STOCKS & COMMODITIES magazine. The Traders' Magazine

Article Archive For JAN1994

  • Chatting With Marc Chaikin by Thom Hartle

    ARTICLE SYNOPSIS ...Chatting With Marc Chaikin - by Thom Hartle Veteran technician Marc Chaikin, senior vice president of Instinet Corp., got started in the financial industry with most fortuitous timing: He was issued his stockbroker's license the very day that the bear market of 1966 ended. Over the years, Chaikin gravitated to trading, turning to technical research when fundamental research faltered and disappointed, and along the way devised the indicator that bears his name, today included in many software technical analysis packages. STOCKS & COMMODITIES Editor Thom Hartle interviewed Marc Chaikin on Octob...

  • Polarized Fractal Efficiency by Hans Hannula, Ph.D., C.T.A.

    ARTICLE SYNOPSIS ...Polarized Fractal Efficiency By Hans Hannula, Ph.D., C.T.A. What is fractal geometry, anyway, and how do you use it? Well, you'll find out here. Hans Hannula of MicroMedia describes the construction and use of an indicator derived from fractal geometry, the mathematics that describe chaotic systems. Most chaotic systems produce some form of graphic representation. For example, turbulent flow in a stream produces swirls, eddies and vortices. Early chaos researchers found that the triangles, squares, lines and cubes of Euclidean geometry simply did not help in describing, studying or understan...

  • Price/Oscillator Divergences by W. Lawson McWhorter

    ARTICLE SYNOPSIS ...Price/Oscillator Divergences By W. Lawson McWhorter Have Dow theory divergences always fascinated you? Well, you're in luck. Here's a primer on observing divergence between indicators and prices to generate trading signals. Divergence, or the nonconfirmation of price movement by a related market, security or technical indicator, has long been a useful part of the technician's repertoire. The importance of divergence was first recognized by Charles Dow and his successor, William Hamilton, in what has become known as the Dow theory. One of the central premises of this method is that any move i...

  • SIDEBAR: DEMA1 EXCEL SPREADSHEET by Technical Analysis, Inc.

    ARTICLE SYNOPSIS ...DEMA1 EXCEL SPREADSHEET by Technical Analysis This Excel spreadsheet (Figure 4) presents the calculation of the DEMA1 (column G) of the weekly closing price of the NASDAQ (column D). We will be using the regression coefficients for the initialization of the single exponential moving averages (column E) and the double exponential moving averages (column F). Column A is the date, column B is the high and column C is the low for the weekly NASDAQ. The first step in calculating DEMA1 will be calculating the linear regression of the closing price to determine the v (slope) and the u (y-intercept) ...

  • SIDEBAR: Dema1 Derivation by Technical Analysis, Inc.

    ARTICLE SYNOPSIS ...Dema1 Derivation by Technical Analysis, Inc. Here is a nonrigorous derivation of the one-parameter double exponential moving average (DEMA1), which assumes there is no noise and that the MAs have reached a steady-state value (i > w). The observed data will be defined as an exact linear process....

  • SIDEBAR: METASTOCK IMPLEMENTATION OF DEMA1 AND MACO-DEMA1 by Technical Analysis, Inc.

    ARTICLE SYNOPSIS ...METASTOCK IMPLEMENTATION OF DEMA1 AND MACD-DEMA1 by Technical Analysis, Inc....

  • SIDEBAR: Polarized Fractal Efficiency Spreadsheet by Technical Analysis, Inc.

    ARTICLE SYNOPSIS ...POLARIZED FRACTAL EFFICIENCY SPREADSHEET by Technical Analysis, Inc. The first step to calculate the 10-period polarized fractal efficiency (PFE) on a percentage basis is to calculate the first-to-last close spacing....

  • SIDEBAR: TICK LINE MOMENTUM by Technical Analysis, Inc.

