---

VOLUME 14 ARTICLE LIST

The Electric Utility Bond Market Indicator

There's a close relationship between the performance of the electric utilities stock index and the bond market. Technicians use this relationship to forecast the direction of interest rates. This S&C Contributing Editor takes it one step further and designs a trading system for bonds based on the S&P 500 electric utility index. By Dennis Meyers, Ph.D.

Quasi-Seasonal Tendencies in Bond Futures

Markets may have certain persistent characteristics. Here, a market analyst takes a close look at the Treasury bond futures markets to see if there are tradable patterns. By Scott Barrie

Quantifying Divergence With the Divergence Index

Divergence, a popular technical term used to denote a market movement in one direction when a technical indicator fails to follow it, can forewarn of a reversal in market direction. However, divergence has been difficult to quantify. Here's one software engineer's approach to tracking divergence. By Matt Storz

The Advance-Decline Line Redux

The advance-decline line is an ongoing sum of the difference between the number of stocks closing higher minus the number of stocks closing lower each day. Here's a primer on how to use a variation on this indicator. By Robert Kinsman

Recovery and Preparing to Trade

Keeping a level head is key to enhancing your success as a trader. In this article, this consultant, who teaches psychological breakthrough strategies, discusses how to relinquish the emotional impact of trading failures and successes and staying focused on the upcoming trades. By Ari Kiev, M.D

Interview

At the Crest of a Tidal Wave:

Robert R. Prechter Jr. on the Elliott Wave Principle

It's inevitable: Anyone who enters into the realm of technical analysis runs into a reference to the Elliott wave theory sooner or later. Whether you're an adherent or a skeptic, the Elliott wave is certainly one of the best-known methods By which to analyze the markets. Robert Prechter, who is considered to be the world's leading authority on Elliott wave, is president of market forecasting and publishing firm Elliott Wave International and is also the author of a number of books on the subject and editor of two monthly forecasting publications, The Elliott Wave Theorist and Global Market Perspective. Prechter began his career in the financial markets as a technical market specialist with the Merrill Lynch market analysis department before he struck out on his own to concentrate on Ralph Nelson Elliott's work. Here, Prechter shares his views on the outlook for the stock market, commodities, the economy and more. By Thom Hartle

On Using Stops

Stop orders are used to manage risk and to enter and exit positions. But what are some of the methods you can use to do so? For a look at the basics plus some of the finer points, read on. By Joe Luisi

Reviews & Quick-Scans

Aim StatNet, version 3.0, build 1.15 (Abtech Corp.)

Top Step Bonds, version 2.1 (MicroStar Research & Trading, Inc.)

S-Plus, version 3.2 (Statistical Sciences, Inc.)

Pattern Recognition Workbench, version 2.1 (Unica Technologies Inc.)

Gauging Mobility With Price Distributions

The price distribution function, which analyzes the distribution of prices over a lookback period, is useful for predicting price mobility. Here's a new method called the mobility oscillator that will allow you to do so. By Mel Widner Ph.D.

Basis For Stock Worth

Estimating a company's value can be the initial filter for identifying trading opportunities. Here's a method to determine a company's value based on earnings growth rates and interest rates. By William N. Hosley

The Unfinished System

Do you spend all your time trying to develop the perfect system instead of taking the plunge with a simple system? Is avoiding risk no matter what the cost at the heart of your problem? Take the leap. Here's how. By Adrienne Laris Toghraie

The Advance-Decline. New-High, New-Low Market System

Try combining popular technical stock market indicators the advance-decline line, the number of stocks making new highs and the number of stocks making new lows to develop a trading system for the stock market. By Dennis Meyers, Ph.D.

