Contents For
SEP1991

A RegressionBased Oscillator by Patrick E. Lafferty
ARTICLE SYNOPSIS ...A RegressionBased Oscillator by Patrick E. Lafferty
Editor's note: Mr. Lafferty originally submitted this article as an entry to the June Traders' Challenge
contest. We decided to run it as a separate article because the idea that Mr. Lafferty presented in his
entry intrigued me and we thought that STOCKS & COMMODITIES readers would similarly be interested in
his techniques.
Although my primary interest in trading is in stock index options, after reading the June STOCKS &
COMMODITIES interview with John Murphy, I realized that my stock index analyses could benefit from
better understanding ...
BY: Patrick E. Lafferty

Guidelines With Support And Resistance by Richard L. Evans
ARTICLE SYNOPSIS ...Guidelines With Support And Resistance by Richard L. Evans
Given the explosive growth of the financial markets, with all the derivative products and the increased
complexity of trading strategies, all aided by the evolution of computers, some exotic forms of technical
analysis have emerged. A perusal of some of the recent features of STOCKS & COMMODITIES is enough to
overwhelm many an average investor. However, one of the oldest forms of technical analysis, support
and resistance, can still put the individual investor on the same playing field with the institutional
investor when it involves ...
BY: Richard L. Evans

Letters To S&C by Technical Analysis, Inc.
ARTICLE SYNOPSIS ...Letters To S&C by Technical Analysis, Inc.
LEAST SQUARE, MOST COOL
Editor,
""A regressionbased oscillator"" by Patrick E. Lafferty (STOCKS & COMMODITIES, September) was very
good, and I would like to see many more articles by him. His trading method was logically developed and
appears to be very promising.
As the basis of his approach depends upon a leastsquare trend, I was dumbfounded in applying this
method because I did not understand the leastsquare equation:
P = 390.52  t(0.77202) + t2 (0.0055339)
where P is the price of June gold in dollars per ounce and t is the time in days. ...
BY: Technical Analysis, Inc.

Nonlinearity, Chaos Theory and the DJIA by Victor E. Krynicki, Ph.D.
ARTICLE SYNOPSIS ...Nonlinearity, Chaos Theory and the DJIA by Victor E. Krynicki, Ph.D.
Here's a fresh look on using nonlinear systems and chaos theory to understand the markets.
Concepts deriving from nonlinear systems and chaos theory have begun to be applied to understand
stock market behavior. In a STOCKS & COMMODITIES article, Hans Hannula presented an attempt to apply
the concept of the strange attractor to major price swings, pointing out that stock market behavior evinces
both linear and nonlinear domains.
Within a linear domain of the stock market, a proportional relationship controls price moves, si...
BY: Victor E. Krynicki, Ph.D.

Pattern Recognition And Candlesticks by Gary S. Wagner and Bradley L. Matheny
ARTICLE SYNOPSIS ...Pattern Recognition And Candlesticks by Gary S. Wagner and Bradley L. Matheny
Here's a look at the new order of artificial intelligence linked with the old order of candlestick charting
By now, who hasn't heard of the Japanese form of charting called candlesticks? Until Steve Nison
introduced candlestick charting to the West a few years ago, charting services or software programs that
offered graphically displayed data in candlestick format were few and far between. Finding a guidebook
or manual on interpretations of candlesticks and their patterns was almost unattainable unless one could
re...
BY: Gary S. Wagner and Bradley L. Matheny

Price/Earnings Ratios by Arthur A. Merrill, C.M.T.
ARTICLE SYNOPSIS ...Price/Earnings Ratios by Arthur A. Merrill, C.M.T.
Here's a look at an old fundamental analysis favorite and what it can do for the technical analyst.
For many years I have monitored the performance of a group of 30 to 50 stocks that have been
exhibiting rapid and consistent growth in earnings per share. They are true growth stocks, with growth
rates averaging an increase in earnings per share of more than 20% per year. To qualify for the list, the
stock must be listed on the New York Stock Exchange and must have increased its earnings per share in
each of the past five years. When earnings ...
BY: Arthur A. Merrill, C.M.T.

Quantifying The Tried And True by John Sweeney
ARTICLE SYNOPSIS ...Quantifying The Tried And True by John Sweeney
Some people think that my use of numbers indicates a lack of respect for traditional charting
techniques. Quite the opposite is true. I've found over the years that what I've come up with generally
confirms many of the triedandtrue trading axioms and charting techniques, only I've been able to put
numbers to many of them which before were unquantified advice.
A good example is the work on maximum adverse excursion (MAE) (STOCKS & COMMODITIES, October
1985, and S&C, January 1991), which advised you to focus on minimizing losses in order to be a...
BY: John Sweeney

Starting A Technical Analysis Group by Barbara Star, Ph.D.
ARTICLE SYNOPSIS ...Starting A Technical Analysis Group by Barbara Star, Ph.D.
While the perfect trading system may be elusive, sharing information with others is very attainable. One way to do so is to become part of a technical analysis group.
Technical analysts constantly search for the knowledge that could propel them to the realm of the truly
great (or, at least, the consistently good) trader. Part of the search includes the desire to compare notes
and experiences with other traders. While the perfect trading system may remain elusive, sharing
information with others is a very attainable goal. One of the b...
BY: Barbara Star, Ph.D.
BY: Thom HartleSUBJECT: Interview

Time Series Forecasting: ARMAX by Thomas H. Lincoln
ARTICLE SYNOPSIS ...Time Series Forecasting: ARMAX by Thomas H. Lincoln
As an avid reader of stock market books and newspapers, I have observed the overwhelming number
of graphic illustrations of economic and market indicators. Oftentimes some indicators are contradicted
by others and leave the future direction of the market probable, but not always quantitatively definite.
Determined to make a useful forecast from the many graphs and indicators, I have combined a multiple
regression model of several economic indicators and related market indicators with the autoregressive
moving average (ARMA) models of BoxJen...
BY: Thomas H. Lincoln