Article Archive For
JAN1988
-
Introductions by Arthur A. Merrill
ARTICLE SYNOPSIS ...Introductions
by Arthur A. Merrill
Stocks tend to fly together, rising in bull markets and declining in bear markets. For this reason,
analysts have been searching many years for indicators of the future of the overall stock market.
It isn't easy to find a leader for the market, since the stock market itself is a leading indicator of the future
of business. An indicator of stock prices is an indicator of an indicator, or an indicator of the second
degree.
Unlike the research of the alchemists, though, analysts have been successful in finding many stock
indicators. Some of their findings are...
AUTHOR: Arthur A. Merrill, C.M.T.DATE: JAN1988
-
Letters to S&C
ARTICLE SYNOPSIS ...Letters to S&C
Overbought/Oversold
Editor,
I read with interest the letter from George N. Bower on the Overbought/Oversold indicator, in which Mr.
Bower referred to the indicator's publication as a possible ""con"" on the reader, or the reader's sensibility. I
have incorporated the indicator into my own trading system with some success, but do not choose to rely
on it wholly.
I use the indicator to tell me what the likelihood of a substantial move in the general market is in the near
future, not as a specific buy/sell signal, the use Mr. Bower apparently tested the indicator under. In
mutu...
AUTHOR: Technical Analysis, Inc.DATE: JAN1988
-
Making spreadsheets part of your trading system Part I by Jim Summers, Ph.D.
ARTICLE SYNOPSIS ...Making spreadsheets part of your trading system
Part I
by Jim Summers, Ph.D.
This column will be all about using Lotus 1-2-3, Release 2.0 as a trading tool. Given the number of
programs written for technical analysis fundamental analysis, and portfolio management, why would
anybody want to use Lotus 1-2-3 for this purpose? The answer is simple--most traders are not
programmers, but they want the control and-the customization power that programming can provide.
Lotus 1-2-3 gives both. Lotus 1-2-3 helped me develop a trading system and a historical testing system to
evaluate indicators. What I w...
AUTHOR: Jim Summers, Ph.D.DATE: JAN1988
-
Market Profile Part 2 by Thomas P. Drinka, Ph.D. and Robert L. McNutt
ARTICLE SYNOPSIS ...Market Profile
Part 2
by Thomas P. Drinka, Ph.D. and Robert L. McNutt
The market is composed of time, price and volume. Each day, the market--in attempting to facilitate
trade--develops a price range delineated by the daily high and low and a Value Area where most of the
prices congregate. Volume is generated by the interaction of time and price.
A ""brief time/price relationship"" is established when price does not remain in a particular range for a long
time period. In this case, the market does not accept a particular price or price area and moves away from
it.
An ""extended time/price rel...
AUTHOR: Thomas P. Drinka, Ph.D. and Robert L. McNuttDATE: JAN1988
Opening Position John Sweeney - Editor
AUTHOR: Technical Analysis, Inc.DATE: JAN1988
-
The Compulsive Trader Part 1 by Van K Tharp, Ph.D.
ARTICLE SYNOPSIS ...The Compulsive Trader
Part 1
by Van K Tharp, Ph.D.
Compulsiveness is perhaps the most serious of all trading problems. I have evaluated psychological
profiles on thousands of commodity and option traders. Despite the fact that about 50% of the traders I
have evaluated make money in the futures markets, I would still describe about 5%-10% of my sample as
being compulsive gamblers.
At least once a month I get a phone call from someone who has lost $250,000 or more in the markets and
who is wondering how I can help. They typically say, ""My wife would kill me if I spent any more money
on invest...
AUTHOR: Van K. Tharp, Ph.D.DATE: JAN1988
-
Trading options volatility by John Nelson and Stephen Kreis
ARTICLE SYNOPSIS ...Trading options volatility
by John Nelson and Stephen Kreis
The objective in trading options is generally a rather straightforward one--buy the premiums low and
sell them high. For many traders there is no need to make ""option action"" any more complicated than
that. Other option investors like to take a more in-depth look at the factors that affect the premium level
to develop their trading strategies.
Volatility is the most important factor affecting option premiums. In fact, some traders only take
positions based on volatility, and are always neutral with respect to price. Knowing volatil...
AUTHOR: John Nelson and Stephen KreisDATE: JAN1988
AUTHOR: Allen D. HansonDATE: JAN1988
-
Trends and price channels by Heidi Schmidt
ARTICLE SYNOPSIS ...Trends and price channels
by Heidi Schmidt
For the beginner, it is important to know that technical analysis is based on the belief that current
market prices are related to prices that occurred previously. In other words, technical analysis is the
opposite of the random walk theory, which states that prices are not related to each other from one day to
the next. Thus, the technician analyzes past price (or yield) activity hoping to glean from it the future
direction of prices. Technical analysis does not attempt to establish a mathematical model of market
activity, such as an econometric mod...
AUTHOR: Heidi SchmidtDATE: JAN1988
-
Volume Called the Market by R. Stuart Thomson
ARTICLE SYNOPSIS ...Volume Called the Market
by R. Stuart Thomson
By going back to October 1986 we can better understand the market explosion that occurred in January
1987, thanks to our cumulative volume (CV) charts. (See ""Cumulative Volume"" in the June 1986 issue of
Stocks & Commodities.)
Starting in October 1986 and with some slow-down in December as the impact of the new Tax Reform
Act reared its ugly head, the technical picture steadily improved. Figure 1 shows how the Dow Jones
Industrials' cumulative volume broke out to a new high in September 1986, quickly retreated to a higher
low that same month, br...
AUTHOR: R. Stuart ThomsonDATE: JAN1988
-
Volume analysis Part 1 by John C. Lawlor
ARTICLE SYNOPSIS ...Volume analysis
Part 1
by John C. Lawlor
Historically, volume has had only modest use as a technical analysis factor, even though volume, or
the magnitude of volume, is a most respected market force. Every day, the 15 most active stocks are
listed--a subtle tribute to volume. Most technicians, when referring to price relationships, state that a
large move in price should be on increased volume.
Cumulative Volume (CV) as treated in a recent article in Stocks & Commodities (June 1986), is one basic
measure of volume. The first important requirement for studying CV is to co-plot it with price. T...
AUTHOR: John C. LawlorDATE: JAN1988
-
Which Money Manager? by Charles Milmoe
ARTICLE SYNOPSIS ...Which Money Manager?
by Charles Milmoe
None can answer the question absolutely, but there is a method of determining if your money manager
has even a chance of making money for you next year. It requires a small amount of high school math and
a desire to select a manager intelligently rather than emotionally.
Many people select futures advisors based upon emotion (greed and fear); but, the failure rate in futures
trading is so high that the prudent use of the following formula can help you objectively select and
evaluate a futures and futures options money manager.
The first requirement is ...
AUTHOR: Charles MilmoeDATE: JAN1988
-
Winning on Wall Street by John Sweeney
ARTICLE SYNOPSIS ...Winning on Wall Street
by John Sweeney
Author: Martin Zweig
Publisher: Warner Books
666 Fifth Avenue
New York, NY 10103
Price: $20
This is a good book. It has a very reasonable approach to trading the market, or even individual stocks.
It's a compendium of experience-generated trading guidelines and indicators which should well serve a
new trader or someone with fewer than five years of market study. It's frank (""Had I stayed with it, I
would have made 50 points ... But that's only a fantasy.""), focused (""There is nothing wrong with bonds.
My specialty happens to be stocks."") and str...
AUTHOR: John SweeneyDATE: JAN1988