ARTICLE SYNOPSIS ...A Closer Look At Divergences by Clive Roffey, Ph.D. In 1972, the investor and well-known goldbug James Dines produced a 600-page treatise called How The Average Investor Can Use Technical Analysis For Stock Profits. I regard this book, unfortunately now out of print, as comparable in the value of its contribution to technical analysis to the classic Technical Analysis Of Stock Trends by Robert Edwards and John Magee. If you can lay your hands on Dines's work, you should. The first major section, on the application of group and crowd psychology to stock market movement, is especially valuable....
BY: Clive Roffey, Ph.D.SUBJECT: Charting
ARTICLE SYNOPSIS ...Analyze Net Positions by Jon D. Andersen Commitment of tradersÝ (COT) data has, for many traders, been difficult to understand and apply. This has largely been because access to usable forms of the data has been limited, and analysis techniques have been sparse. However, the COT does provide useful information for understanding the dynamics of the futures markets. In this article I will offer examples of analysis techniques for net positions between commercial, noncommercial (or large speculator), and small traders. Plotting the difference between the positions of these speculators provides ...
BY: Jon D. AndersenSUBJECT: Trading Techniques
ARTICLE SYNOPSIS ...Auction Market Theory And The Longer Time Frame by Donald Jones Last issue, I provided an overview of Auction Market Theory. Two important facts should be kept in mind as I discuss the next stage, applying the theory: First, markets are not correlated on a day-to-day basis, and second, markets are in a continuous cycle. The lack of correlation precludes finding market condition from yesterday's market, but you still need to know the market condition to make trading decisions. You find out about market condition from the Overlay Demand Curve. MARKET CONDITION FROM OVERLAYS As traders, we spe...
BY: Donald L. JonesSUBJECT: New Techniques
ARTICLE SYNOPSIS ...Books For Traders by Technical Analysis, Inc. ? The Options Workbook, second edition ? The ART of Risk Management: Alternative Risk Transfer, Capital Structure, And The Coverage Of Insurance And Capital Markets ? Bull's Eye Trading: A Trading Champion's Guide To Pinpointing Tops & Bottoms In Any Market ? CNBC Guide To Money & Markets: Everything You Need To Know About Your Finances And Investments ? The Financial Numbers Game: Detecting Creative Accounting Practices ? The Investing Bible ? Single Stock Futures: The Complete Guide...
BY: Technical Analysis, Inc.SUBJECT: Books for Traders
ARTICLE SYNOPSIS ...Fast Fourier Transformation by Amy Wu For a long time, Fourier transforms were used mostly by engineers. Transforms were used to study sound waves, frequency vibrations, and other repetitive occurrences. Since then, Fourier transforms have been applied to a number of other diverse fields. Aerospace engineers use them to study a plane's wing-tip vibrations during flight, while musicians use them to identify patterns when strumming musical instruments. It was only a matter of time before someone used Fourier transforms for technical analysis, specifically, a type of calculation called the fast ...
BY: Amy WuSUBJECT: Cyclical Analysis
ARTICLE SYNOPSIS ...How Does Rule 431 Affect Daytraders? by Paul Carlson Like me, many of you may have been concerned when you received letters from your brokers describing the new minimum margin requirements of $25,000 for pattern daytraders. In those letters, your brokers described the definition of a pattern daytrader as someone who made four day trades in five days. While this definition might not classify you as a daytrader per se, when you looked at your account, you saw several occasions when you would have triggered the rule had it been in effect at that time. You may have only $5,000 or $10,000 in your ...
BY: Paul CarlsonSUBJECT: Real World
ARTICLE SYNOPSIS ...Interview: An Interview With Jake Bernstein by Jayanthi Gopalakrishnan Cycles expert Jake Bernstein's analytical eye has seen the tide of the markets ebb and flow for more than 30 years. Many of the long-term social, political, and economic forecasts Bernstein has published in the last two decades have come to pass, including the interest rate top of the early 1980s, the deflation of the 1980s and early 1990s, the Japanese economic peak, the explosion in genetic engineering technology, the interest rate lows of the mid-to late 1990s, the Gulf War, and many more. He is president of MBH Commodi...
