STOCKS & COMMODITIES magazine. The Traders' Magazine

Article Archive For APR1989

  • A simple cycle finder by Curtis McKallip Jr.

    ARTICLE SYNOPSIS ...A simple cycle finder by Curtis McKallip Jr. Cycle signatures are patterns created by cycles. If you're familiar with Fourier analysis and maximum entropy methods of cycle analysis you know they produce a pattern called amplitude spectra which requires a computer to calculate. In some situations where you might not wish or be able to use a computer, I have an effective method that, compared to computerized mathematics, is crude. Literally, it is a back-of- the-envelope method. Yet it is fast and gives you critical information identifying when your next trading window will arrive. This metho...

  • Alpha-beta trend following system Version II, tuning for performance by Anthony W. Warren Ph.D.

    ARTICLE SYNOPSIS ...Alpha-beta trend following system Version II, tuning for performance by Anthony W. Warren Ph.D. Several years ago, I published the alpha-beta trend following method in Technical Analysis of Stocks & Commodities. Although similar in concept to the classic moving average crossing systems, this method utilized an uncertainty band or trend channel to eliminate most of the false signals associated with moving average crossings. In addition, it graphically represented the preferred times to go long, go short and to stay out of a particular stock, bond or commodity market. One of the prob...

  • Cyclic personalities by John Ehlers

    ARTICLE SYNOPSIS ...Cyclic personalities by John Ehlers Are there basic differences in the cyclic behavior of various commodities? Although theory predicts short-term cycles will come and go, there is no theory predicting different cyclic ""personalities"" for different commodities. My experience has been that cyclic trading is successful for some commodities but not for others. My curiosity about the cyclic behavior of different commodities was aroused during the development of a Maximum Entry Spectral Analysis program (MESA) that provided backtesting. Using the program, I measured the cycles of 12 commodities ...

  • Discipline in trading by James Covington Bryce

    ARTICLE SYNOPSIS ...Discipline in trading by James Covington Bryce I would like you to bear with me for a moment and consider something that, at first, might appear to be a little ""far out."" Let's say all of a sudden you found yourself going about your daily tasks but you didn't have your body! Now I know it is a crazy idea, but consider it for a moment. How would you describe yourself? What would you be? You only live in your body. What you are really is not tangible, i.e., it cannot be measured by any of the five senses. This, my friend, is a very important exercise relative to stock and futures trading bec...

  • Hines ratio by Ray Hines

    ARTICLE SYNOPSIS ...Hines ratio by Ray Hines In 1982, I found the best way to design an indicator that stays with a trend until it has run its course is to isolate the factors that correlate highest with the price trend and monitor their intensity. The relative intensity of correlating factors is the primary influence on price behavior and overcomes the weakness of ""fixed"" trend indicators that contain the analyst's preconception of what length a trend should be. This result forced me to become an even bigger fan of investor emotion and the monetary areas because of their powerful influence on price behavior...

  • Letters To S&C

    ARTICLE SYNOPSIS ...LETTERS TO S&C From one author to another Dear Dr. Anthony, Congratulations on your excellent article on the alpha-beta trend following system (S&C, April 1989). Three questions: 1. ML is the ""lag,"" or one-half of the moving average. Your default value is 15. Is the moving average 15 or is it 30? 2. MS default of 6. Is the moving average 6 or 12? 3. YS is the number of standard deviations. How long a period do you use to calculate one standard deviation (the number to be multiplied by 2.5)? If you have time to answer, many thanks! ARTHUR MERRILL Chappaqua, NY ......

  • Letters To S&C

    ARTICLE SYNOPSIS ...LETTERS TO S&C Fast Fourier Transforms Editor, I am a current user of the technical analysis software CompuTrac and have been recently introduced (two months) to your theory on FFT (Fast Fourier Transform). However, I am puzzled by the fact that Fourier transforms can be used in technical analysis. As an engineer, I have used Fourier transforms but from an engineering perspective. I would appreciate it if you could send me more information on FFT as I would like to seriously study this new form of analysis. K. GIN Singapore As In engineering, Fourier Analysis is used to locate possible p...

  • Master oscillator by William Mason

    ARTICLE SYNOPSIS ...Master oscillator by William Mason Is it possible to produce an overall market entry or exit signal based on several indicators/indices? In answering this intriguing question, I asked myself, ""What do I look at and look for as my first quick estimate of the market trend and direction?"" My answer was that I go to three or four of my favorite indicators/indices and find out where they are in respect to their 10% exponential smoothing average (a 20-day moving average) which has proven, with time, to be a very good short-term support or resistance line. My next thought was, instead of trying t...

  • Member and public short selling by Arthur A. Merrill

    ARTICLE SYNOPSIS ...Member and public short selling by Arthur A. Merrill Total short sales figures, published by the New York and American stock exchanges, are a useful set of figures for gauging market moods. Total short sales figures are reported in The Wall Street Journal and Barron's. Exchange members and non-members, or the public, make up the total short sales figures. You can calculate the total exchange member figures by adding the specialist, floor traders and other member numbers. Deduct member data from the total and you have a figure for the non-members or public. Some analysts report ""members tot...

  • Opening range breakout Part 5 by Toby Crabel

    ARTICLE SYNOPSIS ...Opening range breakout Part 5 by Toby A. Crabel A trade taken at a predetermined amount above or below the opening price of a given day is called an opening range breakout (ORB).A narrow range four pattern (NR 4) is a day with a daily range that is narrower than the previous three days' daily ranges compared individually. In my experience, trades using the ORB technique on a day following an NR 4 pattern tend to coincide with trend day activity--and, consequently, successful ORBs. Figures 1 and 2 demonstrate an ORB on the day following the NR 4 pattern. The table in Figure 3 shows the results...

  • Point and figure: Analysis and projection Part 2 by Charles Idol

    ARTICLE SYNOPSIS ...Point and figure: Analysis and projection Part 2 by Charles Idol The fundamental pattern in point and figure charting -- the congestion area -- occurs after a substantial rise or fall in the price of a stock as the investment community adjusts to the new price. This congestion area looks like sideways price activity within a trading range (Figure 1). As a rule of thumb, the trading ranges are about 15% of the price for a low-priced stock, 10% for a medium-priced stock and 5% for a high-priced stock. Usually, you use the one-point box, one-box reversal charts (a 1x1 chart) to study congestion ...

  • SIDEBAR: Alpha-beta, Version II

    ARTICLE SYNOPSIS ...Alpha-beta, Version II This generic QuickBASIC routine for computing alpha-beta trend channels and trading filters assumes that you already have a means of inputing historical time series data into an appropriately dimensioned array X(M,N), where M >= 4 and N is at least as large as NUM, the number of time points in the input data. You also will need some method of plotting the trend channel and trading filter on the same graph....

  • Understanding Market Profile Part 6 by Thomas P. Drinka and Stephen M. Ptasienski

    ARTICLE SYNOPSIS ...Understanding Market Profile Part 6 by Thomas P. Drinka and Stephen M. Ptasienski Range extensions are the intraday price moves that hold good profit potential. Many current trading systems use them although they are typically called opening range breakouts (See ""Opening Range Breakout, Part 5"" in this issue). Our research into the range extensions of the Chicago Board of Trade's Market Profile report suggests there are analyses that Market Profile traders may wish to conduct on a day-to-day basis. We tabulated the frequency and magnitude of range extensions of 12 markets from February 1 t...








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