ARTICLE SYNOPSIS ...Calculating Relative Strength Of Stocks by Robert L. Hand Jr. Heavy on consumer stocks? You may want to rethink your strategy and make some adjustments to your portfolio. Robert Hand addresses the shift of leadership early this year from consumer stocks to technology stocks, and how relative strength can identify emerging trends. Bear markets come in two forms, the more visible form when all stocks decline below previous lows several times for a total drop from the highs of more than l5%. The less visible form of bear market is often referred to as a sector rotation and is less visible becau...
BY: Robert L. Hand Jr.
ARTICLE SYNOPSIS ...Computer Data Conversion by Hans Hannula, Ph.D., C.T.A. Computers talk to each other all the time -- except when you get involved. A familiar feeling? Ever have data you'd love to have on your system, except the data aren't compatible with your setup and you end up having to input everything all by hand? Well, you're not alone. Fear not, for Hans Hannula explains the whys and wherefores and how to convert that data to your needs. Not long ago, one of the major problems a technical analyst had was getting data. This usually meant hours at the library, scrolling through microfiche of back newsp...
BY: Hans Hannula, Ph.D., RSA, CTA
ARTICLE SYNOPSIS ...Forecasting Tomorrow's Trading Day by Tushar S. Chande, Ph.D. Using linear regression as a crystal ball for forecasting the market? After all, if you were to be able to determine tomorrow's high, low and close for trend changes and placement of stop points, it would simplify your life immeasurably. Can it work? Tushar Chande explains how it can be done. Wouldn't you trade better It you could ""see"" the future? A simple linear regression can provide an objective forecast for the next day's high, low and close. These ingredients are essential for a trading game plan, which can help you trade ...
BY: Tushar S. Chande, Ph.D.
ARTICLE SYNOPSIS ...Optimum Detrending by John F. Ehlers Look at any price chart, and you'll find that markets move up and down even while in a trend . Removing the trend can help identify short-term turning points. Frequent STOCKS & COMMODITIES contributor John Ehlers presents different techniques for detrending prices and his optimized detrending method as well. We want to detrend data because we want to remove the longer-term variations so short term turning points are easier to discern, enabling us to better pinpoint the best entry and exit points for short-term trades. Since the goal of detrending is separ...
BY: John F. Ehlers
ARTICLE SYNOPSIS ...Ranking The Currency Markets by Tim Hayes The very idea of trading the currency markets can make the most seasoned traders shudder a little, but in truth, doing so could be lucrative when combined with a solid technical system. You can rank currencies by averaging the percentage rate of change over various periods. Combining the ranking table with your timing models will help with market timing, too. Tim Hayes, of Ned Davis Research, can fill you in on ranking the currency markets. When currency markets come to mind, the risk-averse investor might cringe at the thought of wild short-term swi...
BY: Tim Hayes
ARTICLE SYNOPSIS ...CALCULATING RELATIVE STRENGTH Calculating relative strength performance in a spreadsheet is easy. Ours example, sidebar Figure 1, uses the closing price of Pepsico (column A) versus the closing price for the S&P 500 (column B). Any two items can be compared. ......
BY: Technical Analysis, Inc.
ARTICLE SYNOPSIS ...CALCULATING TrSI Calculating the true strength index requires an introduction to exponentially smoothed moving averages (EMA): Exponential Moving Average--The EMA for day D is calculated as: EMAD = aPRD + (1-a)EMAD-1 where PR is the price on day D and a (alpha) is a smoothing constant (0<a<1). Alpha may be estimated as 2/(n+1), where n is the simple moving average length....
BY: Technical Analysis, Inc.
ARTICLE SYNOPSIS ...OPTIMUM DETRENDING SPREADSHEET EXAMPLE The following is a spreadsheet example (sidebar Figure 1) and a QuickBasic source code (sidebar Figure 2) of optimum detrending. Our spreadsheet example is for detrending the price data of the bond market example used in Article Figure 9 of the text of the article. Our spreadsheet example uses the variables listed in the text of the article: ......
