ARTICLE SYNOPSIS ...Campaign: April '90 Gold by Robert Miner Every trading action must be made in accordance with the trader's trading plan. Unfortunately, most traders are very disorganized. One of the most useful habits I have developed for trading is to keep a daily trading/analysis log for each market I am interested in trading. Every day I make (usually) brief comments about the position of the market, potential upcoming price and time zones to anticipate change in market activity, news events or reports upcoming that may have at least a temporary effect on price activity and any other comment that I think ...
BY: Robert Miner
ARTICLE SYNOPSIS ...Delayed Channel Breakout System by Peter Aan Originator: Unknown; this is a variation of the simple channel breakout method. Rules and formula: The simple channel breakout is a tried-and-true trading system that has been used for years. The delayed channel is an interesting variation that has been discussed in print by several writers but is less well known. The rules are: Exit shorts and buy long on an intraday stop one point above the highest high of x days, with the most recent day being y days ago. Exit longs and sell short on an intraday stop one point below the lowest low of x days,...
BY: Peter Aan
ARTICLE SYNOPSIS ...Dow Theory by Melanie F. Bowman and Thom Hartle For a man who had the perfect opportunity to widely publicize his theory of stock market trends but never used it, Charles H. Dow nevertheless left a definitive legacy--the Dow theory is at the root of technical analysis and continues to influence trend analysis after nearly a century. Dow was a newspaper reporter and a member of the New York Stock Exchange in the 1880s before he established the Dow Jones financial news service and The Wall Street Journal. Ironically, most of what we know about his theory comes from the editor's closest colleagu...
BY: Melanie F. Bowman and Thom Hartle
ARTICLE SYNOPSIS ...Fibonacci, Elliott And Volatility by Paul G. Williams Suppose we could chart volatility just as we chart conventional prices. Then we could use Elliott wave analysis, Fibonacci characteristics and cycle techniques to forecast greater or lesser volatility. And very high volatility--perhaps resulting in a market crash--should be preceded by a bullish pattern in the volatility chart. Now suppose we could calculate and plot market volatility with a unique method that no one else was using. The volatility patterns would display the same type of structures as conventional price charts--which everyone...
BY: Paul G. Williams
ARTICLE SYNOPSIS ...Four-Year Cycles by James G. Arnold I developed the ""form"" of a long-term up/down cycle of the stock market, as shown in Figure 1a. This form shows that all market trends continue to excess. The up market phase drives prices far above value and the down market phase carries prices well below value. Strangely, the extent of these excess movements has demonstrated great consistency in past markets. The measure of price relative to value is reflected in the price/earnings ratio (P/E) of the average and in the dividend yield of the average. The typical movement of P/E and yield over the long-t...
BY: James G. Arnold
ARTICLE SYNOPSIS ...Hedging With Spreads by Bradley J. Horn A risk manager may prefer the flexibility and limited risk of a call or put strategy. The trader, however, may feel that the premium costs associated with outright option positions are too expensive. These cash flow problems may be overcome with a vertical spread, since this strategy combines the risk-reducing benefits of buying options and the income-generating benefit of selling options. For example, a transportation company that must acquire gasoline in the future is exposed to the risk of rising prices if the company lacks a fixed-price supply cont...
BY: Bradley J. Horn
ARTICLE SYNOPSIS ...Letters to S&C Editor, After reading your Opening Position on index arbitrage (Stocks & Commodities, January 1990), a question that I've been unable to answer since program trading became a controversial topic came to mind again. Information available on index arbitrage seems to support one of the following two arguments: Program trading is harmful to markets due to the potential for increased volatility and, therefore, bad for investors; or, there is no proven evidence that program trading increases market volatility and, therefore, is not bad for investors. Neither of these arguments addr...
BY: Technical Analysis, Inc.
ARTICLE SYNOPSIS ...Right On Target by Richard W. Arms Jr. I used to buy stocks and commodities in the same manner in which Columbus sailed to the New World: I didn't know where I was going when I started out, and when I got there I didn't know where I was. It was a great adventure in exploration, with high hopes at the beginning and self-doubt along the way. Of course, the trip was not randomly chosen. I believed, as Columbus did, that success lay at the end of the journey, and many times it did. Unlike Columbus, however, when I got to my destination I didn't always recognize the fact that I had arrived and get...
BY: Richard W. Arms, Jr.
ARTICLE SYNOPSIS ...SIDEBAR: Contraction/Expansion & ORB/Trend Day Definitions along with illustrations of Contraction/Expansion, opening range breakout and trend day concepts....
BY: Technical Analysis, Inc.
ARTICLE SYNOPSIS ...SIDEBAR: Four-year cycles on a mathematical basis The mathematical basis for the four-year cycle is found in many types of analysis. A good demonstration is the standard deviation of a market average as a risk parameter....
BY: Technical Analysis, Inc.
ARTICLE SYNOPSIS ...The Keys To Technical Conditions by James S. Gould, Ph.D. In the beginning, before personal computers routinely made trading decisions, there were traders who were able to decipher the language of the markets and earn trading profits. Today, traders have more electronic tools to analyze the markets than those of yesteryear could have imagined. Given the availability, power and diversity of those electronic tools, one would expect traders to devote more time analyzing market conditions prior to making trading decisions. Ironically, machines and associated paraphernalia (that is, software) have...
BY: James S. Gould, Ph.D.
ARTICLE SYNOPSIS ...The Principle Of Contraction/Expansion by Toby Crabel, CTA I define the principle of contraction/expansion as the market phenomenon of change from a period of rest to a period of movement back to a period of rest. This interaction between the phases of motion and rest is constant, with one phase directly responsible for the other's existence. For this report I will use daily open, high, low and close data. I tested a trading method called opening range breakout--a trade taken at a predetermined amount above or below the opening range. A trend day is defined as a day when the first hour's tra...
BY: Toby Crabel
ARTICLE SYNOPSIS ...The Psychology Of David Ryan by Van K. Tharp, Ph.D. David Ryan won the U.S. Investing Championships three years in a row. I first interviewed David in May 1988 and again in August 1989. Q: What makes you successful as opposed to the average trader? A: I'm interested in what I'm doing. I love what I'm doing! I'm fascinated! I study the market because I want to do it and because I 'm fascinated to find out what makes the stock go up and what is going to be the next big winning stock. My goal is just to become a better and better trader, more and more disciplined, so I can be more and more suc...
BY: Van K. Tharp, Ph.D.
ARTICLE SYNOPSIS ...Trading Limit Markets by Douglas Arend In an effort to maintain orderly markets in commodity futures, many exchanges impose daily trading limits. If prices rise above or fall below the previous session's close by a certain amount, further movement in the same direction is prohibited throughout the remainder of the session. The theory behind the use of limits is to afford an opportunity for markets to pause while participants determine if a move is overdone. Regardless of the underlying arguments for trading limits, such restrictions can be very frustrating to traders who find themselves lock...
BY: Douglas Arend
ARTICLE SYNOPSIS ...Weekly McClellan Oscillator by Arthur A. Merrill, CMT In the September 1989 issue of Technical Analysis of Stocks & Commodities, Richard Mogey described and interpreted the McClellan Oscillator. It's based on daily data. My data bank has been developed on a weekly basis. This article is a report on the performance of a weekly McClellan. The daily McClellan is the deviation of a 10% from a 5% exponential average of the daily number of advancing stocks minus the number declining. This is about equivalent to the deviation of a 20-day from a 40-day moving average. To change to a weekly, a 20-day...
BY: Arthur A. Merrill, C.M.T.