Quantifying Percentage Retracements

Traders often look for retracements of a market trend to establish new positions with that trend. But how often and how far does a market retrace the prior move before continuing? For the answer, this market analyst examines the Treasury bond futures market to determine typical retracement behavior. By Alex Saitta

Interview

Options as a Strategic Investment:

Options Strategist Lawrence G. McMillan

Options are a part of general financial strategy that at once draws and repels market participants. It's also a strategy that ironically you've basically got to lose money at in order to understand. So how do you learn more about it? It helps if you're familiar with Lawrence McMillan's Options as a Strategic Investment, a classic tome in the investment field. Stocks & Commodities spoke to McMillan about the ins and outs of options, including implied volatility; how far McMillan goes out to buy options; why it's important to do research on your portfolio; some strategies he uses and how expirations of index options move the market. By Thom Hartle

Evaluating Performance

When you're taking a look at records of trading systems and money managers for consistent performance, here are some things to look for. By K.D. Angle

Reviews & Quick-Scans

Pps Trading System (Curtis Arnold)

OmniTrader, version 2.1 (Nirvana Systems, Inc.)

WaveWi$e Market Spreadsheet, version 6.36 (Jerome Technology, Inc.)

Zacks Analyst Watch on Internet (Zacks Investment Research)

New Highs and New Lows

The number of new highs and new lows is a classic stock market indicator, and here are ways that this market statistic can be modified to build a number of market indicators. By Tim Hayes

A Price- and Volume-Based System

Traders often use moving averages of just price to signal trends. Here's a moving average system that uses price and volume for trading signals. By Alex Saitta

Covered Call Writing

Here's a primer on writing options to boost return on investment. By Steven P. Schinke, Ph.D.

The Knight-Ridder Crb Index

The Knight-Ridder-Commodity Research Bureau Index the Crb to you and me has been updated to reflect today's commodity markets. Here's an explanation of the changes to this industry barometer. By Raymond T. Murphy

Measuring System Performance

Want to improve the evaluation of your trading systems? Here's a new performance measure that uses some statistics to measure profitability through time. By Lars N. Kestner

Developing a Trading System

On the road to using technical analysis for trading, developing a trading system is a logical step to take along the way. Here are some guidelines to develop a basic system. By Greg Morris

INTERVIEW

Top Down Investing With S&P's Sam Stovall

Some wander onto Wall Street by mistake, while others seem destined to find their way there. Sam Stovall is a member of Standard & Poor's Investment Policy Committee, editor of S&P's Industry Reports and author of Standard & Poor's Guide to Sector Investing. Stovall spoke with Stocks & Commodities about market cycles, sector investing and relative strength, among other topics. By Thom Hartle

Zen and Emotional Control

This occupational psychologist explains that trading combines market knowledge and emotional discipline and that through meditation techniques, a trader can develop better emotional control. By Richard D. McCall

Trendlines as a Technical Tool

Applying trendlines to charts is a classic form of analysis. Here are some of the basics of using this tool. By Joe Luisi

Reviews & Quick-Scans

Live the Dream by Profitably Day Trading Stock Futures (Reality Based Trading Company)

WealthBuilder for Macintosh, version 4.0 (Reality Online)

Septor Financial Information Service (Notable Technologies, Inc.)

Telescan Investor's Platform (Telescan, Inc.)

The Gmi Bond Market System

This S&C Contributing Editor details a trading system for predicting Treasury bond yields that uses Barron's Gold Mining Index (Gmi) to signal changes. He compares the performance of the trading system with his previous use of the S&P electric utility bond market system. In addition, he tests the Gmi T-bond system for trading the Fidelity Government Securities Fund. By Dennis Meyers, Ph.D.

