STOCKS & COMMODITIES magazine. The Traders' Magazine

Article Archive For FEB1992

  • "Technician's Technician" Martin Pring by Thom Hartle

    ARTICLE SYNOPSIS ...""Technician's Technician"" Martin Pring by Thom Hartle Technician-writer-money manager: Martin Pring was described as the ""technician's technician"" by Barron's, and his diverse background can certainly confirm that. Pring received his initial training with a Canadian investment dealer. His interest in technical analysis led him to join Storey, Boeckh in 1975, publisher of The Bank Credit Analyst. ""The Pring Market Review"" was introduced in 1984 as an extension of his interest in technical analysis. Along the way, he has lectured on and published a number of works on investing and technic...

  • A Low-Risk, High-Potential Return Option Strategy by Jean-Olivier Fraisse, C.F.A.

    ARTICLE SYNOPSIS ...A Low-Risk, High-Potential Return Option Strategy by Jean-Olivier Fraisse, C.F.A. Can call options be used as a substitute for purchasing stocks? Covered calls -- selling a call on stock being held -- is one low-risk strategy, but profits can be limited on an up move. Another low-risk strategy, the long call plus cash equivalent, attempts to preserve capital while combining safety and potentially high profit. Jean-Olivier Fraisse explains how. Options trading is not for the faint of heart. Beyond technical skills, it requires intuition and just plain luck. Some option strategies, however, are ...

  • A Wyckoff Approach To Future by Craig F. Schroeder

    ARTICLE SYNOPSIS ...A Wyckoff Approach To Future by Craig F. Schroeder The Wyckoff approach, which has been a standard for decades, is as valid for futures as it is for stocks, but even students of the technique appear to be unaware of its extended uses. Most technicians know that Wyckoff analysis stresses volume and price, and as there is always uncertainty about the level of volume on current and previous days for futures, it seems logical to conclude that Wyckoff and futures are not compatible. This may seem logical, but it's wrong. According to Schroeder, Wyckoff is not simply about price and volume; it is c...

  • Closing Tick by Arthur A. Merrill, C.M.T.

    ARTICLE SYNOPSIS ...Closing Tick by Arthur A. Merrill, C.M.T. Buyers' market or sellers' market? Counting the upticks and downticks can give you a clue, Merrill says. Are buyers reaching for stock? Do they have to bid a price higher than the last price given (an uptick)? Or do sellers have to accept a lower price to get rid of their stock (a downtick)? A count of the upticks and downticks should indicate whether it's a buyers' or sellers' market. The closing tick is reported each day in the financial press. It shows, for various markets, the number of stocks whose last change in price was an increase less the n...

  • Developing An Edge by John Sweeney

    ARTICLE SYNOPSIS ...Developing An Edge by John Sweeney Once you've developed something with an edge on the market, it's only natural to want to exploit it mercilessly, making hay while the sun shineth, so to speak. The simplest way I know to do this is to add more positions to your basic direction, buying dips when long, selling rallies when short. In my last three Settlements, I've battered one harebrained idea into reasonably profitable shape so that it gives us good trend selections and gets me out in a timely manner. However, there's more. Once we're in a good trade (which we know via the maximum adverse ex...

  • Intermarket Analysis And The Deutschemark by Richard Forest

    ARTICLE SYNOPSIS ...Intermarket Analysis And The Deutschemark by Richard Forest Richard Forest, a two-time Traders' Challenge winner, becomes a S TOCKS & COMMODITIES author with this monograph on how intermarket analysis -- that is, analyzing elements across more than one market and across countries to predict the outcome of seemingly disparate elements -- can be used to trade the Deutschemark or other currencies. Forest points out that the U.S. dollar and the Deutschemark are interrelated and the dollar and interest rates are interrelated, and thus, by watching interest rates the behavior of the Deutschemark and ...

  • Profiting From Convergence by Ira G. Kawaller

    ARTICLE SYNOPSIS ...Profiting From Convergence by Ira G. Kawaller Here are three ways to capitalize on the property of convergence -- the fact that futures prices and spot prices will necessarily come together at the futures expiration. The same concept can be applied to many markets, including various other financial futures contracts, as well as assorted hard commodities. LIBOR (London interbank offered rate) futures contracts are recognized as Chicago Mercantile Exchange (CME) contracts that pertain to a $3 million one-month Eurodollar time deposit, and the Eurodollar futures contract refers to the contract w...

