ARTICLE SYNOPSIS ...%B complements on-balance volume by Joseph Barics Williams' on-balance volume, or WAD, by itself isn't always a clear indicator of a bottom. To better observe supply and demand, I combine WAD with the percentage of buying for the day, or %B, on a high-low-close graph. Unlike WAD, %B is calculated only from price data, and so, often indicates an imminent price turnaround or other price actions following a price minimum....
BY: Joseph Barics
ARTICLE SYNOPSIS ...A simple variation of the moving average by Peter Aan General description: The Moving Average Direction System is trend-following; always in the market. Originator: Peter Aan Advantages: Profits from most significant trends; entry technique eliminates some false signals. Disadvantages: Must wait for close for entry signals; optimal stops somewhat loose for small traders; whipsaw losses in sideways markets. Rules and formulas: Uses a simple moving average (MA) of closing prices. To compute a 30-day MA, for instance, total up the closing prices for the most recent 30 days and divide that to...
BY: Peter Aan
ARTICLE SYNOPSIS ...Commitments of Traders as a sentiment indicator By Stephen E. Briese In the past, conventional market sentiment indicators have been criticized for deficiencies such as the delay involved in reading market letters, weighing their content, estimating their influence on public traders and publishing the results. Also criticized has been the lack of precision (and potential conflict) in polling short-term investors such as pit traders and in projecting public trader market positions from a poll of market gurus, especially given the growing reliance on personal computers. I designed the Commitme...
BY: Technical Analysis, Inc.
ARTICLE SYNOPSIS ...Determining stock value from price and earnings by Paul T. Holliday The value of stocks and stock indices are generally derived from such fundamentals as earnings and return on investment. The value that investors place on a stock or stock index may also be found by examining historical data. Value is a function of fundamental parameters such as earnings and interest rates, but fluctuations around the nominal value occur because investors' expectations of future earnings may be optimistic or pessimistic, thus driving the stock price above or below that nominal value. Just because a relations...
BY: Paul T. Holliday
ARTICLE SYNOPSIS ...Ease of movement by Richard W. Arms Jr. On occasion it seems as though a stock or commodity must have discovered anti-gravity. It moves upward with little effort. Such a move is characterized by increasing volume but similarly increasing price spread on the upside, and the intervening pullbacks entail lighter volume and tighter price spreads. When such a stock or commodity is on the move there can be little trouble recognizing its strength. To short it at such a time can be hazardous to one's financial health! At other times, however, moving a stock higher is much like Sisyphus trying to rol...
BY: Richard W. Arms, Jr.
ARTICLE SYNOPSIS ...Elliott wave: Fact or fiction? by F. David Minbashian Using concepts from the elegant new science of chaotic dynamics, I was writing an essay to show as simply as I could arguing how commodity and stock prices follow a path of motion without any patterns. As I arrived at my conclusion, I could almost hear the hue and cry of disagreement from avid followers of R. N. Elliott only too eager to show me the vast profits they have amassed using his theory, for the Elliott wave principle is nothing if not a grand pattern by which prices are supposed to unfold. If you are one of those followers, don'...
BY: F. David Minbashian
ARTICLE SYNOPSIS ...Finding reliable trading strategies (revisited) by Thomas P. Drinka With the proliferation of microcomputers and analytical software, speculators and commercial traders routinely conduct research to evaluate the potential performance of trading strategies. These investors optimize their technical indicators by evaluating the trading performance of different parameter sets for each indicator. ""Unfortunately,"" according to system programmer Steve Kille, ""most technicians are simply searching for a set of rules which produce the highest level of profits over historical data and then using th...
BY: Thomas P. Drinka
ARTICLE SYNOPSIS ...New high and new low indicators by Mike Burk I use new high and new low indicators to help define cycles. My new high and new low indicators, which I developed with a computer and represent graphically, are exponential moving averages of the daily new highs and lows of the New York Stock Exchange. These indicators have specific uses. For example, the new high indicator is useful for confirming upside moves but is useless on downside moves. However, the new low indicator is the single best indicator I have found for defining cycles. Below are the definitions of the terms I use to discuss the...
BY: Mike Burk
ARTICLE SYNOPSIS ...Quantifying pain via drawdown size by Richard Harrison Most investors want the greatest return on their investment as long as their pain threshold is not exceeded along the way. The amount of pain an investor experiences depends not only on the size of drawdowns, but also on how long the drawdowns last. An investor can quantify both pain components of drawdown on an equity vs. time plot by measuring the area of the drawdown (DA). DA is the sum of the drawdown percentages for each time period for the duration of the drawdown. Summing the individual DAs results in the total drawdown area (TDA...
BY: Richard Harrison
ARTICLE SYNOPSIS ...SIDEBAR: Relevant formulas Formulas are given for nominal price, earnings average, effective interest rate, and divergence as used in the article ""Determining stock value from price and earnings"" by Paul T. Holliday...
BY: Technical Analysis, Inc.
ARTICLE SYNOPSIS ...SIDEBAR: The Commitments of Traders This sidebar simply gives the address for the Commodity Futures Trading Commission (CFTC) where the ""Commitments of Traders in Commodity Futures"" monthly report can be obtained....
BY: Technical Analysis, Inc.
ARTICLE SYNOPSIS ...Stocks above moving averages by Arthur A. Merrill, CMT The percentage of stocks above their moving averages has been tracked for a number of years by Investor's Intelligence, a weekly report that includes the number of New York Stock Exchange issues above their 10-week and 30-week moving averages. How useful are these figures? I calculated the standard deviations over the past 10 years. As benchmarks, I tried two-thirds of a standard deviation above and below the mean and a full standard deviation. Using these benchmarks to determine which figures were noticeably low or high, I checked their...
BY: Arthur A. Merrill, C.M.T.
ARTICLE SYNOPSIS ...Trading five-wave reversals Part 2 by Dan A. Dimock In ""Trading five-wave reversals"" (Stocks & Commodities, January 1990), I examined the one place in the market cycle where optimal entry into a win-win situation can occur: at the end of any wave C that has subdivided into five lesser waves of sufficient price range. I also mentioned a technique that can be used to find it. The discussion ended with the three wave classifications (1, B and X) that can follow these optimum entry points within the guidelines of the wave principle, reasoning that a potentially profitable trade with minimal ris...
BY: Dan Akin Dimock
ARTICLE SYNOPSIS ...Trading threshold by John Ehlers In radar, signal-to-noise ratio is used to measure the quality of target detection. In trading, this simple concept can be used to hit our profit targets better. We can improve our trading profitability if trading decisions are deferred until the signal-to-noise ratio is high. The charts can be viewed as noisy channels in which the daily range and very short-term day-to-day variations are the ""noise."" The longer-term variations mark the channel envelope. The trader's profitability can be enhanced if he waits for conditions in which the peak-to-peak variatio...
BY: John F. Ehlers