Timing Stock Buys With an Oscillator

Use this oscillator to calculate buy points for a stock in an upward trend. By Richard Goedde

The Arms Index

Here's the scoop on the Arms index, a stock market indicator that incorporates the number of advancing and declining stocks with the advancing and declining volume. The index is widely used as an indication of overbought and oversold conditions in the marketplace. By Bruce R. Faber

On Option Theta

Options traders use various measurements to calculate an option's risk, the calculations of which are denoted by Greek letters. One example is theta, which is the measure of how much an option's price decreases for each day that passes. By Lawrence D. Cavanagh

A Trend Channel Trade

Here's a trade that combines fundamentals, trend channels, pattern recognition and volume. By Thomas Bulkowski

The Benefits of Diversification

The question of how to increase returns while decreasing risk has fascinated investors for decades; after all, the goal is of trading or investing is to maximize return per unit of risk accepted. Here's an introduction to the benefits of diversification. By Lars N. Kestner

The Lone Trader

The stresses built into the profession of trading isolates traders from their natural emotional supports. Here are some ways to ensure those pressures don't reach a boiling point. By Adrienne Laris Toghraie

Predicting Major Market Moves

Here's a statistical method that compares the movement of the Standard & Poor's 500 index with the changes of interest rates. In addition, the author explains statistical tests that help validate the reliability of the relationships as well as a technique to identify anomalies, which may be used to anticipate changes in the S&P 500. By Gregory N. Hight

Interview

Learning Through Trial and Error: Mark Boucher

Hedge fund manager Mark Boucher would be the first person to tell you that you have to have control of your own investments and of course, once you do, how much more you have to learn about them. Stocks & Commodities interviewed Boucher, who publishes Portfolio Strategy Letter, about his experiences in the market, how he analyzes those markets and what traders and investors should look at and study in order to understand those markets. By Thom Hartle

Reviews & Quick-Scans

QuoTrek, version 7.0 (Data Broadcasting Corporation)

Monocle (Manhattan Analytics, Inc.) .

$ecure (Chande Research & Trading, Inc.)

Trading With a Variable Position Size

Once a position has been put on, some traders will hold it at a constant size throughout the life of the trade, while other traders will vary the size. Which is better? By Tom O'Malley

Real-World Option Pricing

Option models calculate premiums or the prices of options on the assumption that volatility is a constant. Here's how stock and index price changes are distributed in the real world and how the market prices options. By Lawrence D. Cavanagh

Presidential Parties and the Stock Market

Is there a relationship between the Presidential party in power and the subsequent performance of the stock market? Before you take a guess, here are the facts. By Dave Dorgan

The Volume Indicators

In spite of its importance, much less is written about volume than about price. Here's an introduction on the subject for the novices and a refresher for the veterans. By Bruce R. Faber

Interview

Living the Dream: Trader Gary Smith

In this day and age of computers and high technology, trader Gary Smith is certainly an anomaly, as he uses no computer, disapproves of mechanical systems and simply uses the data off Cnbc with which to trade. How does he do it? How has he done it? His recently published book, Live the Dream By Profitably Day Trading Stock Futures, explains, and so does this interview. By Thom Hartle

Charting Equity

Technicians apply technical analysis to charts for trading decisions. This technician applies similar techniques to his trading system results. By Joe Luisi

The Gold and Silver Bond Fund System

Building on his previous Gmi system article, this Contributing Editor develops a system using the Philadelphia Stock Exchange daily gold and silver stock index to trade a long-term government bond fund. By Dennis Meyers, Ph.D.

Event Trading in the Bond Market

The financial markets frequently react with large price movements after the government and private agencies release their economic reports. Are there any reliable patterns to the way a market reacts to the news? One money manager decided to find out, and here, he shows how monitoring the reaction to those reports can be a profitable endeavor. By Ben Warwick

Reviews & Quick-Scans

Market Skill-Builder (Richard H. King, FCA)

Cqg For Windows, version 1.487 (CQG)

Elliott Wave Analyser (Center for Elliott Wave Analysis)

The Derivative Moving Average

Here's a strategic variation of the tried-and-true simple moving average that uses a moving average for entry signals and the trend analysis index for exit signals. By Adam White

The High, Tight Flag

During a strong trend, a stock will still spend some time in a consolidation period before the next run. Here's a chart pattern that can be found during a consolidation of a strong stock. By Greg Kuhn

Seasonality and the S&P 500

Looking at the seasonality of the stock market from different viewpoints can give you new insight into an old concept. Here's a look at the best and worst months in which to invest as well as some suggested investing guidelines. By Mark Vakkur, M.D.

