Shi-Miin Liu.
Could a statistic just be due to chance? This famous technician teaches
the basics of testing data for significance using the chi-squared method.
By Arthur A. Merrill, CMT.
This indicator is a one-day rule of change of a triple exponential smoothing
of the daily number of declines, an oscillator similar to Trix. It is one
method by which the 1987 market correction could have been forewarned. In
the period that Raff tried the method out it would have made only about 50%
of a buy-and-hold strategy (although it would have shielded the user from
violent declines in the period). He concludes that the method can be improved.
By Gilbert Raff.
This longtime newsletter publisher introduces a long-term indicator called
the Gann quarterly chart, which will signal a turn up from bear market lows.
Bear markets occur when the previous quarter’s intraday low is breached.
This technique requires careful monitoring of the intraday highs and lows
of the previous quarter. W.D. Gann, who invented this technique, said that
the upturns or downturns in this chart often signaled the onset of new bull
or bear markets.
By Jerry Favors.
Trin, also known as the Arms index, is simple yet sophisticated and sometimes
contradictory. This author analyzes some of the problems with the widely
used index.
By Jack Rusin.
Market sentiment can be useful in market timing, for mutual funds in particular.
Here’s a method in which a careful perusal of Investor’s
Intelligence, Market Vane and Barron’s can help you predict
the best times to buy.
By Joe Duarte
Equivolume charting, which permits plotting price movements vs. volume instead
of time, can be plotted by hand or with one of several charting programs,
but a plain spreadsheet program on your personal computer can do the job
and lets you add your own indicators. Leahy shows you how.
By James Leahy.
Portfolio management involves finding the highest possible return while
limiting risk. Because economic conditions constantly change, keeping to
this goal requires moving assets in and out of the portfolio a time-consuming
and (worse) costly procedure. Using stock index futures and options can help.
Fraisse uses S&P 500 index futures contracts as a tool with which to
quietly increase a portfolio’s exposure to market fluctuations if a
money manager is bullish or decrease a portfolio’s risk if a money
manager is bearish.
By Jean-Olivier Fraisse.
Not all markets have the same tendency to trend. Poulos uses his February
1991 STOCKS & COMMODITIES article on the random walk index as the basis
of this study producing a table of 28 commodities futures and debunking some
common assumptions about futures trends.
By E. Michael Poulos.
Chaos and Order in the Capital Markets CSS Statistica (Statsoft) Omega TradeStation, v. 2 (Omega Research Inc.)
Trading bands, lines plotted in and around the price structure to form an
envelope, may not be new, but they remain one of the most powerful concepts
available to the technical investor. Here, the creator of Bollinger Bands
himself explains how to use them to determine if prices are high or low on
a relative basis.
By John Bollinger.
Here are three ways to capitalize on the property of convergence the fact that
futures prices and spot prices will necessarily come together at the futures
expiration. The same concept can be applied to many markets, including various
other financial futures contracts, as well as assorted hard commodities. Learn
how to profit from the expiration of futures.
By Ira G. Kawaller
Technician-writer-money manager-broker: Martin Pring was described as the “technician’s
technician” by Barron’s, and his diverse background reaffirms
that claim. In this interview, Pring tells us about his KST indicator and
the market cycle model.
By Thom Hartle.
The Wyckoff approach, a standard for decades, is as valid for futures trading
as it is for stocks, but even students of the technique appear to be unaware
of this use. According to Schroeder, Wyckoff is not simply about price and
volume; it is about supply and demand, cause and effect, and effort and result.
And of course these three laws apply to all interactions.
By Craig F. Schroeder.
The Commodity Channel Index is a long-time, widely used technical analytical
standard that’s often misunderstood, this author astutely explains.
Star points out that the index serves to determine when a cycle trend is
in force, not to calculate cycle lengths. Included is some enlightening commentary
from CCI inventor Donald Lambert himself.
By Barbara Star.
The advance-decline line is helpful for picking market tops, but lead time
is a recurring problem. Favors suggests this variation as an alternative
to overcome the problems.
By Jerry Favors.
