Article Archive For
JAN1993
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Commercial Floor Traders Identify Value by Donald L. Jones
ARTICLE SYNOPSIS ...Commercial Floor Traders Identify Value
by Donald L. Jones
STOCKS & COMMODITIES contributor Donald Jones presents the use of Liquidity Data Bank (otherwise
known as Market Profile) to analyze the futures market by studying commercial activity.
A commodity's value is the attribute that all trading methods seek to identify. The fundamentalist is
clearest about it: Isolate all the economic factors, weight them and combine them to grab the prize: value.
Technical analysts use price (and sometimes volume and open interest) to develop trading models --
implicity equating some type of smoothed pri...
AUTHOR: Donald L. JonesDATE: JAN1993
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Gold And The DJIA by Richard C. Forest
ARTICLE SYNOPSIS ...Gold And The DJIA
by Richard C. Forest
Gold has its own cycles. How best to interpret them? STOCKS & COMMODITIES contributor Richard
Forest illustrates that gold cycles can be best understood when analyzed and compared to the DOW
Jones Industrial Average (DJIA). Here's why.
Gold cycles have their own unique rhythm, sometimes not immediately recognizable. They can,
however, be understood when analyzed and compared with the Dow Jones Industrial Average (DJIA).
Gold can sometimes forewarn of a market rally or correction and gold cycles are influenced by cycles of
the DJIA, perhaps because of ...
AUTHOR: Richard C. ForestDATE: JAN1993
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Momentum And The S&P 500 by Michael Oliver and Gary Esayian
ARTICLE SYNOPSIS ...Momentum And The S&P 500
by Michael Oliver and Gary Esayian
As applied to market action, momentum is generally confined to some limited role such as measuring the
relationship between moving averages. But momentum can be much more. Michael Oliver and Gary
Esayian explain.
Momentum, the relative change in price over a specified time, can be used as a methodology of sorts
for market analysis. Momentum provides a measure of insight that goes far beyond simple price
confirmation. Price can be considered to be the veneer of a market, the side that is clearly visible to the
public. Beneath the s...
AUTHOR: Michael Oliver and Gary EsayianDATE: JAN1993
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Philip Roth of Dean Witter by Thom Hartle
ARTICLE SYNOPSIS ...Philip Roth of Dean Witter by Thom Hartle
A 27-year veteran of Wall Street, Dean Witter chief technical market analyst Philip Roth has also been a
survivor of the merger and acquisitions merry-go-round. After working for Merrill Lynch, Roth worked
first for Loeb Rhoades and then E.F. Hutton, both of which were acquired by Shearson over the years,
gaining from his experiences a unique perspective of an institutional emphasis compared with a retail
emphasis. STOCKS & COMMODITIES Editor Thom Hartle spoke with Phil Roth on October 21, 1992, via
telephone, discussing among other topics analyzing t...
AUTHOR: Thom HartleDATE: JAN1993SUBJECT: Interview
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Point & Figure Charting by Gary Van Powell
ARTICLE SYNOPSIS ...Point & Figure Charting
by Gary Van Powell
Point and figure charting, a technique for following stocks and commodities, may be simplistic but still
offers the keys to success: trend identification, price objectives and money management, all of which it
provides.
Using point and figure, also known as the price reversal method, is an excellent way to identify
reliable buy or sell signals for trading individual stocks. Point and figure charts are designed to remove
market noise, thus allowing the market participant to trade the real moves, leaving the insignificant
moves to the short-term tr...
AUTHOR: Gary Van PowellDATE: JAN1993
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Risk Assessment For Security Analysis by Lloyd Silver
ARTICLE SYNOPSIS ...Risk Assessment For Security Analysis
by Lloyd Silver
Assessing the risk in a security is an essential part of the investment process. Here, then, are the
advantages and disadvantages of two common risk measures: variance and beta. Further, Lloyd Silver
introduces a relatively unknown, yet effective, risk measure called lower partial moment and finishes
with a method of comparing securities.
Before discussing how to measure risk in a security, it is important to explain exactly what risk is and
why it is important to the investment process. Three possible conditions are present when foreca...
