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• Cumulative Volume and momentum Part 2 by John C. Lawlor

  ARTICLE SYNOPSIS ...Cumulative Volume and momentum Part 2 by John C. Lawlor Price is so obvious that we all expect it to tell us everything. For example, if our stock gains $1 on the day, we feel good. However, what we really do is multiply that $1 by, say, the 500 shares we own and, of course, we feel $500 richer. It is truly the number of shares we own that makes us feel good. Volume, then, makes the difference, not just the price or the price change. Some technical analysts talk erroneously about price momentum. Momentum is defined as ""the force of a moving body"" or ""momentum = mass ´ velocity."" Consider...

AUTHOR: John C. LawlorDATE: FEB1988

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• Letters To S&C

  ARTICLE SYNOPSIS ...LETTERS TO S&C Novice Plan Editor, I was reading one of the back issues of Stocks & Commodities (April 85) when I came across your article ""Novice Speculator Trading Plan."" In it you offered to share the plan you were referencing; if the offer is still good, I would greatly appreciate a copy. I am on the verge of diving into the commodities trading business as a day trader and trying to prepare myself. So if you have any plan specifically tailored to day trading or others you found interesting and are willing to share, please include them. Great magazine, keep up the good work. ROBERT B...

AUTHOR: Technical Analysis, Inc.DATE: FEB1988

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• Market Profile and trends Part 3 by Thomas Drinka, Ph.D. and Robert L. McNutt

  ARTICLE SYNOPSIS ...Market Profile and trends Part 3 by Thomas Drinka, Ph.D. and Robert L. McNutt The key to market opportunity is knowing when current market price diverges from value and being able to judge whether price will move to value or value to price. A divergence of price and value can occur during the trading session-as well as over many days-and may generate a trend. Trends can be used to evaluate the speed at which the market is moving through time and, knowing the market's speed, even a trader far from the pits can judge the amount of response time for trading. There are three types of trends, ea...

AUTHOR: Thomas Drinka, Ph.D. and Robert L. McNuttDATE: FEB1988

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• Money flow analysis by Steven B. Goldstein and Michael N. Kahn

  ARTICLE SYNOPSIS ...Money flow analysis by Steven B. Goldstein and Michael N. Kahn In 1976, Joe Granville documented several theories of stock market price and volume movements in Granville's New Strategy of Daily Stock Market Timing for Maximum Profit. The book explained the calculation and interpretation of on-balance volume, a market analysis technique that compares volume on up days to volume on down days. His theory was that, as stock prices move higher in a rising market, volume on days that prices increase should be higher than volume on days when prices decline. Conversely, volume on down days should be...

AUTHOR: Steven B. Goldstein and Michael N. KahnDATE: FEB1988

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• Night trading: the impact on technical charts by Heidi Schmidt

  ARTICLE SYNOPSIS ...Night trading: the impact on technical charts by Heidi Schmidt The new night trading session at the Chicago Board of Trade (CBOT) is causing worry among technical chartists. Should technical analysts adopt the new child at first sight and incorporate the data into their painstakingly kept charts and indicators? What if the session is declared a flop and halted -- will pristine charts be forever blemished? Chartists have two choices: incorporate the new session into the daily trading range and merely continue their current charts or keep two sets of charts until the success/impact of the new n...

AUTHOR: Heidi SchmidtDATE: FEB1988

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Opening Position by John Sweeney, Editor

AUTHOR: John SweeneyDATE: FEB1988

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• Pelletier on PDI

  ARTICLE SYNOPSIS ...Pelletier on PDI Bob Pelletier is a distant but favorite figure to us at Stocks & Commodities. He's distant, residing in Florida while we are in Seattle. He's a favorite because for years he has supplied us with data and software for trading. We've watched CSI grow from a small package that could run on Apples and Commodore 64's to a full-service data vendor for major institutions. To us the interesting thing was that Bob himself, with the help of a band of programmers, was constantly developing new indicators and technical trading tools. His monthly newsletter often read like a trader's ins...