Buyers’ market or sellers’ market? Counting the upticks and
downticks can give you a clue, Merrill says.
By Arthur A. Merrill, CMT.
Can call options be used as a substitute for purchasing stocks? This S&C
author suggests some likely strategies.
By Jean-Olivier Fraisse.
This author explains how analyzing elements across more than one market
and across countries to predict the outcome of seemingly disparate elements
can be used to trade the Deutschemark or other currencies. He goes on to
write that a dual moving average crossover works well for predicting when
currencies change trends because that indicator is most accurate in long-lasting
trends instead of brief fluctuations.
By Richard Forest.
3d (John Ehlers)
Minitab (Mac) (Minitab Inc.)
Coda Smartline (Committee on Data Analysis Inc.)
As redundant as it may sound, following the stock market is in reality following
a market of stocks. And surveying a market of stocks can present a challenge.
The brothers Stewart, using time series analysis, here present a ranking
method to design portfolios. It was this method that they used to select
five stocks to build one portfolio for each year since 1967. We show here
their results.
By Donald and Kenneth Stewart.
If a market is active, it will have volatility. And because the market is
continuously changing, an indicator that attempts to predict market activity
must itself adapt and change. How? Tushar Chande presents a new class of
dynamicnot staticindicators: a variable-length moving average, which adapts
to volatility by exponentially smoothing data based on standard deviation.
By Tushar S. Chande, PhD.
Using subjects covered in his previous STOCKS & COMMODITIES articles
in November 1991 and January 1992, Joe Duarte explains that by combining
a simple moving average with an oscillator, trading foreign currencies and
foreign currency mutual funds can help you protect your mutual fund portfolio
profits.
By Joe Duarte.
Whether you know it as the trading index (Trin) or the Arms index, this particular
indicator has inspired variations ranging from an issue/volume-weighted long-term
index to this, a short-term trading indicator based on a five-day sum of Trin.
Newsletter publisher Jerry Favors explains.
By Jerry Favors
The price/earnings ratio works perfectly well for stocks. But, Paul Holliday
points out, it doesn’t work for stock indices such as the DJIA or the
Standard & Poor’s 500, where the effective interest rate works
much better. To prove it, he’s come up with a market model based on
the theory that price is in proportion to earnings divided by interest rate.
By Paul T. Holliday.
S.G. Warburg senior vice president, head of market strategy and technical
analyst Gail Dudack is no Joanie-come-lately to technical analysis or the
world of Wall Street. Dudack writes both weekly and monthly strategy letters,
has served on the Market Technicians Association board of governors and two
terms as the MTA’s president, and until recently was also on the board
of directors of the New York Society of Securities Analysts. She can also
be seen as a regular panelist on the popular “Wall $treet Week” television
show. In this interview, Dudack and STOCKS & COMMODITIES Editor Thom
Hartle discuss the global markets and her use of flow of funds indicator.
By Thom Hartle.
Looking for an indicator that doesn’t predict huge booms or busts,
but tells you what the safest course of action is? Here it is. For this model,
all you need is the Value Line Index. It’s simple, but it works.
By Bob Kargenian.
Few have heard of fractal geometry and fewer still know how to use it. But
it is a powerful tool with which to analyze nonlinear systems and is the
main alternative for analyzing systems that defy development of predictive
nonlinear equations. It can even be used to analyze, as Krynicki points out,
the basic building blocks of music!
By Victor E. Krynicki, PhD.
It’s an election year again. What does history say about them? This
famous technician tells you that what you’ve heard about Presidential
election years may very well be true.
By Arthur A. Merrill, CMT.
The number three, a number of importance in Japanese culture as well as
Western culture, can be seen prominently throughout candlestick technique
and particularly in the form of “Sakata’s five methods.” The
five methods, though more than 200 years old, can be used in current-day
trading with little modification, as Wagner and Matheny show.
By Gary S. Wagner and Bradley L. Matheny.
DollarLink v. S4.2D (DollarLink Software)
The Japanese Chart of Charts (Shimizu)
Global Portfolios (Aliber/Bruce).
