STOCKS & COMMODITIES magazine. The Traders' Magazine

Article Archive For AUG1989

  • A more conservative estimate of risk by Clifford J. Sherry, Ph.D.

    ARTICLE SYNOPSIS ...A more conservative estimate of risk by Clifford J. Sherry, Ph.D. Risk is, or at least should be, of interest to all investors. One of the traditional measures of risk is the standard deviation of expected returns (that is, the spread of the expected return around the mean or average expected return). I think that there may be a better, more accurate, measure of risk, assuming that we want to define risk in terms of dispersion First, we need to agree on a few definitions. The first is deviation: ......

  • A thing of duty by Sara Nuss-Galles

    ARTICLE SYNOPSIS ...Duty or passion? In either direction there is poetry in work. By Sara Nuss-Galles; page 273....

  • Daily stock technician by Thomas K. Lloyd

    ARTICLE SYNOPSIS ...Daily stock technician by Thomas K. Lloyd For several years, I marketed a proprietary chart service, called Flow of Capital, to major money managers in the country who generally had at least a billion dollars in equities under management. Each chart plotted four/variables. The first line showed capital flowing into or out of the stock. Next, there was a line showing the demand-supply fluctuations. Below that was a rate-of-change indicator. Finally, there was comparative relative strength. These charts showed that relative strength is the basic raw data for every novice technician to learn a...

  • Fibonacci profit objectives by Joe DiNapoli

    ARTICLE SYNOPSIS ...Fibonacci profit objectives by Joe DiNapoli Anyone who has been involved in the market for long has probably heard about Fibonacci numbers and ratios. We know they somehow mysteriously affect the market; however, most of us resist trying to understand how they work. I resisted because I thought that Fibonacci numbers, wave analysis and related systems were very difficult concepts to learn. Eventually, my desire to better understand the market and to win bigger overcame my prejudice. I quickly discovered that applying Fibonacci techniques to the market is not very difficult, and that a trader...

  • Financial Volume Index by Patrick Cifaldi

    ARTICLE SYNOPSIS ...Financial Volume Index by Patrick Cifaldi In 1979, the analysis of trading volume was done mainly by hand. Joseph Granville was the foremost researcher and his books and friendship gave me the tools to start my work. The basic work was tedious and long, and left little time for experimentation. With the advent of personal computers, I finally had the time to research volume. The foundation of volume analysis is that changes in the trend of volume precede changes in the trend in price. One analogy is that if volume is the tides of the sea, and price is a sailing ship, the ship must wait for t...

  • Most active STOCKS by Arthur Merrill

    ARTICLE SYNOPSIS ...Most active STOCKS by Arthur Merrill The 15 most active issues on the New York Stock Exchange (NYSE) are listed daily in The New York Times and The Wall Street Journal, and weekly in Barron's. Are these statistics helpful? The average price statistic can be used to measure the speculative tone of the market. A market dominated by low-priced stocks is speculative; one dominated by high-priced stocks is usually respectable. Because the market becomes speculative at the top of a swing, low values of this indicator should be found at market peaks. I use the weekly statistic reported in Barron's...

  • Point and figure analysis and projection Part 2 by Charles Idol

    ARTICLE SYNOPSIS ...Point and figure analysis and projection Part 2 by Charles Idol When you start point & figure chart (P&F) analysis, you should start with longer-term data and a lī3 chart like Figure 1, the P&F chart for AT&T. (See ""Point & figure charts: An overview,"" Stocks & Commodities, March 1989.) AT&T falls under the influence of the downtrend line formed by connecting the tops of columns 11, 13 and 21. While this line holds, any short-term patterns indicating upward price action tend to be optimistic. Price action on the līl chart (Figure 2) covers a slightly different time period. (To tie the chart...

  • Relative Strength Index by Peter Aan

    ARTICLE SYNOPSIS ...Relative Strength Index by Peter Aan Rules and Formulas: The formula for computing the Relative Strength Index (RSI) is well-known and computerized by dozens of commercial software packages. Briefly, to compute a 14-day RSI, you must first collect 14 days of closing prices. Looking at the daily net changes (DNC) from the previous close, add all of the up DNCs and divide by 14 to get the up average. Total the down DNCs and divide by 14 to get the down average. Divide the average up DNC by the average down DNC. Add 1 to this result and divide the new result into 100. Subtract this figure from...

  • Tracking profits: accounting software by Mike Takano

    ARTICLE SYNOPSIS ...Tracking profits: accounting software by Mike Takano Choosing the ""best"" accounting software package is a difficult task. Given different circumstances and user abilities, one package may suit your needs better than another. Nevertheless, I liked Monogram's Business Sense for small businesses, Layered's Insight for small to medium-sized businesses and Great Plains Accounting Series for large businesses. If you're in the market for an accounting software package, decide how elaborate a system you need, including special features, prior to looking at any package. This may prevent you from pa...

  • Tradable price patterns by Kent Calhoun

    ARTICLE SYNOPSIS ...Tradeable price patterns by Kent Calhoun What if you knew tomorrow had an 85% probability of closing higher. Do you think it w w would be possible to find a way to make money? Such patterns do exist in the markets all the time, but go unnoticed because traders do not know how to find them. You can estimate the probabilities associated with any particular pattern of daily closes. Use a computer with your current data or manually tabulate closing prices from, say, The Wall Street Journal or Investor's Daily. First, Monday's close is always assigned a value of X whether it is up or down from Fr...

  • Trading commodity spreads mechanically by Louis P. Lukac & B. Wade Brorsen

    ARTICLE SYNOPSIS ...Trading commodity spreads mechanically by Louis P. Lukac & B. Wade Brorsen Using a mechanical rule to trade a futures market is not new--countless mechanical methods exist with the general purpose of creating a profit while eliminating the human factor from trading. One place where mechanical trading rules have received increased attention lately is in spread trading. Spread trading involves taking a long position in one market and a corresponding short position in the same or related market, so the offsetting positions reduce the risk. If a mechanical rule could be developed for spread tradi...

  • Using MMI to trade OEX by Dan Downing

    ARTICLE SYNOPSIS ...Using MMI to trade OEX by Dan Downing My firm uses an indicator derived from the Major Market Index (MMI) Stock Index Future to trade options on Standard & Poor's 100 Stock Index (OEX). The indicator is used to determine when the MMI future is in very oversold territory and subject to a short-term bounce. Let me emphasize that the phrase ""short-term bounce"" refers to two or three days, no longer. Our research has shown that when the MMI future is very oversold, the equity markets are ready for a bounce. Instead of buying the future however, we purchase OEX calls to take advantage of the an...







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