Statistics of Chaotic Markets

For those of us who have had "chaotic" days when everything was topsy-turvy and nothing went the way it should have maybe the problem isn't in those days; maybe it's in what we expect. By Hans Hannula, Ph.D., C.T.A.

Employment as a Bond Market Forecast

How good a barometer is the monthly US employment report for the bond market? One analyst decided to find out. By Alex Saitta

Sustaining the Trader's Momentum

This psychiatrist, who teaches strategies for successful trading, explores various strategies for overcoming obstacles to continued success. By Ari Kiev, M.D.

Enhancing On-Balance and Negative Volume

Here's a new technique that can be used to identify when on-balance volume or negative volume is indicating something notable about the direction of the New York Stock Exchange Composite Index. If your objective is to keep the bear away from the door, this may help. By Phillip C. Holt

Interview

Jim Bianco of Arbor Trading

There is no shortage of market analysts in this world, but as Jim Bianco, the director of research for Arbor Trading, can tell you, if you want to make a difference you have to look at things with a different vantage point. Bianco's career in the markets began in equity research, but eventually, he changed his focus to the fixed-income arena. Stocks & Commodities talked with Bianco on why his interest shifted from stocks to bonds, why bonds are out of fashion at the moment, and how he tracks the players that he thinks make the real difference on where interest rates are headed. By Thom Hartle

Reviews & Quick-Scans

Momentum historical stock market reference data (Momentum)

Trendseeker business database & software (Clairvoyant Data Systems Inc.)

Street Smarts (M. Gordon Publishing Group)

Insider TA, version 2.10 (Stock Blocks Inc.)

Market Edge trading recommendation software (Computrade Systems)

Schwager on Futures: Technical Analysis (John Wiley & Sons)

Interview

Cycles Within Cycles: Richard Mogey

Markets ebb and flow, rise and fall, come and go in short, they appear to be cyclical. To learn more about using cycles, there is probably no better source than Richard Mogey, the executive director of the Foundation for the Study of Cycles. Stocks & Commodities spoke with Mogey about the Foundation's research into the influence of cycles on the stock market, commodities and bond markets. By Thom Hartle

The Emotional Volatility Trap

Here are some simple guidelines for avoiding volatile emotional swings due to the stresses of trading. By Adrienne Laris Toghraie

An Alpha Indicator For Bonds

Alpha measures the performance of a stock compared with the stock market. Here, the alpha between a cyclical stock group and the Treasury bond market is used as an indicator for trading T-bonds to signal trends. By Frank Ritchie

The A/D Volume, New-High, New-Low Market System

Here, classic stock market indicators have been combined into a trading system for the market. By Dennis Meyers, Ph.D.

Trading Index Spreads

There are a number of different stock index futures, such as the Value Line index and the S&P 500, with similar characteristics but can be traded as spreads. Here are some basic methods. By Richard Halford

Three Turns On the Pivot Point

This floor trader updates his previous article on the pivot point technique with additional insight on how he uses the method for day trading S&P futures. By William Greenspan

Jump Into the Net

Want to do some research on the Internet but don't know where to start? Well, you're in luck. Here are some techniques currently available for finding investment information online, using search engines to navigate the Internet. By Ron Berlin

The Hidden Divergence

Divergence, which is a term that technicians use when two or more averages or indices fail to show confirming trends, is one of the mainstays of technical analysis. Here's a new way to use oscillators and divergence as well as methods to locate entry levels during a trend. By Barbara Star, Ph.D.

Reviews & Quick-Scans

Turtle Trading Concepts (Russell J. Sands)

Astro-Trend (Norman Winski & Assoc.)

