STOCKS & COMMODITIES magazine. The Traders' Magazine

Article Archive For JUL1989

  • Letters to S&C

    ARTICLE SYNOPSIS ...Letters to S&C MTA and CTA Editor, I wonder if you might publish the address, telephone number and name of a contact person at the Market Technicians' Association? Also, I learned recently that there is a program leading to qualification as a Certified Technical Analyst. Could you tell me how I might find out more about this? LEE SNOWDEN Ogosha, MN Contact Robert Prechter at (404) 5360309 regarding MTA membership. Accreditation is through John Brooks at (404) 393-1610. ?Ed....

  • Locating value with auction market data by Donald L. Jones

    ARTICLE SYNOPSIS ...Locating value with auction market data by Donald L. Jones There are two fools in every market. One asks too little, one asks too much. -- Old Russian proverb The search for value in markets is a never-ending quest, since value changes with underlying economic conditions. A fundamental approach to valuation, such as that of Graham & Dodd, (Security Analysis, first printed in 1934), looks to the long term and projects an intrinsic value from earnings growth, management quality, business prospects and the like. Technical analysis uses the daily summary data (open, high, low, close, volume) to ...

  • Opening Range Breakout Part 8 by Toby Crabel

    ARTICLE SYNOPSIS ...Opening Range Breakout Part 8 by Toby Crabel The bull hook pattern, as suggested by its name, is a bullish indication and, in most cases, will be followed by a price move to the upside on the day or days following the hook. However, as you will see from the tests I ran, this is not always the case. A bull hook day (Figure 1) opens above the previous day's high and closes below the previous day's close with a narrowing range. Tests of opening range breakout (ORB) trades taken the day following the bull hook pattern are shown in Figure 2. An ORB trade is entered at a predetermined amount abov...

  • Option shooters vs. spreaders by Jerry Kopf

    ARTICLE SYNOPSIS ...Option shooters vs. spreaders by Jerry Kopf Option market timers and option relationship traders occupy major places in the spectrum of call and put investors. Timers or ""shooters"" go for the ""home run"" by simply buying premium (i.e., going long a put or call). Relationship traders grind out small but consistent yardage by stacking probabilities in their favor. Because they are skilled at spreading and know beforehand what an option's price ""should"" be, that is, its theoretical value, they capitalize on price discrepancies. Market timers make subjective decisions based on: News -- Mont...

  • Phase shifts in the 40.68-month cycle by Gary Zin, Ph.D.

    ARTICLE SYNOPSIS ...Phase shifts in the 40.68-month cycle by Gary Zin, Ph.D. Phase shifts plague every cycle technician. Phase shifts, or apparent phase shifts, are often present when a high or low of a cycle is expected but doesn't occur. Sometimes, if neither a cycle high nor low occurs on its projected date, a cycle will shift 180 degrees to its subsequent anniversary date. Many times, these phase shifts occur near major trend changes in the market. By assuming that a change in market direction is probable near the date of a predicted high or low, other trend-following indicators can be used to decide whethe...

  • Price projections on point and figure charts by Luis Ballesca Loyo

    ARTICLE SYNOPSIS ...Price projections on point and figure charts by Luis Ballesca Loyo One of the great advantages of point and figure (P&F) charting is its well-defined features: price formations, buy and sell signals, trendlines and price projections. The P&F method establishes a price objective that a security could reach when its price breaks (or penetrates) a formation. Two types of projections are possible: horizontal and vertical counting. These techniques calculate a proxy for the price objective by applying the formulas in Figure 1. Figure 2 shows a breakout to the upside of a bullish symmetrical tria...

  • Regressions in hard commodities by L. R. James

    ARTICLE SYNOPSIS ...Regressions in hard commodities by L. R. James The possibilities for precious metals price rises are present, but so are the possibilities for their decline. The bond market and the Federal Reserve give every indication of being intolerant of anything more than low level inflation, raising interest rates in response. During the past few months, rates have moved further and further in the direction of an inverted yield curve. A few of the Commerce Department's economic indicators also have suggested some slowdown in the economy. So far, in this business cycle, precious metals have not kept up ...

  • SIDEBAR: True range

    ARTICLE SYNOPSIS ...True range Formula for calculating true range, page 231....

  • Volatility analysis and simulation used in tactical trading Part 2 by Peter Eliason

    ARTICLE SYNOPSIS ...Volatility analysis and simulation used in tactical trading Part 2 by Peter Eliason The tactical trading algorithm, as explained in the March 1989 issue of Stocks & Commodities, is made up of two components: the manipulation of a numerical series to determine the number of shares to buy or sell (normally a small portion of the shares owned), and a point spread that determines the price at which the buy or sell should take place. Two limit orders, one above and one below the last transaction's price, await the price movement of the stock or commodity and the eventual filling of an order. With...

  • Volatility system by Peter Aan

    ARTICLE SYNOPSIS ...Volatility system by Peter Aan Rules: The volatility system uses a close-only reversing stop that is activated only on the close and trails behind the most favorable close attained in the trade. Volatility determines how closely the stop will trail the market. During volatile periods, the stop may lag considerably behind the market, and during quiet periods the stop will remain closer to recent market action. To follow the system, you must first measure the volatility. Wilder expresses volatility as the average true daily range over the last ""n"" days. True range refers to the actual range ...

  • Watch the Fed! by Arthur A. Merrill

    ARTICLE SYNOPSIS ...Watch the Fed! by Arthur A. Merrill The actions of the Federal Reserve are vitally important to investors and speculators. When the Fed tightens the money supply, interest rates rise, bonds and stocks fall. The reverse occurs when the Fed eases the supply of money. Most of the federal policy decisions are made behind closed doors at meetings of the Federal Open Market Committee (FOMC), held in Washington eight times a year. The committee uses weekly reserve targets to determine strategies for the future. ""Fed Watchers,"" I'm sure, would like to bug the committee meetings. However, as secon...

  • What K-wave? by Jeff Walker

    ARTICLE SYNOPSIS ...What K-wave? by Jeff Walker Cycles -- in things as varied as locusts, sunspots and pig iron production -- are an undeniable part of the universe. The reality of Nicolai Kondratieff's 54-year cycle is rather less certain. A cycle is a more-or-less regular fluctuation of a value from one extreme to another and at least partially back. In the longer run, the value may be trending higher, lower or not at all. Most advocates of the Kondratieff wave (K-wave) believe that an economic cycle averaging 54 years in duration turned up around the time of the Great Depression. Most believe that it peaked i...








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