Tony Tabell has carried the family tradition of technical analysis through
the years, given him from his father, technician Edward Tabell, and his great
uncle, Richard D. Wyckoff, long before most professional investors even recognized
it as a legitimate technique. STOCKS & COMMODITIES spoke with Tabell
about his impression of the historical stock market, the changes in market
patterns, and his definitions of the technician’s role.
By Thom Hartle.
Is the daily closing Arms index helpful in pointing market direction?
By Arthur A. Merrill, CMT
Here’s how to determine your trading system’s minimum capital
requirements and how market exposure should be modified to maximize profits
without increasing risk.
By Bob C. Pelletier.
Too small a time frame and too large a time frame can both hurt you. Here’s
what to do.
By Linda Satterfield.
Some contracts tend to have definite cyclic personalities, and last year
was no exception.
By John F. Ehlers.
Neural nets need not be confined to theory; ambitious traders can build
them for their own trading systems. Katz explains how to avoid pitfalls.
By Jeffrey Owen Katz.
Explaining r.
Market lore has long been filled with claims that planetary motion affects
stock and commodity prices. Skeptical? You may be surprised.
By Hans Hannula.
How can we tell whether one indicator is superior to another? Arrington
explains how to measure a technical indicator’s ability to forecast
prices.
By George R. Arrington.
Despite all the powerful technical tools available, even the savviest technician
is susceptible to emotion. Psychological influences can sometimes prevent
traders from taking appropriate action, where they lose out on opportunity.
Martin continues his quest for more quantifiable measures for sentiment.
By James P. Martin.
The 100 Best Stocks to Own in America (Waldon)
Viking 5.12 (Delphi Economics).
You can rank the profitable currency markets averaging the percentage rate
of change over various periods.
By Tim Hayes.
You may already know of M. Kimelman’s Bernadette Murphy from “Wall
$treet Week,” where she’s been a regular panelist for the past
12 years. She also appears weekly on Cnbc/Fnn, is a regular guest on Cable
News Network, and was the fifth president of the Market Technicians Association
in the 1970s. STOCKS & COMMODITIES spoke with Murphy of about what she
witnessed during the volatile markets of the 1960s and 1970s.
By Thom Hartle.
Removing trends can help you identify short-term turning points. Frequent
STOCKS & COMMODITIES contributor John Ehlers presents different techniques
for detrending prices and his optimized detrending method as well.
By John F. Ehlers.
Intermarket analysis is based on the theory that one instrument affected
will in turn affect another. Technical pioneer John Murphy explains the interrelationship
between bonds and commodities.
By John J. Murphy.
Arthur Merrill explains how to derive the number of days between two dates
using a simple table.
By Arthur A. Merrill, CMT.
The true strength index may be considered a cross between a relative strength
indicator and a moving average convergence/divergence with many of the desirable
properties from each. Creator William Blau, who introduced the indicator
to S&C readers last year, explains here how to trade with the index.
By William Blau.
Linear regression can provide an objective forecast for the next day’s
high, low and close. This author introduces a regression forecast oscillator,
%F, that gives early warning of impending trend changes.
By Tushar S., PhD.
Does controlling losses by using predetermined stop-loss points help? To
find out, Balsara randomly selected moving average crossover systems and
ascertained the best stop-loss points to use. Then he tested the system over
different data. We present his results.
By Nauzer Balsara, PhD.
Data incompatible with your system? Convert the data to your needs.
By Hans Hannula, PhD.
Heavy on consumer stocks? You may want to rethink your strategy and make
some adjustments to your portfolio. Robert Hand addresses the shift of leadership
early this year from consumer stocks to technology stocks, and how relative
strength can identify emerging trends.
By Robert L. Hand Jr.
Eurodollar Futures and Options (Burghardt)
Market Base, v. 3.24 (MP Software Inc.)
What does it take to make consistent profits trading commodities? Roger
Altman theorizes that like support and resistance levels in stock charts,
historical floor and ceiling prices in commodities can be used to gauge relative
cheapness and richness of prices, and whether a price decline or increase
is likely.