  • SIDEBAR: ADD-ONS VS. PYRAMIDING

    ARTICLE SYNOPSIS ...ADD-ONS VS. PYRAMIDING A paragraph explaining the difference between add-ons and pyramiding....

  • SIDEBAR: CALCULATING A RATE OF CHANGE OSCILLATOR

    ARTICLE SYNOPSIS ...CALCULATING A RATE OF CHANGE OSCILLATOR A rate of change oscillator (Roc) is calculated by dividing the price in the current time period by the price n periods ago. For example, a 10-day rate of change would be today's price divided by the price 10days ago. Roc indicators are quite useful in wide trading range markets but can give misleading signals if a strong trend is in force. In addition, a specific Roc oscillator will reflect only one cycle. Incorrect interpretations will occur if another cycle length is dominant. Combining various Roc oscillators into a single indicator is one method wi...

  • SIDEBAR: CALCULATING BOLLINGER BANDS

    ARTICLE SYNOPSIS ...CALCULATING BOLLINGER BANDS An Excel spreadsheet is used to calculate Bollinger Bands for the DJIA. The actual formula for each cell is shown at the bottom of the column; the formula presented is specific for the location of that cell....

  • SIDEBAR: CONTRACT SPECS

    ARTICLE SYNOPSIS ...CONTRACT SPECS Eurodollar time deposits and one-month LIBOR futures....

  • SIDEBAR: Calculating an 11-period CCI

    ARTICLE SYNOPSIS ...CALCULATING AN 11-PERIOD CCI The commodity channel index (CCI) can be calculated using any lookback period chosen by the trader. The Excel spreadsheet shown in sidebar Figure 1 is an 11-period CCI for the Dow Jones Industrial Average. The first step is to calculate the daily typical price. This is the high, low and close added together and divided by three. This step is performed in column E. The formula for cell E2 is: ......

  • SIDEBAR: PROFITABILITY OF BREAKOUT AND OSCILLATOR METHODS WITH S&P 500

    ARTICLE SYNOPSIS ...PROFITABILITY OF BREAKOUT AND OSCILLATOR METHODS WITH S&P 500 Profitability of breakout and oscillator methods with S&P 500....

  • The Commodity Channel Index by Barbara Star, Ph.D.

    ARTICLE SYNOPSIS ...The Commodity Channel Index by Barbara Star, PhD. A technical analytical standard that's often misunderstood, the Commodity Channel Index, which was developed by technician/programmer Donald Lambert more than a decade ago, offers a broad range of trading options to use alone or with other indicators. Lambert, during the course of his research, noticed that many commodities displayed cyclic patterns that reminded him of sine waves and formulated the theory based on that observation. The index, which author Barbara Star explains does not calculate cycle lengths, instead helps to determine when...

  • The Lindsay A-D Indicator by Jerry Favors

    ARTICLE SYNOPSIS ...The Lindsay A-D Indicator by Jerry Favors The advance-decline line is handy for picking market tops, but lead time is a recurring problem, you say? Favors suggests this variation as an alternative to overcome that bothersome predicament. Most stude nts of te chnical analysis are familiar with the advance-decl ine line.To construct one, y ou simply begin with some base num ber and i f today's advances ex ceed decl ines for t he day, you add t he number of net advances (advances m inus decl ines) to that base num ber. If declines exceed advances for the day, you subtract the number of net decli...

  • Using Bollinger Bands by John Bollinger

    ARTICLE SYNOPSIS ...Using Bollinger Bands by John Bollinger Trading bands, which are lines plotted in and around the price structure to form an envelope, are the action of prices near the edges of the envelope that we are interested in. It's not the newest of ideas, but as John Bollinger of Bollinger Capital Management points out, it's one of the most powerful concepts available to the technically based investor, answering not whether absolute buy and sell signals are being given but whether prices are high or low on a relative basis. Trading bands can forewarn whether to buy or sell by using indicators to confi...








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