ARTICLE SYNOPSIS ...Stocks & Commodities V. 22:4 (120-121): Charting The Market: Stochastics by David Penn STOCHASTICS For many technicians, stochastics are the first real oscillator to be encountered when embarking on the study of technical analysis. Unlike some of the more common-sounding concepts in technical analysis, terms like support and resistance, breakout and breakdown, trading range, relative strength, and pullback, a term like stochastics lets an acolyte technician know he or she has truly entered a different field of knowledge with its own rules, customs, mores, and in-group jargon. What are stoch...
BY: David PennSUBJECT: Charting The Market
ARTICLE SYNOPSIS ...Stocks & Commodities V. 22:4 (58-60): Come Here Quick, Durbin Watson by Ron McEwan Here's how you can use the Durbin Watson statistic to measure the autocorrelation of two securities. One of the most powerful statistical tools traders have at their disposal is the ability to measure the correlation between two sets of time series data. There are many approaches to this. One is to measure the relationship of stock prices (usually the closing prices). Another method, common among portfolio analysts, is to measure the correlation of the returns (daily, weekly, or monthly) of the underlying dat...
BY: Ron McEwanSUBJECT: Statistics
ARTICLE SYNOPSIS ...Stocks & Commodities V. 22:4 (30-37): Do Price Patterns Really Work? by Martin J. Pring How far can you expect prices to go when they break out of a pattern? Here's one technique you can use to find out. Technical analysis focuses on identifying trends early on and riding them until evidence of a reversal appears. Essentially, these trends are periods in which either buyers or sellers are in command, depending on direction. Fortunately for technicians, there is usually a transitional phase or trading range separating up- and downtrends. During these trading ranges, neither side is in contro...
BY: Martin J. PringSUBJECT: Chart Patterns
ARTICLE SYNOPSIS ...Stocks & Commodities V. 22:4 (52-55): Dollar-Weighted Put/Call Ratios by Fari Hamzei and Barbara Star Ph.D. Does this new twist on the popular sentiment indicator hold some predictive value? Find out here. Many years have passed since Martin Zweig used end-of-day option trading activity to create the put/call ratio. Since then, it has been widely followed as a measure of market sentiment. It reflects the emotional aspect of trading by identifying the degree to which traders feel optimistic or pessimistic about near-term market direction. Because it reveals what traders are thinking, many bel...
BY: Fari Hamzei and Barbara Star Ph.D.SUBJECT: Options
ARTICLE SYNOPSIS ...Stocks & Commodities V. 22:4 (65): Explore Your Options by Tom Gentile CALENDAR SPREADS Q: I'm having a hard time understanding exactly how a calendar spread creates profit. Can you explain this technique in language that I can easily understand? A: A calendar spread, also referred to as a time spread, is a "delta-neutral" (nearly risk-free) strategy. It is composed of both a long and a short position (hence the spread), using two calls or two puts that have the same strike price but expire on different dates. Ideally, in order to maximize the profit, you would like for the stock to finish ...
BY: Tom GentileSUBJECT: Explore Your Options
ARTICLE SYNOPSIS ...Stocks & Commodities V. 22:4 (56-57): Intermarket Review by David Penn TURKISH INVESTMENT FUND (TKF) The Turkish Investment Fund (TKF) is a closed-end fund under the advisement of Morgan Stanley Investment Advisors. Traded on the New York Stock Exchange (NYSE), the fund is geared toward providing investors with exposure to equities of companies based in or out of Turkey. Founded in December 1989, the fund had total net assets in excess of $29 million as of this writing. Holdings in the Turkish Investment Fund include companies such as Turkiye Is Bankasi (banking), Akbank (banking), and Turkc...
BY: David PennSUBJECT: Intermarket Review
ARTICLE SYNOPSIS ...Stocks & Commodities V. 22:4 (66-73): Interview: Short-Term Trader Jeff Cooper by Jayanthi Gopalakrishnan Few people have succeeded in trading the way Jeff Cooper has. His first book, Hit And Run Trading, is often referred to as the bible of the short-term trader. His other work, including Hit And Run Trading II, has further given insight into his ability to spot unique trading setups that over time profitably repeat themselves. His next book (with partner David Reif), Wheels Of Time And Price, will be published in 2005 by Traders Library. Cooper is a regular contributor to TheStreet.com, whe...
BY: Jayanthi GopalakrishnanSUBJECT: Interview
ARTICLE SYNOPSIS ...Stocks & Commodities V. 22:4 (10-13, 86-87): Letters To S&C by Technical Analysis, Inc. CANDLESTICKS REVISITED Editor, While I disagree with the importance placed on a single tall white candlestick line in Stephen Bigalow's article in the February 2004 issue ("Stop-Loss Procedures Made Easy"), I am glad he touched on the importance of using stops. In all of my training material, I stress that while candlesticks give many timing advantages, the trader must always take into account risk and reward. One of my Nison Trading Principles (my 13 most important trading concepts) is, "Even a perfect ...
BY: Technical Analysis, Inc.SUBJECT: Letters To S&C
ARTICLE SYNOPSIS ...Stocks & Commodities V. 22:4 (74): Novice Trader's Notebook: Momentum by Amy Wu MOMENTUM The momentum indicator was first presented in J. Welles Wilder's ""New Concepts In Trading Systems"" and has since become a popular technical tool. Price momentum is defined as the measure of velocity of price change or market speed. The difference method for calculating a momentum indicator is the following: have n be the time period (usually 14 days), then subtract the close n periods ago from the present close period. If both of these closing values are identical, then the difference is zero. If the p...