By Roger Altman.
Moving averages are one of the most common technical tools that technicians,
both veteran and novice, may take advantage of. But for those novices, the
concept may be somewhat confusing. What is a moving average, anyway? And
what about all those variations linear, stepweighted, exponential, even triangular?
George Arrington gives us a refresher course.
By George R. Arrington, PhD.
W.D. Gann’s trading methodologies are not always easy to define or
to analyze. But when interpreted correctly, they can be applied to everyday
trading principles across many different markets . John Blasic simplifies
Gann’s techniques in this article into terms more easily understood,
sketching out how they can be applied within your overall trading strategy.
By John J. Blasic.
The financial volume index, first introduced by Patrick Cifaldi in STOCKS & COMMODITIES
in 1989, combines futures contracts, the Dow Jones Utility Index and the
Dow 20 Bond Index. Here, Cifaldi examines its use for the current decade.
By Patrick Cifaldi, CMT.
Range oscillation, not often covered by students of technical analysis,
delves into repetitive market patterns during which the daily trading range
narrows and widens. Examining this pattern allows the technician to forecast
market reversals that other indicators may miss. Dorsey proposes the use
of range of oscillators in his mass index.
By Donald Dorsey.
Bond funds have become popular investment vehicles for income-oriented investors.
However, the bond market is often more responsive to news events than the
stock market is, so volatility can be extreme. Technical intermarket analysis
can be a useful tool in trading the bond market.
By Joe Duarte.
Senior research analyst Mitzi Wilson Carletti of Frank Russell Company researches,
monitors and evaluates international money managers as well as assists client
executives and other research staff to develop client strategy recommendations.
She is responsible for non-U.S. derivative and global tactical asset allocation
research.
By Thom Hartle
Do markets have memory? In this new theory by Edgar Peters, an offshoot
of chaos theory, John Kean explains, markets can be regarded as nonlinear
dynamic systems, and neural networks can be used to analyze and gauge behavioral
patterns in price change data useful in prediction.
By John Kean.
How does a veteran technician like Arthur Merrill select stocks for investment?
He explains that it’s not the simplest of methods and it does require
research and work, but the results, he notes, are worth it his growth stock
index and the DJIA started at 874 back in 1965; when the DJIA reached 3169
recently, Merrill’s index hit 15,149!
By Arthur A. Merrill, CMT.
Intermarket analysis is based on the premise that all markets are linked.
Last month, technical trailblazer John J. Murphy explored the inverse interrelationship
between commodity and bond prices; this month, he examines the relationship
between bonds and stocks and how bond prices can be used as a leading indicator
for stocks.
By John J. Murphy.
A trader can score that one big win, but it’s all for naught if he
can’t hold onto his profits. Money management is the step both before
and after trading, the study of risk and reward and how best to utilize investment
capital and keep it. Here’s an excerpt from
The Elements of Successful Trading. By Robert Rotella.
One of the most important aspects of any trade is timing the entry. Surprisingly,
daily and weekly analysis can be instrumental in planning an entry for long-term
trades. S&C Editor Thom Hartle outlines a complete approach to trading,
incorporating basic charting and trendline plotting, the stochastics oscillator
and momentum studies.
By Thom Hartle.
Staying with DOS (Gookin)
The New Financial Instruments (Walmslet)
Wall Street Words (Maturi)
The New Stock Market (Harrington)
Relevance III (Relevance III Inc.)
Elizabeth Marbach, first vice president and broker/analyst in the financial
futures group for Rodman & Renshaw, started out in the early 1980s down
in the Treasury bill trading pit on the Chicago Mercantile Exchange floor.
STOCKS & COMMODITIES interviewed Marbach on topics ranging from the Eurodollar
market to the dangers of pyramiding.
By Thom Hartle.
Using data and techniques originally presented in April 1990, the authors took
the most profitable indicator and combined it with money management methods
to statistically test for profitability.
By Timothy L. Krehbiel, Thomas P. Drinka, Gisele F. Hamm
This new indicator identifies those places on the price graph where highs
and lows are getting closer and closer together, and when used in conjunction
with buy rules and sell rules, it can be used to create a computerized trading
system.