Quotes Plus (Quotes Plus Inc.)

The Edge, version 1.1 (BulletProof Corp.)

Indicators & Trading Systems, volumes 1-11 (G. Morris Corp.)

Wall$treet Money Deluxe (MarketArts Inc.)

TRADING TECHNIQUES

The S&P 500 Seasonal Day Trade

Is there a particular day of the week within a month that offers the most opportunity? Here's a trading system based on the best days of the week for trading Standard & Poor's 500 futures. By William Brower, C.T.A.

INDICATORS

Historical Volatility and Pattern Recognition

A market tends to move swiftly from periods of price consolidation to new levels. Here's how to recognize the setup before a market moves out of a short-term consolidation, from the authors of Street Smarts: High Probability Short-Term Trading Strategies. By Laurence A. Connors and Linda Bradford Raschke

NOVICE TRADER

The Market Facilitation Index

Volume, one of the key elements in technical analysis, is used to analyze the power behind a trend. Heavy volume days may indicate a strong trend, while light volume days could indicate the lack of a trend. Here's a method to connect volume and price movement to quantify price activity. By Thom Hartle

Interview

On the Intuitive Trader: Robert Koppel

Phenomenology and existentialism and trading? Oh, my! Nothing in Robert Koppel's background as a philosophy academic could have given the slightest clue that he would end up as a floor trader for 17 years before giving that up for yet another career using the insights of his previous two. Stocks & Commodities interviewed Koppel, who is now a proprietary trader with Innergame Partners, on topics such as how traders see their own versions of reality and the importance of developing a trading plan that is consistent with your personality. By Thom Hartle

STATISTICS

Pacific Stock Exchange Technology Index

This professional options investor examines the performance of the Pacific Stock Exchange Technology Index compared with other market indices as a speculative and hedging tool. By Jerome M. Lederman, Eng.Sc.D.

REAL WORLD

Treasury Bond Yields and the S&P 500

Interest rates have long been tied to movement in the stock market. Here's how to test trading rules for the stock market based on a six-month moving average of the 30-year Treasury bond yield, showing us when it may and may not be profitable to invest in stocks. By Mark Vakkur, M.D.

Reviews & Quick-Scans

Excalibur, version 2.01 (Futures Truth)

Windows on WallStreet Pro, version 4.0.3 (MarketArts Inc.)

P/E CD-Rom (Deci$ionware Inc.)

Wall Street Quest, version 1.1 (Street Logic Software)

Option Strategies and Neural Networks

Confidence intervals are a statistical tool that describes the accuracy of a prediction, while neural networks provide predictions. This article combines the two to define the risk in a trade. By Thomas B. Rubino Jr. and Donald P. Nimey II

Avoiding False Signals

Some people may think that technical analysis doesn't work anymore, but here's one author's solutions to today's challenging modern markets. By Joe Luisi

Interview

Howard Abell of Innergame Partners

With nearly 30 years' experience as a trader and broker in the commodities pits, money manager and author Howard Abell has the bead on what it takes to trade. Abell, co-author with Bob Kopell of The Innergame of Trading and The Outer Game of Trading, and whose own Day Trader's Advantage has just been published, uses technical analysis with the weather eye of experience. He also writes the Impr Market Letter, published for professional and institutional traders. Stocks & Commodities interviewed Abell on topics such as how Abell picks his spots to enter the market, why he may abandon a bad trade and the mental challenges to trading. By Thom Hartle

Neutral Options Strategies

Here's an overview of using options as a technique to take advantage of unique situations in the futures markets. By David L. Caplan

The Cot Index and Corn

Here's a study on using the Commitments of Traders index as an indicator for trading the corn market. By Scott Barrie

Standard Error Bands

Here's a new technique for placing trading bands around the price action of your favorite market. This technique shows how to recognize low-volatility situations and aid in forecasting trend direction. By Jon Andersen

The Trader's Commitment

Are you willing to explore the ramifications of your trading? Trading in terms of your objectives is a key to enhancing your success as a trader. Here's how to use your goals to develop powerful trading strategies. By Ari Kiev, M.D.