AUTHOR: Lloyd SilverDATE: JAN1993
AUTHOR: Technical Analysis, Inc.DATE: JAN1993
AUTHOR: Technical Analysis, Inc.DATE: JAN1993
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SIDEBAR: STOCHASTICS MOMENTUM INDEX
ARTICLE SYNOPSIS ...STOCHASTICS MOMENTUM INDEX
The spreadsheet features in sidebar Figure 1 an example of calculating the stochastics momentum index
(SMI) for a lookback period of two days (q = 2) and a double smoothing of 20 days (r = 20, s = 20) using
an exponential smoothed moving average (EMA). The first step is determine the highest high for the last
two days, which is column E. The formula for cell E21 is:
=MAX(B20:B21)
Then determine the lowest low for the last two days. This is performed in column F. The formula for F21
is:
=MIN (C20:C21) ......
AUTHOR: Technical Analysis, Inc.DATE: JAN1993
AUTHOR: Technical Analysis, Inc.DATE: JAN1993
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Spectral Forecasting And The Financial Markets by Denis Ridley, Ph.D..
ARTICLE SYNOPSIS ...Spectral Forecasting And The Financial Markets
by Denis Ridley, PhD.
Ever considered spectral wave analysis to determine cycles in the stock market? Denis Ridley tells you
how.
As a rule, the financial markets are not easy to forecast. While forecasting every future value of the
index is not a reasonable objective, predicting sharp changes in very short-term trends is useful for
trading, and that is really all that should matter to the trader. While we cannot and will not prove or
disprove the random walk theory, we will look at some predictable elements that do exist in the DJIA and
are o...
AUTHOR: Denis Ridley, Ph.D.DATE: JAN1993
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Stochastic Momentum by William Blau
ARTICLE SYNOPSIS ...Stochastic Momentum
by William Blau
A new twist on the venerable stochastic formula was presented in a January 1991 article,
""Double-smoothed stochastics,"" written by William Blau. Here, Blau expounds on stochastic double
smoothing in a somewhat different form that emphasizes momentum characteristics.
Double smoothing of both numerator and denominator of the original formula for %K of the stochastic
indicator aids in obtaining low-lag smooth-contoured indicator curves. In lieu of a single parameter to
specify the stochastic, the Ds-stochastic formulation provides an additional two parame...
AUTHOR: William BlauDATE: JAN1993
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The Stock/Bond Yield Gap by Jay Kaeppel
ARTICLE SYNOPSIS ...The Stock/Bond Yield Gap
by Jay Kaeppel
STOCKS & COMMODITIES contributor Jay Kaeppel presents an indicator using the yield for high-grade
corporate bonds and the yield for the DJIA to predict the stock market.
Investors have often wondered if some significant information could be gleaned from comparing yields
on stocks to yields on bonds. In theory, at least, it would seem to make sense that if bond yields were
much higher than stock yields, then investment dollars would be drawn to bonds and away from stocks,
thus having a negative effect on stock prices. Likewise, if the difference betwe...
AUTHOR: Jay KaeppelDATE: JAN1993
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The Volume Oscillator by Martin Pring
ARTICLE SYNOPSIS ...The Volume Oscillator
by Martin Pring
Price and volume is important for technical analysis of markets. Here's how noted author and
technician Martin Pring presents two of his favorite ways of looking at volume.
Most technical indicators we deal with are derived from price data. After all, moving averages,
relative strength index (RSI) and moving average convergence/divergence (MACD) as well as all the
others are really techniques for manipulating the same data but in different forms. That is why it is often a
good idea to also monitor some measure of volume, as volume is a variable that is...
AUTHOR: Martin J. PringDATE: JAN1993
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Traders' Tips
ARTICLE SYNOPSIS ...TRADERS' TIPS
METASTOCK To recreate the stochastic momentum index, explained this month by William Blau, in
MetaStock Professional, plot the custom formula (remember, this should all be on one line):
SMI(13,25,2)
100*(mov(mov(C-(0.5*(hhv(H,13)+llv(L,13))),25,E),2,E)/(0.5*mov(mov(hhv(H,13)-llv(L,13),25,E),2,E)))
The parameters can be changed to any values desired.
The moving average menu may be used to plot a signal line as mentioned in Blau's article. After plotting
the SMI, press [M] to access the moving average menu. Select an exponential moving average of the
indicator. Choose whatever...
AUTHOR: Technical Analysis, Inc.DATE: JAN1993