ARTICLE SYNOPSIS ...A sojourn through random territory by Henry S. Patricoff The New York Stock Exchange Advance/Decline (A/D) figures, dice, and roulette have a bit in common on a probability basis. The figures are for these particular 6,500 trials. At some future sampling, they can be quite different, but no doubt will meander above and below the probability line. The following shows runs of 1, 2, 3, or more pluses in a row....
BY: Henry S. Patricoff
ARTICLE SYNOPSIS ...Applied artificial intelligence by Jerry Felsen, Ph.D. Both the science of cybernetics and artificial intelligence (AI) techniques are central to the design of viable man-computer investment decision systems. Cybernetics has been defined as the interdisciplinary science of communication and control in the animal and machine. Its major province is the study of systems which may be exceedingly complex and dynamic . . . perhaps defying a full description. These are exactly the sort of systems faced by the investment analyst....
BY: Jerry Felsen, Ph.D.
ARTICLE SYNOPSIS ...Assessing risk on Wall Street part 2: Applying the Random Walk by Thomas A. Rorro The Random Walk theory lets the investor evaluate the risk of an investment before the investment is made. In the first article in this three-part series, the potential profitability of this approach was demonstrated. Investments were reduced to a graphic representation of profit vs. the underlying common stock price. In this article, we will examine a technical analysis approach to the Random Walk. Profit characteristics of basic investments The profit characteristics of market instruments are determined by t...
BY: Thomas A. Rorro
ARTICLE SYNOPSIS ...Detecting hidden signals by Clifford J. Sherry, Ph.D. Do you have a signal, such as a particular pattern of price movements, that is buried in noise like random fluctuations or seasonal trends? If you believe this signal is time-locked to some internal event, like a particular pattern of price changes, or an external event, like the beginning of a trading week or month, you may be able to use a relatively powerful technique called averaging to detect your signal. Averaging is done with a special-purpose computer and is used in such disciplines as neurophysiology or electrical engineering to d...
BY: Clifford J. Sherry, Ph.D.
ARTICLE SYNOPSIS ...Letter to Jake by Stuart J. Pahn Dear Jake, You asked me to explain some of the main factors I consider when making a trade. Let me use my most recent trade as an example. As the attached equity run shows, I sold short a contract of June Comex gold on May 1, at $345.10, and covered it May 6 at $343 for a gross profit of $2.10, per contract. The accompanying chart shows the daily price action of June gold with a couple of moving averages superimposed and volume plotted below the price bars. As a long-time Wyckoff student, I usually begin analysis by examining the price/volume relationship.......
BY: Stuart J. Pahn
ARTICLE SYNOPSIS ...Letters to S&C by Technical Analysis, Inc. S&C Computer Program Editor, Would you please spend a few minutes to reply to my inquiry as to what equipment I will need in order to run the upcoming Stocks & Commodities programs for non-CompuTrac users? I am currently using an Apple II + with 48K and one disk drive. I have a Panasonic 1091 NLQ dot matrix printer and am uncertain as to the interface card. I wish to be one of the first purchasers in line--as my father was with CompuTrac--for my intention is to start a business on the side using your program. I intend to teach others how to interpre...
BY: Technical Analysis, Inc.
ARTICLE SYNOPSIS ...part 2: Are junk stocks really dogs? by Bill Dunbar This is the second part of an article by the same title published in a previous issue of Stocks & Commodities. In the first half, my question was related to investment in junk stocks near the peak of the market cycle. The question was: what is the risk in a portfolio of junks under such circumstances? The answer was: on the average, less risk than in a portfolio of respectable stocks. The part that was missing was what the relative gains were if the stock had been purchased just prior to a healthy bull market. Since it required a different s...
BY: Bill Dunbar
ARTICLE SYNOPSIS ...Sweeney Agonistes by John Sweeney FEEDING FRENZY I opened my Journal today to find Kidder Peabody explaining ""What is a stock?"" on the editorial pages. My mother calls to find out if she should be going for ""higher returns in the market."" I've not been through a stock market feeding frenzy personally, but it seems to me a lot of ordinary people are thinking about throwing money at the stock market. Of course, through their mutual funds and retirement plans, they already have thrown a lot of money at the market. With cash inflows in both areas growing, fund managers seem to be sorely pres...
BY: John Sweeney
ARTICLE SYNOPSIS ...Technical analysis of the Dow 20 Bond Index by Howard Waxenberg Over the years, the correlation between moves in the bond market and moves in the stock market has been tremendous. In the last several years, we have repeatedly seen the condition where bonds rally and then four to six weeks later stocks start a bull move. There is a repeating pattern at tops as well where bonds top out and, on average, two weeks later equities begin to falter. So, it makes sense then, that predicting moves in the bond market through technical analysis has two effects. First, of course, is predicting the future ...
BY: Howard Waxenberg
ARTICLE SYNOPSIS ...Trading Tactics A livestock futures anthology by John Sweeney Editor: Todd Lofton Publisher: Chicago Mercantile Exchange Agricultural Commodity Marketing 30 South Wacker Drive Chicago, IL 60606 (312) 930-8213 (direct line to order the book) Price: $29.95 Trading Tactics will serve novice traders well as a survey of approaches to trading the livestock and meat futures. Those who have four or five years under their belts may find that some of the chapters are useful introductions to areas in which they have not spent time. Those who are not about to change their established, effective trading ...
BY: John Sweeney
ARTICLE SYNOPSIS ...Weekly price and volume by Frank Tarkany The daily DJIA closing price and NYSE total volume from January 2, 1897 to December 31, 1985 were used to construct a weekly data series. The week's closing price and total volume contained 4,623 data pairs, about 18.65 percent of the original daily data series. This weekly data series was then investigated for non-random and serial dependent trading windows with an eye to comparing the results to those from the daily data. Figures 1, 2, 3, and 4 show the weekly non-random and serial dependent chi-square x2 values for the DJIA weekly closing price and...
BY: Frank Tarkany
ARTICLE SYNOPSIS ...Wyckoff Part 7: Coordinating vertical and figure charts for more effective forecasting by Jack K. Hutson Vertical charts, alone, are a detailed source of information for the Richard D. Wyckoff analysis of individual stocks groups and the market. But when the analyst combines vertical charts with figure charts, even better results are possible. Vertical charts with their price-volume information point out where trends are headed, while the price information in figure charts shows just how far the trends should go. The vertical figure chart duo, therefore, makes for more complete diagnosis and...
BY: Jack K. Hutson