Reviews & Quick-Scans

The Intuitive Trader (John Wiley & Sons)

StockTips information paging service (Claflin Communications)

InterQuote Internet quote service (Paragon Software)

The Winning Edge (On Target Press)

Wall Street Analyst, version 2.1 (Omega Research)

SYSTEM DESIGN

The Siren Call of Optimized Trading Systems

Today's software for trading systems can take you down some dangerous paths. Here's how to avoid one mistake. By Dennis Meyers, Ph.D.

TRADING TECHNIQUES

Seasonality and the Presidential Election Cycle

Can you combine politics with seasonality? With the Presidential election coming up, here's a review of some trading strategies for the stock market built around this event. By Mark Vakkur, M.D.

CLASSIC TECHNIQUES

The Andrews Line

Here's a charting method to determine market trend and identify reversal points to set up trading opportunities. By Ron Jaenisch

NOVICE TRADER

On Symmetrical Triangles

You might have seen triangle formations and wondered what they were all about. You might have been caught on the losing side of a descending triangle and wondered what happened. For those of you who've wondered what was going on, here's the first part of a two-part refresher course on the three basic types of triangle formations and how to use them in your investment decisions. By Thomas Bulkowski

Interview

Modeling the Markets With Nelson Freeburg

Nelson Freeburg, editor and publisher of market research newsletter Formula Research, has focused his energies on the development of systematic approaches to participating in the stock, bond and futures markets. What are the key issues and steps that anyone should take to designing trading models? Stocks & Commodities spoke with Freeburg about such subjects as parameter sensitivity, environmental conditions and some of Freeburg's favorite models. By Thom Hartle

INDICATORS

Pork Bellies and the Cot Index

When presented with sentiment data, you'll need to know when to follow the crowd or be a contrarian. In our continuing look at using the Cot index to predict market direction for commodities, here's a study on the Cot report as an indicator for trading pork bellies. By Scott W. Barrie

MONEY MANAGEMENT

Managing the Future With Managed Futures

The stock market has been trending higher for a record period, and a correction is long overdue. What can you do to stay in the game, besides reduce your risk? Consider diversifying your assets beyond just a basket of stocks. Here's the rationale. By Victor Sperandeo

TRADING PSYCHOLOGY

Those Losses That the Trader Creates

Traders may move from periods of success to periods of loss, but the losses may be created by the trader and not the markets. Here are some guidelines to identifying this problem and how to overcome it. By Adrienne Laris Toghraie

Reviews & Quick-Scans

TradeStation version 4, Build 15 (Omega Research)

Option Pro On-Line, version 2.1 (Essex Trading Co. Ltd.)

NEW TECHNIQUES

Dynamic Multiple Time Frames

This private trader, who was profiled in The New Market Wizards, discusses one of his techniques to trade the market based on an early signal for trend direction. By Robert Krausz, MH, Bche

REAL WORLD

On Developing Trading Systems

This neural network developer details steps in developing a trading system using advanced technology. By Jeffrey Owen Katz, Ph.D., with Donna L. McCormick

Interview

On the Principle of Parsimony: James O'Shaughnessy

Money manager and author James O'Shaughnessy, founder and president of O'Shaughnessy Capital Management, has been called a "statistical guru" (by Barron's, no less), while his first book, Invest Like the Best, was pronounced "awesome" by Forbes. O'Shaughnessy's latest work, What Works on Wall Street, is a serious inquiry into the investment strategies that stand up under long-term scrutiny and is refreshing research for every investor. So what does work on Wall Street, and more important, why? To find out, Stocks & Commodities spoke to O'Shaughnessy about investing for the long term, why human nature is brilliant as well as destructive and what class of companies offers the best opportunities. By Thom Hartle

trading techniques

Statistically Analyzing Volume

Is an increase in the activity of a stock a meaningful indication of the direction of price? To answer this question, you can use statistical methods and most any spreadsheet to analyze the relationship between price and volume. By William M. Goodman, Ph.D.

