Contents For
APR1996
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A Trend Channel Trade by Thomas Bulkowski
ARTICLE SYNOPSIS ...A Trend Channel Trade by Thomas Bulkowski
Here's a trade that combines fundamentals, trend channels, pattern recognition
and volume.
Selecting a stock to trade means more than just throwing darts. For my own trading, I use statistically positioned
trend channels, a method that allows me to define the boundaries of a trend. When dealing with trend channels,
you're faced with a declining stock that you still want to purchase. What makes you so sure that the stock will turn
around and climb instead of plummeting? Here's a top-down approach to trading the trend channel, using market trend analys...
BY: Thomas BulkowskiSUBJECT: Real World
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Learning Through Trial and Error: Mark Boucher by Thom Hartle
ARTICLE SYNOPSIS ...Learning Through Trial And Error - Mark Boucher
I started off totally technically based, opposite from what investors normally start off with.
When I started, there was a lot more material on technical analysis than I could find on
fundamental analysis. Most of it wasn't very good, but I liked technical analysis because you
could test it. - 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 have control of your own investments, how much more you have to learn
about them. STOCKS &...
BY: Thom HartleSUBJECT: Interview
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Letters to S&C
ARTICLE SYNOPSIS ...Letters To S&C
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? Have you run across trading techniques, services or products that have proved
useful? 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. Letters ...
BY: Technical Analysis, Inc.SUBJECT: Letters To S&C
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On Option Theta by Lawrence D. Cavanagh
ARTICLE SYNOPSIS ...On Option Theta by Lawrence D. Cavanagh
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.
A nyone who has ever traded options quickly becomes aware that if all things remain equal, then over time, the
price (or premium) of the option declines. Theta (q) is the Greek letter used to mark the decay of an option premium
over time. This price decay is nonlinear (that is, it changes over time), and most of the tim...
BY: Lawrence D. CavanaghSUBJECT: Options Analysis
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Predicting Major Market Moves by Gregory N. Hight
ARTICLE SYNOPSIS ...Predicting Major Market Moves by Gregory N. Hight
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.
Major trend changes may be signaled when market activity takes a distinct turn from a previous pattern. The
relationship between changes in interest rates and changes in the Standard & Poor's 500 index can be moni...
BY: Gregory N. HightSUBJECT: Stastics
BY: Technical Analysis, Inc.
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The Arms Index by Bruce R. Faber
ARTICLE SYNOPSIS ...The Arms Index by Bruce R. Faber
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.
In general, most stock market technical indicators use the closing and daily range prices of a stock or an index for
calculations. However, some indicators use what may be considered internal measurements of market activity. This
group of indicators is gauging the strength or weakness of the market ...
BY: Bruce R. FaberSUBJECT: Novice Traders' Notebook
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The Benefits of Diversification by Lars N. Kestner
ARTICLE SYNOPSIS ...The Benefits of Diversification by Lars N. Kestner
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.
The first major progress in portfolio management was made by Harry Markowitz, 1990 Nobel Prize co-winner in economics. Some 40 years ago, Markowitz began asking questions on the nature of risk and reward. Looking at
streams of cash flows, he attempted to quantify the relationship through mat...
BY: Lars N. KestnerSUBJECT: Money Management
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The GMI Bond Market System by Dennis Meyers, Ph.D.
ARTICLE SYNOPSIS ...The GMI Bond Market
System by Dennis Meyers, Ph.D.
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.
The connection between gold and interest rates is well known; gold prices are often used as a proxy for future
inflation. Today's perception of future inflation rates causes bond...
BY: Dennis Meyers, Ph.D.SUBJECT: System Design
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The Lone Trader by Adrienne Laris Toghraie
ARTICLE SYNOPSIS ...The Lone Trader by Adrienne Laris Toghraie
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.
If you were to make a movie of this man's life, it would be filled with scenes of him surrounded by all the people
in his life: his adoring wife and three children, his supportive parents, his many friends and associates and his wider
associations in the community where he is regularly elected to head committees and organizations. That's why I was
surprised when Jack confe...
BY: Adrienne Laris ToghraieSUBJECT: Trading Psychology
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Timing Stock Buys with an Oscillator by Richard Goedde
ARTICLE SYNOPSIS ...Timing Stock Buys
With An Oscillator by Richard Goedde
Use this oscillator to calculate buy points for a stock in an upward trend.
Oscillators are most useful when prices fluctuate up and down within a horizontal or flat channel (two parallel
lines that contain prices). When the channel is sloping upward as recommended for successful investing, it is more
difficult to determine the point at which %R gives a valid buy signal. In investment analysis, an oscillator is a
mathematical tool used to identify turning points in prices and is useful in timing the purchase and sale of a security.
Here'...
BY: Richard GoeddeSUBJECT: Basic Techniques
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Traders' Tips
ARTICLE SYNOPSIS ...TRADERS' TIPS
Do you have a custom formula, solution or user tip for your software that you would like to share? Have you ever
pondered a trading question that you'd like to share with other readers? Have you ever contemplated a question for
a while and come up with a solution that you'd like to share with others? Or are you still stuck without a solution?
Send your formulas, solutions, tips and questions to Traders' Tips, STOCKS & COMMODITIES, 4757 California
Ave. SW , Seattle, WA 98116-4499. Please send a hard copy and, if possible, the information on a disk in
unformatted ASCII along with...
BY: Technical Analysis, Inc.