BY: Technical Analysis, Inc.
ARTICLE SYNOPSIS ...SAMPLES OF USE Three samples of data in different programs manipulated to be used in other software trading programs....
BY: Technical Analysis, Inc.
ARTICLE SYNOPSIS ...SETTING UP AN EXCEL SPREADSHEET Following is an example of setting up an Excel spreadsheet for creating a forecast using a five-day linear regression for tomorrow's close. Sidebar Figure 1, Column A, lists the dates and Column D lists the closing prices (the Y variables) used for the forecasted close. ......
BY: Technical Analysis, Inc.
ARTICLE SYNOPSIS ...UNDERSTANDING STANDARD MATHEMATICAL SYMBOLS It is inevitable that today's technician will encounter steps to calculating an indicator that uses standard mathematical symbols that appear to be beyond simple arithmetic. In reality, these symbols are simply shorthand notation for no more than basic arithmetic. The following is a guide and interpretation to mathematical symbols commonly seen in STOCKS & COMMODITIES....
BY: Technical Analysis, Inc.
ARTICLE SYNOPSIS ...The Elapsed Time Calculator by Arthur A. Merrill, C.M.T. Veteran technician Arthur Merrill explains how to derive the number of days, actual or calendar, between two dates using a simple table and some elementary steps. Do you need to know the number of calendar days between two dates? Do you need to know the number of days to the expiration of a futures contract to calculate fair value? Do you need to know the number of calendar days between two peaks or two troughs to estimate cycle length? Do you need to know the number of days between two dates to calculate interest due? If so, this tab...
BY: Arthur A. Merrill, C.M.T.
ARTICLE SYNOPSIS ...The Link Between Bonds And Commodities by John J. Murphy Like a set of tumbling dominoes, intermarket analysis is based on the theory that one instrument affected will in turn affect another. Technical pioneer John Murphy, best known for his trailblazing work in technical analysis and intermarket analysis, explains how that interrelationship between bonds and commodities works. Intermarket analysis adds another layer to the work of the technician by considering activity in related markets. Whereas traditional technical analysis treats each market separately, intermarket technical analysis su...
BY: John J. Murphy
ARTICLE SYNOPSIS ...The Technical Song of Bernadette Murphy by Thom Hartle ""The investor is in conflit, right now, because we've had the tremendous advance of consumer stocks throughout the 1980s. What we have is this battle: Should you be following capital goods? Or should you stay with growth stocks?"" -- Brernadette Murphy Bernadette Murphy, C.M.T., of M. Kimelman & Co., who, like so many others, came to Wall Street out of curiosity but never intended to stay, is a longtime veteran of the markets. She has seen fads take the Street by storm and then promptly fade, and she's witnessed market peaks and crashes ...
BY: Thom HartleSUBJECT: Interview
ARTICLE SYNOPSIS ...Trading With The True Strength Index by William Blau The true strength index, which was introduced late last year in these pages, may be considered to be a cross between a relative strength indicator and a moving average convergence/divergence indicator with many of the desirable properties from each. Creator William Blau, who introduced the indicator to S&C readers last year, explains how to trade with the index. The true strength index introduced in STOCKS & COMMODITIES November 1991 was discussed as a smooth momentum indicator stripped of high-frequency noise useful for expressing the dir...
BY: William Blau
ARTICLE SYNOPSIS ...Using Probability Stops In Trading by Nauzer Balsara, Ph.D. Does controlling losses by using predetermined stop-loss points help? To find out, Nauzer Balsara selected randomly moving average crossover systems and ascertained the best stop-loss points to use. Then he tested the system over different data. We present his results. The goal of risk management is conserving capital -- getting out of a trade without incurring too much of an unrealized loss. The question here is how much is too much? An unrealized loss arises during the life of a trade, representing the difference between the curren...
BY: Nauzer J. Balsara, Ph.D.