Sidebar: Normalize to Compare

TRADING TECHNIQUES

Stay in Phase

This cycles software specialist discusses an indicator based on cyclical analysis. By John F. Ehlers

Sidebar: BASIC Code for Phase Calculation

NOVICE TRADER

Ascending and Descending Triangles

Last issue, symmetrical triangles and the ways to trade with this particular chart formation were the topic at hand. This month, we present two more variations of the triangle, the ascending and descending triangles, their attributes and how to use them in your investment decisions. By Thomas Bulkowski

TRADING PSYCHOLOGY

Transforming Trader Self-Talk

Traders can talk themselves into disastrous losing scenarios. Here are the steps to avoid the problem. By Adrienne Laris Toghraie

Reviews & Quick-Scans

Quote Monkey, Version 2.11 (Primate Software)

ModelQuest, Version 4.0 (AbTech Corp.)

INDICATORS

Float Analysis

Here's a close look at the turnover of a stock's float, based on an idea from the works of W.D. Gann, that reveals some dramatic patterns and expands the definition of a base or consolidation zone. By Steve Woods and Jan Arps

REAL WORLD

A Rule-Based Approach to Trading

Last month, Katz presented his experience developing a trading system using a neural network–p;based approach. This month, he delves into a rule-based approach to trading. By Jeffrey Owen Katz, Ph.D., with Donna L. McCormick

NOVICE TRADER

The Expanding Triangle

Classic chart analysis and Elliott wave theory both consider the expanding or broadening triangle chart pattern to be a reversal of a long-term trend, and further, that such an event may be occurring in the Dow Jones Industrial Average. Here are the details. By Kit Webster

TRADING TECHNIQUES

The 2/20-Day Ema Breakout System

Moving average systems seek to capture meaningful trends. Here's a modified exponential moving average system that uses pattern recognition as a filter for entry rules. By David S. Landry

TRADING TECHNIQUES

Combining Trend and Oscillator Signals

Most trading systems fall into two categories. One, the most popular, is the trend-following method, where the signals are oriented toward putting the trader on board long-term trends. The profits acquired during the long-term trends will, hopefully, recover the monies lost during trendless activity. The other category takes advantage of trading ranges, and the trader makes the most money when the market's primary direction is sideways. Here's a trading system that incorporates both approaches to time entry and exit positions. By Jeremy G. Konstenius

Interview

Still Basic After all These Years:

Author and Analyst John Murphy

John Murphy, a veteran of nearly 30 years in the equities and futures markets, is the technical analyst for Cnbc television, publisher of the "Futures Trends and Intermarket Analysis" newsletter and author of such classics in the field as Technical Analysis of the Futures Market and Intermarket Technical Analysis, and his newest work, The Visual Investor, promises to be comparably memorable. Most recently, he's also cofounder of MurphyMorris Inc., a joint venture to develop multimedia software for investors interested in technical analysis. With all that he's seen and done, what are some of the technical approaches he's most impressed with? Stocks & Commodities asked him about the steps he takes to profiling which markets are offering opportunities and which are not, his favorite technical indicators, and more. By Thom Hartle

TRADING PSYCHOLOGY

Proactive vs. Reactive Trading

There are many different styles used by individual traders, some proactive, some reactive. Either can work and either can fail. Here's why. By Adrienne Laris Toghraie

Reviews & Quick-Scans

Options for the Stock Investor

Mesa96, version 1.9 (Mesa Software)

Cats (Chart Analysis Trending System)

Behold!, version 2.5.3 (Investors' Technical Services [NTech])

Simulated Trading Competition (TradeComp)