Contents For SEP1997

  • Break Faster Than Rally? by Alex Saitta

    ARTICLE SYNOPSIS ...Do markets decline in value at a faster pace than they rally? The question is put to the test using the Chicago Board of Trade Treasury bond futures contract. Nearly all market analysts agree that the bull market in bonds began in 1981, when the price of the Treasury bond futures contract bottomed at 55-05 (Figure 1). There is, however, an array of disagreement as to when or if the bull market ever ended. In my opinion, the bull market for bonds ended in October 1993, when the futures contract peaked at 122-06. The primary reason for my bearish view? Since the October 1993 peak, the Treasury ...

  • Do Cycles Exist in the Market? by John F. Ehlers

    ARTICLE SYNOPSIS ...This longtime S&C contributor explains the basis of the existence of cycles in market data. The markets are not always efficient; this is why trading decisions based on technical analysis work. Chart patterns that are discernible, technical events such as double bottoms› and Elliott waves›, allow technically based traders to make intelligent deci-sions. Another key discernible event that technical traders may make use of comes in the form of cycles. As a rule, it is not a task of much difficulty to identify cycles; a simple ap-proach, such as measuring the distance between successive lows, ca...

  • Identifying Significant Chart Formations by Daniel L. Chesler

    ARTICLE SYNOPSIS ...Before computers became commonplace, technical traders spent most of their time studying their charts, looking for consolidation and reversal patterns. Today, many traders have moved away from using classic chart patterns to methods based on quantifiable indicators. Here, the two disciplines are combined, using chart analysis and basic indicators to identify trading opportunities. Despite the growth in mechanical systems trading over the past decade, classical chart pattern analysis continues to enjoy a wide following. For example, Robert Edwards and John Magee's Technical Analysis of Stock T...

  • Managed Futures and Commodity Trading Advisors by Martin Hiemstra

    ARTICLE SYNOPSIS ...Are managed futures for you? Mysterious for many investors, they nonetheless fill a particular need and are no riskier than traditional equity investments. Dealing with a professional commodity trading advisor (CTA) can certainly help sort through the confusion. In early 1997, equity markets were on a roll, consistently making new highs. As a result, it was relatively easy for investors to make money in the bull market. But many investors have begun to question whether the stock market can continue to go up. Will their portfolios be overexposed if there's a correction? Regardless of how the s...

  • Steve Shellans of MoniResearch Newsletter by Thom Hartle

    ARTICLE SYNOPSIS ...Computers have managed to insinuate themselves into our lives these days, but not many of us remember the early days. MoniResearch Newsletter publisher Steve Shellans was a pioneer of sorts in the industry; he started to work with computers in earnest 40 years ago, before manned space flight had even been achieved. By the early 1970s, he was a pioneer of another sort when he moved out of New York City, the financial center of the nation, across the country, and there eventually building the beginnings of the market timer database that would be the underpinning of The MoniResearch Newsletter. S...

  • Sunspots and Market Activity by J. Katz, Ph.D.

    ARTICLE SYNOPSIS ...Is increased sunspot activity a precursor to market volatility? As any amateur radio operator can tell you, one of the major influences on long-distance radio transmissions is sunspots, which appear to the observer as, literally, dark spots on the surface of the sun. Why they occur is not known, although theories abound. One theory holds that they are produced by certain peculiarities in the gravitational influences of neighboring planets on the sun's tidal rhythms, while another theory attributes sunspot activity to shifts in the sun's magnetic poles. During periods of high sunspot activity,...

  • The Basics of Managing Money by Mark Vakkur, M.D.

    ARTICLE SYNOPSIS ...Why is money management one of the first items that profes-sional traders stress? Why would you think? Here's an overview of risk and several simple mechanical approaches to money management. Preserving capital is essential to a trader's long-term survival. The only legitimate objective of trading or investing is to make money; if you trade for the thrill of it, you are playing the world's most expensive sport. The objective of any money management system is simple: If followed, it will force you to cut losses short and let profits run. Most novice traders -- and the bulk of today's mutual fun...

  • The Relative Strength Index (RSI) by John Sweeney

    ARTICLE SYNOPSIS ...Here, one of the most popular indicators found in most analytical software packages is explained. When the relative strength index (RSI) became popular in the 1980s, it was touted as the indicator that led every turn in the market. Indeed, for certain futures contracts, financials and currencies, it could be prescient: In those markets, it had the peculiar ability to turn just as the financials would find a level of support or resistance before taking off to another price level. On other items, say, pork bellies or corn or cocoa, it would ape the price swings precisely. However, on trending p...

  • Traders' Tips

    ARTICLE SYNOPSIS ...TRADESTATION Here are two indicators to assist readers in identifying some of the classic chart patterns, as discussed in Daniel Chesler's "Identifying significant chart formations" elsewhere in this issue. Ideally, you will use one or both of the indicators in conjunction with other analytical techniques, such as trendlines, to identify trading opportunities on your charts. The first indicator, the ADX/MovAvg Combo, is a relatively simple indicator based on the average directional movement indicator (ADX) and moving average calculation. This indicator plots a 50-bar moving average and trigge...

  • V15:9: Letters to S&C

    ARTICLE SYNOPSIS ...WEB FORUM ON TRADING? Editor, I'm a longtime subscriber to your magazine and enjoy it very much, including especially the reviews of products. There is a related need that your Web site could meet while it would be impractical for a periodical. The product reviews in the magazine are good for an overall view of a product but can-not shine a light on many users' everyday experiences with the product, including those annoying or efficiency- wasting implementation issues related to usage and configurations, and intangibles such as ease of living with a product and enthusiasm and depth of support...