STOCKS & COMMODITIES magazine. The Traders' Magazine

Article Archive For AUG1990

  • An Overview In Elliott Terms by Mark Thompson

    ARTICLE SYNOPSIS ...An Overview In Elliott Terms by Mark Thompson I began to plot a chart in January 1987 in an effort to discover exactly where the stock market would peak. Basically, I agreed with Robert Prechter's long-term wave counts. But to my surprise I came to a conclusion different from other Elliott wave analysts. The 1929 peak in the market was the top of Grand Super Cycle I and 1990 will see the peak of Grand Super Cycle III, according to my analysis. The chart I constructed includes the Axe-Houghton Industrial Average from 1855 to 1932, and from 1932 to 1989 I spliced in the Dow Jones Industrial Av...

  • Bezier Curves: No Tool For Trading by Donald R. Lambert

    ARTICLE SYNOPSIS ...Bezier Curves: No Tool For Trading by Donald R. Lambert Once upon a time, long, long ago, when the dates all ended in ""B.C."" (which, as we all know, stands for ""before computers""), draftsmen were often faced with a problem. The head draftsman would tell his assistant to draw a smooth curve that passed through a series of given points. The assistant would get out a long thin sheet of metal called a ""spline,"" fasten it to his drafting board so that it passed through the desired points and draw the required line. This method was grand for producing plans, but when it came time to convert ...

  • Don't Regulate Futures Like Stocks by Howard S. Portnow

    ARTICLE SYNOPSIS ...Don't Regulate Futures Like Stocks by Howard S. Portnow Even as I write this, the U.S. Congress is considering ways in which the financial markets, and especially the futures market, may be ""reformed."" The main proposals being put forth are to unify the regulation of the stock and commodity markets under the authority of one regulatory body, to raise margin rates on the stock indices--a 50% margin is the amount most frequently mentioned--and to disconnect the stock and stock indices markets to prevent arbitrage. The reason for this desire to impose regulative and/or legislative changes on the...

  • Elementary Bond Trends by Thom Hartle

    ARTICLE SYNOPSIS ...Elementary Bond Trends by Thom Hartle The bond market provides the technician with an assortment of approaches to trading. Complex and esoteric styles occupy one end of the spectrum, while the other extreme is represented by techniques that are simple and straightforward. For my money, the elementary style is the most appealing. Using an approach built upon the basics of trading provides me with the best forecasts of the bond market's direction. Experience has taught me that the bond market marks time in periods that are bottoms, consolidations and tops. If the bond market is not marking tim...

  • Finding Cycles In Time Series Data by A. Bruce Johnson, Ph.D.

    ARTICLE SYNOPSIS ...Finding Cycles In Time Series Data by A. Bruce Johnson, Ph.D. To improve the process of removing trend from stock market prices to see underlying cyclic movement, I have combined triangular moving averages with the moving average convergence/divergence (MACD) concept of calculating the difference between two moving averages. Figures 1-9 indicate that this new technique shows some promise, at the cost of some moving average lag. This loss is redeemed by the gain of a stationary curve that retains, and may reinforce, the cycles in the original data. Trend can be removed from data in a number...

  • Historical Patterns In The Long-Term Stock Market by James G. Arnold

    ARTICLE SYNOPSIS ...Historical Patterns In The Long-Term Stock Market by James G. Arnold Stock markets have been around a long time, and historically, markets demonstrate some well-defined patterns. At some levels of averaging, one is even tempted to call the long-term market ""predictable."" I use statistical analysis to reduce more than 100 years of market data to a simple mathematical model. I've sought to identify the important patterns and examine their significance. Understanding the cycles and trends of ""markets past"" should allow you to become comfortable with the market. Prices do not stay in line wi...

  • How Random Is Random? by Clifford J. Sherry, Ph.D.

    ARTICLE SYNOPSIS ...How Random Is Random? by Clifford J. Sherry, Ph.D. Some fundamentalists and most technicians would probably agree that tick-to-tick or maybe even day-to-day price changes aren't completely random. Most fundamentalists would argue that price changes over longer time periods are affected by different factors, the impact of which makes price changes random. Technicians, on the other hand, argue that past prices affect current prices. It's difficult for them to believe price changes are completely random. I originally proposed a test for divergence from randomness about seven years ago, which was...