BY: Amy WuSUBJECT: Novice Traders' Notebook
ARTICLE SYNOPSIS ...Stocks & Commodities V. 22:4 (60): Sidebar: Durbin Watson statistic by Ron McEwan The Durbin Watson statistic is a test that looks for first-order autocorrelation in the residuals of a time-series regression. The residual for time period t is compared with the residual for time period t?1, resulting in a statistic that measures the significance of this correlation. The value of the statistic ranges from zero to 4, with 2 indicating that there is no serial correlation. Sidebar Figure 1 shows a spreadsheet for calculating the autocorrelation for 10 securities....
BY: Ron McEwanSUBJECT: Sidebar
ARTICLE SYNOPSIS ...Stocks & Commodities V. 22:4 (62-64): The Wounded Trader by Adrienne Laris Toghraie Don't let your past affect your present performance in the markets. The business of trading forces you to face the psychological baggage that you carry. It also makes you deal with new issues that develop from losses in the markets. Hard-earned money and dreams lost can leave deep psychological wounds. The prevention of such wounds, and the way you handle them when they do happen, will determine whether you will survive as a professional trader. READY TO RUMBLE If you want to become a profitable entrepreneu...
BY: Adrienne Laris ToghraieSUBJECT: Trading Psychology
ARTICLE SYNOPSIS ...Stocks & Commodities V. 22:4 (44-48): Tiny Chart Patterns: Stinkers Or Stalwarts? by Thomas N. Bulkowski Recognizing tiny chart patterns may be all the edge you need to make a killing in the market, but do they work? In two prior articles, I discussed bullish chart patterns of long duration. This article discusses smaller chart patterns: some you may have heard about, and some that may be new to you. None of the patterns is longer than a few days. Daytraders in stocks or commodities may find them useful, but some of the patterns may also help longer term investors. Sometimes these tiny patte...
BY: Thomas BulkowskiSUBJECT: Charting
ARTICLE SYNOPSIS ...Stocks & Commodities V. 22:4 (102-113): Traders' Resource: Courses And Seminars by Technical Analysis, Inc. They say that the more you learn, the more you know you need to learn. This is true in trading. If you're not fully prepared when you go to trade, you could be the one that the smart money profits from. Education is crucial in trading. If you don't step up to the line with the right tools and know-how to trade the markets, you might as well be gambling -- with the odds on the house's side. But help is available, in the way of courses, seminars, classes, manuals, books, tutorials, even me...
BY: Technical Analysis, Inc.SUBJECT: Traders' Resource
ARTICLE SYNOPSIS ...Stocks & Commodities V. 22:4 (90-99): Traders' Tips by Technical Analysis, Inc. Here is this month's selection of Traders' Tips, contributed by various developers of technical analysis software, all to help readers more easily implement some of the strategies presented in this issue. Internet users will also find these and most previous Traders' Tips at our website at www.Traders.com. To locate the various tips, use our site's search engine or click on the STOCKS & COMMODITIES magazine icon on the left-hand side of our homepage, then scroll down to the "This month in S&C" section on the left-...
BY: Technical Analysis, Inc.SUBJECT: Traders' Tips
ARTICLE SYNOPSIS ...Stocks & Commodities V. 22:4 (14-20): Trend-Quality Indicator by David Sepiashvili Having trouble detecting trends, or estimating their duration when you do spot one? This indicator comes to the rescue. Trend detection and estimation is one of the most important objectives of technical analysis. One common filtering technique that attempts to eliminate stock market noise and extract important trends is smoothing with the help of moving averages. When using moving averages (MAs) to detect a trend in a security's price, the main difficulty is determining the appropriate averaging period. To d...
BY: David SepiashviliSUBJECT: New Techniques
ARTICLE SYNOPSIS ...Stocks & Commodities V. 22:4 (22-28): Volume Divergence by Hal Masover Divergence in volume and price give clues to future price movement. One of the first things I learned about trading was to search for divergences. Briefly, divergence simply refers to the circumstance of price going one way but not being confirmed by any number of possible other confirming indications. The first one I learned to use and still like is stochastic divergence. This was developed by George Lane and is available on virtually any charting software. In Figure 1, I have reproduced stochastic divergence on a fivem...
BY: Hal MasoverSUBJECT: Basic Techniques
ARTICLE SYNOPSIS ...Stocks & Commodities V. 22:4 (99-100): Websites For Traders: CANSLIM.net by David Penn CANSLIM.NET When veteran traders and stockpickers are asked, "How do I get started in the stock market?" many point to one book: William O'Neil's classic, ""How To Make Money In Stocks."" This book, which was first published in 1988, is infused with both an optimism that is exceptional for its directness and simplicity ("Success in a free country is simple. Get a job, get an education, and learn to save and invest wisely. Anyone can do it. You can do it"), as well as a hard-as-nails attitude toward investi...
BY: David PennSUBJECT: Websites For Traders
BY: Ashwani GujralSUBJECT: Candlestick Corner
BY: David PennSUBJECT: Focus On