BY: Jayanthi GopalakrishnanSUBJECT: Interview
ARTICLE SYNOPSIS ...Letters To S&C Editor, This technical analysis business seems intriguing. Is the art and science of it developed and practiced by many? How long has TA been practiced? MARK MCCLATCHEY, via e-mail I credit Charles Dow with developing the first technical analysis system, which some call Dow theory. Dow was the cofounder of Dow Jones & Company and the first editor of The Wall Street Journal in 1889. The Dow Jones Industrial Average was first published in 1896. Intellectual debate about the validity of technical versus fundamental analysis has gone on for more than a hundred years. From a pra...
BY: Technical Analysis, Inc.SUBJECT: Letters To S&C
BY: Jayanthi GopalakrishnanSUBJECT: Opening Position
ARTICLE SYNOPSIS ...Q&A by Don Bright OPENING FAIR VALUE I'm interested in what information or data is needed to calculate opening fair value for stocks, and how the calculations are made. Any help would be appreciated -- Matthew Murray We use the fair value (FV) number offered at www.programtrading.com (there are other sources, but I find theirs to be right on most of the time). We then find where the spot price of the S&P futures closed, add FV to it, and call this number "Spinx" (this is an actual symbol on some data vendors, like Neovest FirstAlert)....continuded...
BY: Don BrightSUBJECT: Q&A
BY: Technical Analysis, Inc.SUBJECT: Traders' Resource
ARTICLE SYNOPSIS ...Traders' Tips by Technical Analysis, Inc. METASTOCK: DIVERGENCE FORMULAS I've seen many divergence formulas written for MetaStock, but in my opinion, none of them work well. Here, I'll present a divergence formula for MetaStock using RSI(14) and the close. I'll also introduce another divergence formula, which I call double successive divergence (DSD)....
BY: Technical Analysis, Inc.SUBJECT: Traders' Tips
BY: David PennSUBJECT: Websites For Traders
BY: Jayanthi GopalakrishnanSUBJECT: Websites For Traders
ARTICLE SYNOPSIS ...Working Money: How Dow Theory Works by Andrew Hetherington The Dow Jones Industrial Average (DJIA) is an index of the price fluctuations and volume for 30 bluechip equities. The DJIA's companion index is the Dow Jones Transportation Average (DJTA), which is made up of freight, airline, courier, trucking, and rail equities. According to Dow theory, the DJTA confirms the movements of the DJIA. This confirmation usually lags after the DJIA has already completed its move. However, there are times when the two move almost in tandem....
BY: Andrew HetheringtonSUBJECT: Dow Theory
ARTICLE SYNOPSIS ...Working Money: Recognizing Elliott Wave Patterns by Rudy Teseo Part I discussed the basic wave patterns: impulse and corrective. Part II will describe the patterns that must be recognized in order to do a thorough job of Elliott wave (EW) analysis. The following examples by no means include all the patterns you will encounter in your Elliott wave analysis, but represent those that appear most often. You need to know not only to what price levels the market will rise, but also what patterns to expect in your bar (candle) chart. The two main Elliott waves are motive and corrective. The motive ...
BY: Rudy TeseoSUBJECT: Novice Traders' Notebook
ARTICLE SYNOPSIS ...Working Money: That '70s Show by David Penn These must be confounding times for those who have spent the past five years alerting the investing public to dangers of deflation. Deflation -- the process through which a currency becomes overvalued relative to goods and services available, resulting in a decline in pricing power -- was the last phase of the disinflation wave that began in the early 1980s as the chronic inflation of the 1970s was finally eliminated from the US economy. Most evident in the bearish commodities markets, deflation and its discontents (increased burdens for debtors, for ...
BY: David PennSUBJECT: Market Update
BY: Don MillerSUBJECT: Novice Traders' Notebook
ARTICLE SYNOPSIS ...Zero-Lag Data Smoothers by John Ehlers Here's a technique that can reduce lag to nearly zero. A causal filter can never predict the future. As a matter of fact, the laws of nature demand that all filters must have lag. However, if we assume steady-state conditions -- that is, no new, disturbing events -- there are techniques we can use to reduce the lag of these filters to nearly zero. It turns out that such filters are useful for technical analysts with which to smooth data, and perhaps create some fast- acting indicators. This is possible because the steadystate assumptions are almost, but n...
BY: John F. EhlersSUBJECT: Trading Systems