Analyzing indicators with the cells method by David R. Aronson
ARTICLE SYNOPSIS ...Analyzing indicators with the cells method
by David R. Aronson
Does a given technical indicator have predictive value or not? This fundamental question must be
answered before using it to forecast market trends or as input to trading decisions. An intuitively
appealing way to answer this question is what I call the signal event method. The signal event method
evaluates the net profit or loss that would have resulted over some period of past data had a trader acted
on the buy and sell signals generated by the indicator. Applying the signal event method, the analyst
defines rules (i.e., one or ...
ARTICLE SYNOPSIS ...Member Trading
by Arthur A. Merrill
Once a week, but two weeks late, the New York and American stock exchanges report some
interesting figures. You will find them in Barron's or The Wall Street Journal :
Total volume and total short sales;
Specialist purchases, sales
and short sales;
Floor traders purchases, sales
and short sales,
Odd lot purchases, sales
and short sales.
You can calculate the total exchange member figures by adding the specialist, floor traders and other
member numbers. Deduct member data from the total and you have a figure for the non-members or
Moving averages and smoothing filters by John Ehlers
ARTICLE SYNOPSIS ...Moving averages and smoothing filters
by John Ehlers
Moving averages are perhaps the single most widely used technical trading tool. While averages are
important tools, let's face it--we don't need computers to calculate them. Traders were using moving
averages long before simple calculators were commonly available. Traders simply computed the averages
by hand. Since we have the awesome power of sophisticated computers now at our fingertips, it's logical
to imagine that we can harness this power to create a better smoothing filter than the averages we now
use. I'll show that may not be so.
Point and figure charts: an overview by Charles Idol
ARTICLE SYNOPSIS ...Point and figure charts: an overview
by Charles Idol
The popularity of the personal computer has given rise to a bewildering number of charting techniques.
In addition to a profusion of moving averages of one kind or another, we have linear regressions,
stochastic methods, Fibonacci arcs, Gann angles and any number of applications of mathematical
techniques to stock data. This is progress, I suppose.
The drawback comes when this abundance shoves from the scene one of the most established and
venerable charting methods, one which embodies a unique philosophy as well as a very clever technique...
ARTICLE SYNOPSIS ...Stochastic oscillator
by Mike Takano
The stochastic oscillator is used to indicate overbought or oversold conditions on a scale of zero to 100%.
The stochastic process is based on the observation that as price decreases, the daily closes tend to
accumulate nearer the extreme lows of the daily range....
ARTICLE SYNOPSIS ...Tactical stock trading
by Peter Eliason
We have all heard that there is no solution to predicting the market because price movement is a
random walk. The statement is partially right and partially wrong. Price movement may be random, but
there is an exact solution to a random walk that can be used to mathematically beat the markets.
The solution revolves around the use of a tempered martingale numerical series. This algorithm is not
probabilistic, but it is mathematically exact. (See Stocks & Commodities, July 1988, page 40.) It has two
components: a point spread that determines exactly when...
ARTICLE SYNOPSIS ...Testing breakout systems
by Steve Notis
Breakout or volatility systems comprise a large portion of the current glut of publicly offered trading
systems. Many of these systems sell for $3,000 or more. For that price you usually get a nice software
package which will run optimizations on several variable parameters and give you a printout of the most
Whether you can make money using those parameters is an open question. Aside from the software, you
are buying the system designer's logic, whether fully disclosed or proprietary, which is embedded in the
software. You can adjust ...
ARTICLE SYNOPSIS ...Variable sensitivity stochastics
by William Mason
In this article, I am presenting elementary Statistical Analysis of Stocks and Indices (SASI) in an index,
three new indicators (SASITOP, SASIBOT and sigma limits) plus variable-sensitivity stochastics based
on statistical analysis. SASITOP is very similar to stochastics but uses plus and minus variance (sigma)
limits in place of the high and low over the time window. The data is modified for sharper sensitivity.
Because SASITOP and SASIBOT are the reciprocal of each other, I will concentrate only on SASITOP
in this article and apply it to the...
ARTICLE SYNOPSIS ...Velocity of the S&P 500
by Robert A. Wood
Structural changes in security markets resulting from the introduction of derivative instruments, namely
options and futures, have been the focus of extensive study in recent years. More recently, the
introduction of portfolio insurance and arbitrage trading strategies involving market indices implemented
with program trading have been the subject of widespread concern, especially after the events of October
Do derivative instruments, portfolio insurance trading strategies and/or the ability to instantly trigger a
large number of trades by ...
Volume-weighted RSI: money flow by Gene Quong and Avrum Soudack
ARTICLE SYNOPSIS ...Volume-weighted RSI: money flow
by Gene Quong and Avrum Soudack
The Relative Strength Index (RSI) by J. Welles Wilder Jr. is one of the most popular technical
indicators. RSI is included in most of the technical analysis software available today. Anyone conversant
with the algorithm used to calculate RSI knows that only the closing price is used. We believe RSI can be
improved by using volume to weight the index.
Classic market tops are characterized by an increase in volume. Technical indicators which rely only on
price changes do not reflect the whole picture. Volume can vary by an order o...