  • Japanese Stocks: Potential Calamity Or Business As Usual? by Eric L. Sharp

    ARTICLE SYNOPSIS ...Japanese Stocks: Potential Calamity Or Business As Usual? by Eric L. Sharp Market calamities can be interesting, profitable and even fun to watch. We've had a few of our own in the U.S., with the savings and loan debacle and the junk bond market hijinks. People who talk about how efficient markets are should be required to explain why these major market screwups occur when the signs leading up to them are often obvious. The Japanese stock market is another example. It serves as a good lesson on how an objective statistical evaluation can keep you on the right side of things. For several year...

Letters to S&C

  • Making Money With Chaos by Hans Hannula, Ph.D., RSA, CTA

    ARTICLE SYNOPSIS ...Making Money With Chaos by Hans Hannula, Ph.D., RSA, CTA An order indeed exists in the market, as W.D. Gann and, more recently, J. Welles Wilder have claimed. But the order is not as perfect as some have made it out to be, simply because the market obeys the physical laws of a chaotic system. The purpose of this article is to explain the basic behavior of chaotic systems and to show you how to profit by them. Since the publication of the popular book, Chaos, the Making of a New Science, many have tried to apply those theories to the markets. Profitable application of theory, however, require...

  • On The Battlefield by Mike Burk

    ARTICLE SYNOPSIS ...On The Battlefield by Mike Burk In Elliott wave theory, the A, B and C waves refer to the reaction following the initial decline from a cycle top: The A wave is the initial decline, the B wave is a slight advance after the initial decline and the C wave is the decline following the secondary high. The period of the most rapidly moving prices in the stock market is often the beginning of this second decline, the beginning of the C portion of the Elliott wave, a downward wave that occurs after an unconfirmed market top drops for a while and then begins moving up again. As such, it is the best ...

  • Programming For Technical Analysis Part 3 by Steve Notis

    ARTICLE SYNOPSIS ...Programming For Technical Analysis Part 3 by Steve Notis In the last two installments of this column I wrote about Microsoft QuickBASIC being my choice as the best language for a beginner to learn for technical analysis, and I presented a routine to read CompuTrac format data files. I also presented a crude but working technical analysis charting program with source code. The TACHART.BAS program that I presented last issue demonstrated the techniques needed to scale and plot charts and indicators. It is not a ""bulletproof"" program in that there are no routines to reject improper entries b...

  • SIDEBAR: A tale of two frequencies

    ARTICLE SYNOPSIS ...SIDEBAR: A tale of two frequencies Using the prices in Article Figure 2 as examples of this technique, we'd place the first price, 233.76, in the first histogram; the second price, 234.91, in the second histogram; and the third price, 232.56, in the first histogram. We'd continue this process until we reached the last price....

  • SIDEBAR: Triangular moving averages

    ARTICLE SYNOPSIS ...SIDEBAR: Triangular moving averages Article Figure 1 represents a 20-period triangular moving average (P=20). By convention, the maximum weight for all values of P is 2.0. If P=20, the maximum weight 2.0 must be at the midpoint, time period 10. Incremental weights from zero will be 2/(P/2), or 0.2 in this example. The diagram indicates that weights return to zero at time period 20, period P. Therefore, the number of effective time periods and weights, n, are 19, so n=P- 1 ....

  • SIDEBAR: What about lags?

    ARTICLE SYNOPSIS ...SIDEBAR: What about lags? What about the lags introduced by triangular moving averages? An example is the best way to study them. The index in Article Figure 2 is a sine curve with a period of 40 observations and an amplitude of 10....

  • Secondaries by Arthur A. Merrill, CMT

    ARTICLE SYNOPSIS ...Secondaries by Arthur A. Merrill, CMT If the owner of a large block wants to sell without generating a big price decline, he sometimes enlists the help of an underwriter. This type of sale is called a secondary offering. The underwriter uses his skills to dispose of the stock discretely at the best possible price. Owners of large blocks certainly watch the performance of their stock and its company. Sometimes they are on the ""inside."" They are not small operators, and they should have access to good information. Their wish to sell must have a reason: perhaps they have uncovered some bit of...








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