    ARTICLE SYNOPSIS ...TICK LINE MOMENTUM by Technical Analysis, Inc. The daily closing tick is collected in column C in sidebar Figure 1. The first step is to smooth the daily closing values using a 10-period exponentially weighted moving average. To start this process, we need to calculate the 10-day simple moving average, which is done in cell D11. The formula for cell D11 is: =TRUNC(AVERAGE(C2:C11))...

  • Smoothing Data With Faster Moving Averages by Patrick G. Mulloy

    ARTICLE SYNOPSIS ...Smoothing Data With Faster Moving Averages By Patrick G. Mulloy Has the lag time of moving averages ever irritated you? Well, there is a way around it: a modified statistical version of exponential smoothing with less lag time than the standard exponential moving average that is used in securities technical analysis, a double exponential moving average. All moving averages smooth or reduce the noise level of a time series such as closing stock market prices by increasing the moving average (MA) length. But moving averages have an inherent detrimental lag time that increases as the MA length ...

  • Stock Market Risk: A Monthly Look by John Kean

    ARTICLE SYNOPSIS ...Stock Market Risk: A Monthly Look by John Kean Have you ever wanted to know what the actual statistics of the month-to-month risk in the stock market are? This article looks at the question and formulates a possible reason. Most stock market analysis focuses on whether prices will rise or fall, with much less attention given to the question of drawdowns, or lows. Occasionally, however, even a month with a substantial stock index gain will have a draw down that is beyond many investors' stamina levels. Now take a look at monthly drawdowns in the Standard & Poor's 500 stock index from 1965 on...

  • The Haurlan Index by Paul E. Carroll

    ARTICLE SYNOPSIS ...The Haurlan index, which was originated by the Trade Levels, Inc., advisory service, has received comparatively little attention unfortunate, as it has proved to be effective in signaling tops and bottoms. By Paul E. Carroll The number of advancing and declining stocks each day provides the raw data for a variety of breadth indicators and trading systems, among which are the advance-decline line, the McClellan oscillator, the Nicoski index (advancing stocks divided by declining stocks) and the Bolton-Tremblay indicator, to mention only a few. And then there is the Haurlan index. I have found...

  • Traders' Tips by Technical Analysis, Inc.

    ARTICLE SYNOPSIS ...TRADERS' TIPS by Technical Analysis, Inc. METASTOCK The interview this month, with Marc Chaikin, discussed one of his indicators, called the Chaikin money flow. To create Chaikin's money flow indicator in MetaStock, simply enter and plot the following custom formula:... Figure 1 shows the 21-day Chaikin money flow plotted below the price chart of COMPAQ (CPQ). Note how each of the turns in the price of COMPAQ was forewarned by the indicator turning direction before the price. --Allan McNichol, EQUIS International...

  • Using Options In Takeover Situations by Lawrence G. McMillan

    ARTICLE SYNOPSIS ...Using Options In Takeover Situations by Lawrence G. McMillan Sometimes, a takeover situation can be as absorbing as watching a professional tennis match or reading an exciting thriller. Can you take advantage of the situation as an observer? Well-known options expert Lawrence McMillan explains how you can use stock options to participate in the activity of the stocks that have become takeover candidates. When Viacom (VIA) recently made a friendly takeover bid for Paramount Communications (PCI), Paramount stock soared (Figure 1) and Viacom stock took a beating (Figure 2), as the deal was prop...

  • Using The Tick In A Short-Term Indicator by Daniel E. Downing

    ARTICLE SYNOPSIS ...Using The Tick In A Short-Term Indicator by Daniel E. Downing The tick index, the net difference of the number of stocks last traded on an uptick from those last traded on a downtick, is a well-known indicator, but it's got a problem. The raw number result is volatile, perhaps too volatile for some. What to do? Here, then, is a way to smooth out the noise to identify short-term trading opportunities. The tick is a basic unit for the markets, watched with fascination during periods of turmoil and periods of enthusiasm. It is quoted throughout the day on most quote services. In addition, the ...








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