By Curtis McKallip Jr.
Veteran technician John J. Murphy, whose trailblazing work on technical
analysis and intermarket analysis are classics of the field, has delved into
how bonds and commodities are interrelated and then how bonds and stocks
influence each other. Now, he introduces the Crb index/bond ratio as another
example of how these three market sectors interact, allowing us to determine
the relative strength between bonds and commodities.
By John J. Murphy.
What is system optimization, and is it good or bad? It’s
a little of both, systems designers will tell you.
By David S. Nicol
Presenting a technique of combining momentum and trend data to rate the
condition of the market.
By Anthony J. Macek.
If certain futures contracts show decided trend tendencies, can the same
be said about certain stocks or indices.
By Stuart Meibuhr.
Are you the kind of trader who assumes that everything will go your way,
only to be hit with a string of disastrous losses? Or are you the kind of
trader who assumes that the worst scenario is the most likely one, only to
find that you could have done a lot better with a much less fatalistic attitude?
What are the chances of a series of bad trades occurring, anyway? In an excerpt
from his Elements of Successful Trading, this author explains the
theory of runs.
By Robert P. Rotella
Even the most sophisticated market participants are tempted to buy a stock
that has been announced to split two for one. They, of all investors, should
know better, because not all stock splits turn out to be positive events.
How often are they positive for three to six months after?
Michael Sheimo, best known for books such as Dow Theory Redux and Stock
Market Rules, explores the question.
Our Technical Editor discusses trading ranges.
By John Sweeney.
OptionVue IV (OptionVue Systems International)
MetaStock Professional 3.0 (Equis International)
All-Season Investor (John Wiley & Sons).
An abundance of articles and letters concerning the popular Arms index,
or trading index (Trin), this year have addressed both the uses and limitations
of the index. The two major problems with the Arms index arose in constructing
a long-term Arms index and with using the index in mixed markets. STOCKS & COMMODITIES
contributor Tushar Chande proposes a way to measure market thrust and overcome
the limitations of the Arms index.
By Tushar S. Chande.
Are moving average crossovers effective when applied to the Dow Jones Industrial
Average? Frequent S&C contributor Arthur Merrill researched this question
using weekly data for the last 24 years, checking out crossovers with a four-week
exponential moving average and with 13–, 26– and 52–week
exponential averages. Here are his results.
By Arthur A. Merrill, CMT.
Mokrasch, continuing research published originally in his April 1991 article,
presents a generalized method for detecting seasonal patterns. He notes that
the trader should take a good long look at the data involved for significant
patterns before risking capital on so-called seasonal trades.
By Lewis Carl Mokrasch, PhD.
Of all the interrelationships between markets, one that has been taken for
granted for decades is the relationship between the Dow Jones Industrial
Average and the Dow Jones Transportation Average. John Murphy, veteran technician
and leading proponent of intermarket analysis, points out that the third
Dow Jones average, the Dow Jones Utility Average, can be used for forecasting
purposes for stocks as well as bonds. Murphy explains.
By John J. Murphy.
Respected technician and author Martin Pring debuts as a STOCKS & COMMODITIES
author, writing about the rate of change oscillator, a simple method of figuring
advances or declines in a given period.
By Martin J. Pring.
The Gann quarterly chart, a trend-following indicator like other range breakout
techniques, was previously described by Jerry Favors in the January STOCKS & COMMODITIES.
Most trend-following indicators give less than satisfactory results in the
absence of a strong trend, and Reif, whose research on the indicator goes
back a number of years, concludes that the Gann quarterly chart is no exception.
By David C. Reif.
Do you ever find yourself thinking that maybe you ought to try using the
exponential moving average but find yourself intimidated into paralysis?
Don’t be. Let Raymond Rothschild be your guide into a not-so-alarming
technique.
By Raymond Rothschild.
