ARTICLE SYNOPSIS ...Disproving The Efficient Market Theory Samuel Eisenstadt Of Value Line For more than 50 years, Samuel Eisenstadt has been one of the major reasons for the phenomenal success of Value Line, Inc., developers of the Value Line Ranking System. Eisenstadt is research chairman, senior vice president, and a director of the company, and his primary areas of responsibility include the application of various quantitative methods to securities valuation and forecasting. A frequent lecturer on Value Line techniques to business school audiences and financial analyst societies, Eisenstadt has successfully...
BY: David Penn and John SweeneySUBJECT: Interview
ARTICLE SYNOPSIS ...CLARIFICATION, NOT CRITICISM Editor, I was shocked to learn that an S&C reader interpreted my letter to the editor in the February 2001 STOCKS & COMMODITIES ("Phasor Displays") as a criticism of John Ehlers. I have so many faults that I have a personal rule never to criticize any person. My letter was an appeal for help, not a criticism. Ehlers's articles show brilliance, but I'm frustrated because they go over my head. (Perhaps, as my wife reminds me, an idea goes in one of my ears and out the other -- with nothing to stop it.) If I say that I don't understand Einstein's writings (and I don...
BY: Technical Analysis, Inc.SUBJECT: Letters To S&C
ARTICLE SYNOPSIS ...Limited Risk With Limited Profit Option Credit Spreads Selling options is usually a good idea. Here's a tactic to do it. by Lee Lowell Option trading all comes down to probability of profit. Statistically, option sellers always have a better chance of profiting. It's true that when you sell options your profit is limited, but your chances of walking away with that profit are high. The reverse is true for option buyers. Their potential profit is limitless, but the odds of achieving that profit are very small, especially with out-of-themoneyÝ options. Why not put the odds of success on your s...
BY: Lee LowellSUBJECT: Options
ARTICLE SYNOPSIS ...EXIT SIGNALS I always believe that entry signals for trading are not so important compared with exit signals. Both "cut your loss" and "ride your profit" strategies are exit signals. What's a good strategy in terms of profit-taking signals? What criteria should I adopt in profit-taking mode?-- K.M. Lim, via e-mail We try our best to teach our traders to read the tape for both entry and exit points. Since we may go in and out of the same stock many times each day, we use minor intraday changes in our indicators for both entries and exits. Sometimes the best exit is actually a small loss (cutti...
BY: Don BrightSUBJECT: Q&A
BY: Phil DoyleSUBJECT: Trading Techniques
ARTICLE SYNOPSIS ...Valuing A Stock Using Earnback Periods Screening For Misvalued Stocks by Martti Luoma and Reijo Ruuhela You won't get an edge on finding good trades using the same tools everyone uses. Here's a new look at finding misvalued stocks. T he price/earnings ratio (P/E) is undoubtedly the most common valuation measure of a stock, and also the most commonly misused. P/E combines outside information (price) and inside information (earnings). Because of the central roles that price and earnings play, it is not particularly surprising that the use of P/E is so popular among analysts and investors. It...
BY: Martti Luoma and Reijo RuuhelaSUBJECT: New Technique
ARTICLE SYNOPSIS ...Tracking Risk Premium Seasons In Soybeans Year after year, the Earth turns around its axis, producing trading opportunities you can exploit with technical tools. by Scott Barrie Seasonality and technical analysis can be a powerful combination. Traders who understand the natural supply and demand cycles in the commodities markets can anticipate market turns more precisely, helping them isolate good trading situations and avoid poor ones. Here's a practical application: tracking risk premium in the soybean market. Soybean prices change based on the perception of future supply. The amount of c...
BY: Scott W. BarrieSUBJECT: Seasonality
ARTICLE SYNOPSIS ...The Early Bird Does Get The Worm Trade The Opening's Reaction Here's a simple, profitable trade you can make during the opening 30 minutes of the market. by Perry R. Stevens, MD, MBA The first 15 to 30 minutes after the stock market opens are usually the most volatile and the trickiest time of the day to make a trade. During this period, traders and investors alike are sizing up the market and eyeing specific stocks to buy or trade and may even take action. Any news that has come out since the market's close of the previous session or prior to the opening has been digested and interpreted. A...
BY: Perry R. Stevens, MD, MBASUBJECT: Trading Techniques
ARTICLE SYNOPSIS ...With the explosion of exchanges around the world and the increasing poaching of products between exchanges, traders should be aware of all the places where trading opportunities occur. No longer bound by national borders or even physical locations, exchanges can be no more than a box in the corner of an office. Differentiation comes in the form of product, volume, speed, pricing, and investor protections. Look for an exchange with extensive trade documentation so that disputes can be resolved quickly and with quick reference to events. Since more and more alternatives are rapidly becoming ava...
BY: Technical Analysis, Inc.SUBJECT: Exchanges
ARTICLE SYNOPSIS ...? TRADESTATION EASYLANGUAGE "Relative Performance Charting" by Phil Doyle in this issue presents a technique for comparing the rate of price change of two or more tradable instruments. The purpose is to help find the sectors with the best trading opportunities. Relative performance charting is a built-in feature in TradeStation Pro. After opening a standard linear-scale bar chart, enable Percent Change Charting via the Format Window dialog. This will change the chart to a Percent Change Chart. You can then add additional securities to the same chart for comparison purposes via the Insert Symb...
BY: Technical Analysis, Inc.SUBJECT: Traders' Tips
ARTICLE SYNOPSIS ...For Support And Resistance Volume-Weighted Average Price Here's how to use VWAP with the Midas indicators. by George Reyna Successful traders know how important it is to evaluate volume before taking a position in the market. This concept has been much discussed, but understanding the relationship of price behavior and volume is usually an intuitive exercise. Long-term success is based on experience level and seasoned judgment. On the other hand, volume-weighted average price (VWAP) calculations can create powerful indicators that graphically represent the interaction between price and volum...
BY: George ReynaSUBJECT: Indicators