AUTHOR: Technical Analysis, Inc.DATE: FEB1988

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• Spike protection by John McCormick

  ARTICLE SYNOPSIS ...Spike protection by John McCormick You've just spent four hours perfecting the spreadsheet that conveys an idea which blossomed full-blown in your imagination at 1 a.m. You know that you would never again be able to duplicate this perfect means of analyzing stock movements, and you are certain that fame and fortune are assured by the work you've just completed. Realizing that you haven't backed up any copies of your precious work, you reach for a diskette. After inserting the backup disk and striking the ""save"" key, you begin to relax. Just then, the lights in the room brighten momentarily...

AUTHOR: John McCormickDATE: FEB1988

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• Students select a winning portfolio by Michael Scott

  ARTICLE SYNOPSIS ...Students select a winning portfolio by Michael Scott Can high school seniors on a college prep track outperform leading investment advisors and mutual fund managers? Based on the following evidence, the answer must be an unqualified ""yes."" The underlying reason for this classroom success is that college prep students are bright, perceptive, objective and follow instructions carefully. I suspect they also have implicit faith in a good instructor. This investment experiment was the outgrowth of a unit on American capitalism in a senior social problems class. I felt that college prep students...

AUTHOR: Michael ScottDATE: FEB1988

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• Taming the indicators by Arthur A. Merrill

  ARTICLE SYNOPSIS ...Taming the indicators by Arthur A. Merrill An indicator is often difficult to read because of its wild fluctuations. It may appear optimistic and then dive into bearish territory. Then it might reverse again and turn bullish. Frustrating! A wild indicator is usually tamed by a moving average or an exponential average. These techniques ""smooth"" the data for us. The most common smoothing method is a simple moving average. This method is easily described by an example: a five-week average is the average of the last five weekly data points. In the following week, a new average is calculated b...

AUTHOR: Arthur A. Merrill, C.M.T.DATE: FEB1988

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• Trading with Elliott Wave and Gann by David Lamarr

  ARTICLE SYNOPSIS ...Trading with Elliott Wave and Gann by David Lamarr Wave confusion. This is the best way to describe my introduction to the Elliott Wave Principle more than four years ago. I read the books, started keeping an hourly chart updated by hand and had reasonable expectations as to the results of my interpretive skills. Initially, I was able to readily identify bottoms and tops several days after their occurrence and be whipsawed whenever I thought I precisely knew what the wave count was. I slowly improved my wave count skills to the point that when I identified a particular wave count, it was usu...

AUTHOR: David LamarrDATE: FEB1988

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• Wave Market Analysis Part I by Bryce T. Gilmore

  ARTICLE SYNOPSIS ...Wave Market Analysis Part I by Bryce T. Gilmore As Perry J. Kaufman says in his book Commodity Trading Systems and Methods: ""Speculation is a sophisticated business, and to be successful at it you must make it your business. To compete with a professional speculator you must anticipate the next move better or be more accurate in predicting prices from current news--not the one printed in today's newspaper but the one that has yet to be published. ""Pattern recognition over short intervals is a study of behavioral science. Within the commodities markets speculators and commercial traders will...

AUTHOR: Bryce T. GilmoreDATE: FEB1988

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• Wilder's Directional Movement Index System Part 2 by Jim Summers, Ph.D.

  ARTICLE SYNOPSIS ...Wilder's Directional Movement Index System Part 2 by Jim Summers, Ph.D. As I noted in the last issue, I need both a charting program and Lotus 1-2-3 to trade with discipline and confidence, along with maintaining my emotional health. My first major programming task for Lotus 1-2-3 came about when I recognized the limits of charting software. The first indicator we'll systemize is J. Welles Wilder Jr.'s Directional Movement Index (DMI). However, only when we understand what the indicator is supposed to do does it make sense to test it or incorporate it into our trading plans. Thus, actual Lot...

AUTHOR: Jim Summers, Ph.D.DATE: FEB1988