Ed Seykota, whose thoughts and insights were chronicled in Jack Schwager’s
book Market Wizards, has been involved with trading commodities
since the late 1960s. According to Market Wizards, Seykota’s “model
account” an actual customer account started with $5,000 in 1972 and
to date has earned more than a 250,000% gain. Recently, he purchased data
and software vendor Technical Tools. STOCKS & COMMODITIES interviewed
Seykota to find out his secrets to trading successfully.
By Thom Hartle
Moving averages are attractive because they simply and reliably execute
the “cut your losses and let your profits run” strategy. Moving
averages also have drawbacks because they discard much of the information
that the market offers. A simple moving average represents simple quantified
information either prices are above it or below it. Can additional information,
in this case the slope of the moving average, be put to use to improve trading
performance? Adam White of the “Technical Traders Bulletin” shows
you how.
By Adam White.
Bull and bear traps are gap openings that are reversed the same day and
that can cost a trader dearly. S&C contributor Nauzer Balsara presents
his method of analyzing market history to calculate the proper placement
of stops to avoid being caught in such traps.
By Nauzer J. Balsara, PhD.
This month, our Technical Editor evaluates a simple trading range model.
By John Sweeney.
Book: Agricultural Marketing (Aleris Consulting Inc.)
Trader’s Money Manager version 2.0 (CSI)
ProSearch version 2.0 (Telescan Inc.)
Book: Money Management Strategies for Futures Traders (John Wiley & Sons)
Book: Relative Dividend Yield (John Wiley & Sons)
The Volatility Handbook (Robert Krause)
Stock Market Logic (Dearborn Financial Publishing).
In the August STOCKS & COMMODITIES, noted technician Martin Pring presented
smoothed rate of change indicators as a method to identify both the trend
and reversals of trend in the markets. He pointed out that different rate
of change measurements could lag important market turns due to the presence
of different time cycles. Here, Pring presents his method of combining various
rate of change indicators for enhanced trend and reversal of trend identification.
By Martin Pring.
Some people get a start on their careers early, but Jeffrey Weiss, a Chartered
Market Technician and a first vice president with Shearson Lehman, began
earlier than most, at age 13. The technical analysis risk management approach
(Tarma) he pioneered was developed from his own trading experiences, including
the disastrous 1973-74 bear market. His opinions have been widely solicited
outside Shearson and he has been a guest on such well-known financial and
investment shows as “Wall $treet Week,” CNBC’s “Inside
Opinion” and “Business View” and Cnn’s “Business
Morning” and “Moneyline.” He is frequently quoted in the
print media as well. STOCKS & COMMODITIES interviews Weiss on topics
ranging from trading perspectives to the philosophy behind Tarma.
By Thom Hartle.
The author of The Technical Analysis Course debuts as a STOCKS & COMMODITIES
writer with this article. Here, Thomas Meyers explains that mistakes made
in systems testing can make the difference between the accurate assessment
of a system’s profitability and a distorted picture that failed to
take into account certain inevitable factors. Meyers shows you how to fine
tune your testing techniques so that these problems can’t cost you
all your trading capital when you go to trade in real time.
By Thomas A. Meyers
Last month, this technical trailblazer examined how utilities and bonds
were interconnected. This month, John J. Murphy analyzes how utilities in
turn affect stocks.
By John J. Murphy.
Michael Sheimo, best known for books such as Dow Theory Redux and Stock
Market Rules, tackles the age-old question of whether the Dow theory
is still valid and if it is, is it really sending us a warning?
By Michael D. Sheimo
Most technical indicators use a fixed lookback length based on the idea
that cycles are present in the price data. Should the same fixed lookback
length be used for all markets? Are there persistent cycles present
to justify the use of the same lookback length for evaluating the market?
Mike Poulos searches through a number of markets for persistent cycles and
offers his solutions.
By E. Michael Poulos
Newsletter publisher Jerry Favors presents another Gann method, this time
the weekly swing chart, as a timing tool with which to track individual stocks.
By Jerry Favors.
Who hasn’t heard of Fibonacci ratios by now, but to actually use them
in predicting market turns? Here, two software developers give novice and veteran
technicians alike a few things to ponder over.
By Brad Swancoat and Ed Kasanjian
The Equalizer 2.3 (Charles Schwab & Co.)
Option Simulator (Bay Options)
QuoteMaster Pro 1.63 (Strategic Planning Systems).
Pyramiding, the process of adding to the number of contracts during the
life of a trade, needs to be distinguished from the strategy of increasing
or decreasing the trading size contingent on the outcome of a closed-out
trade. Typically, pyramiding is undertaken with a view toward concentrating
resources on a winning trade, but pyramids could also be used to average
or dilute the entry price on a losing trade. Adding to a losing position
is essentially a case of good money chasing after bad and so, in this article,
Nauzer Balsara examines the concept of adding to profitable positions.
By Nauzer J. Balsara.
A stock’s price may be considered a mechanism to adjust its dividend
yield. In the short run, the dollar amount of the dividend is fixed, and
so stock prices change to accommodate changes in bond yields. Lags occur
because it takes time to convince most participants that bond yields have
changed meaningfully. Here’s an example of quantitative intermarket
analysis, analyzing the relationship of bond yields to stock dividends.
By Tushar S. Chande.
Gann’s methods have been studied for years and applied by many to
trading stocks and commodities. Here, Richard Diaz of Refco, Inc., provides
us with his Gann analysis of a bull market in wheat.
By Richard Diaz.
Building on a February 1990 article by Jay Kaeppel, “Formula Research” report
editor Nelson Freeburg and engineer/investor Charles Skelley introduce a
stock market timing model using the Fed discount rate and the 13-week Treasury
bill rate spread.
By Nelson Freeburg and Charles Skelley.
Do seasonal variations exist in the heavily traded and researched stock
market? Recently, a securities analyst was quoted as saying that semiconductor
stocks declined an average of 40% from their seasonal highs to their seasonal
lows. Jack Karczewski presents this primer on the analytical procedure of
investigating seasonal fluctuations in the stock market using a semiconductor
stock as an example.
By Sigmund Karczewski.
Technical analysis is typically applied to prices to determine the trend
and changes in the trend. Now consider applying the same concept to analyzing
your equity curve to determine those times when your equity may not be trending
in the preferred direction.
By Joe Luisi.
Arthur A. Merrill, currently of Merrill Analysis and Analysis Press and
previously of Technical Trends, drew his first bar chart in 1930. His first,
earliest calculations were made on slide rule, long before the pocket calculator
or indeed the personal computer became a matter of course. Who else has had
a chance to watch the markets evolve quite the way that Art Merrill has?
Who else has experience quite like his to learn from? STOCKS & COMMODITIES
interviewed Art Merrill on July 27, 1992, inquiring about today’s markets
compared with yesterday’s and whether statistical analysis has ever
steered him wrong.
By Thom Hartle.
Logarithmic point & figure
Advance-decline divergence oscillator (ADDO)
Odd-lot shorts
Public shorts
Large block transitions
Testing indicators
Price/dividends ratio.
Veteran technician and leading proponent of intermarket analysis John Murphy
continues to delve into the interrelationships between markets, this time
between interest rates and the U.S. dollar.
By John J. Murphy.
The direction of price is influenced by different time cycles. Important
market turns occur when a number of these cycles are changing direction.
The KST indicator is an oscillator designed to identify market turns based
on the existence of these time cycles. Here, noted author Martin Pring presents
the application of different-length KSTs to identify important market moves.
By Martin J. Pring.
One problem that traders studying commodity markets face is the fact that
individual futures contracts have price characteristics that are not continuous
with other contracts within the same market. Jack Schwager, author and director
of futures research at Prudential Securities, has some suggestions on dealing
with this problem.
By Jack Schwager.
Here’s a concept to visually compare an indicator’s historical
profitability over a range of parameters simultaneously with the indicator’s
current standing, allowing the trader to identify those trading signals that
have been historically profitable.
By Christopher K. Smith.
DTN Wall Street datafeed (Data Transmission Network Corp.)
Director system testing (Nirvana Systems)
Signal 3.0 with SignalReports (Data Broadcasting Corp.)