STOCKS & COMMODITIES magazine. The Traders' Magazine

Article Archive For JUL1990

  • 'Tis The Season by Bob Kargenian

    ARTICLE SYNOPSIS ...'Tis The Season by Bob Kargenian The seasonal tendencies of the stock market have been the subject of extensive research. The likes of Yale Hirsch, Arthur A. Merrill, Martin Zweig and Norman Fosback -- all noted technical analysts -- have explored this topic, and most have conducted ongoing studies. My interest lies in what has happened to seasonal tendencies since the advent of stock-index futures and whether they can still be profitably exploited by investors and traders. Essentially, there are six types of seasonal tendencies -- days of the week; months; month-end; holidays; the Presidential...

  • A New Market Index by Dan Downing

    ARTICLE SYNOPSIS ...A New Market Index by Dan Downing Technicians are always looking for leading indices and indicators. We continually search for tools that will give us some advanced warning of the direction of the Dow Jones Industrial Average (DJIA) or the Options Exchange index (OEX 100). More than a year ago, the research team at my firm, Downing & Associates, and I combined four existing equity indices to make a new index, the mixture index. We have found this new index quite helpful in forecasting the intermediate-term trend of equity markets. The four indices we use to build the mixture index are the Do...

  • A Short-Term Buy Signal For The DJIA by John Toombs

    ARTICLE SYNOPSIS ...A Short-Term Buy Signal For The DJIA by John Toombs Buying the first retreat in prices following a strong move up in the Dow Jones Industrial Average (DJIA) is often profitable. Three questions are involved in doing so, however. What constitutes a ""strong move up""? Then should you buy? When should you close the position? All three questions can be answered by using a slow version of the 20-day stochastic oscillator. Since September 1984 there have been 20 signals, almost four a year. Nineteen have been winners and only one a loser. The stochastic oscillator, with its scale of zero to 100...

  • Absolute Tick Volume by Charles F. Wright

    ARTICLE SYNOPSIS ...Absolute Tick Volume by Charles F. Wright Volume is one of the major tools used in technical analysis. The volume of a particular day or intraday bar is used as a gauge for activity during the time period. Trading judgments are based on traders' interpretation of that volume number. Conventional volume analysis centers around two points: First, higher volume is beneficial to the trend -- higher volume confirms the move while lower volume makes the move suspect, and second, the importance of the bar volume lies in its relation to the volume of the previous bar. Since almost all technical analys...

  • Archiving The Experts by Jason S. Glazier

    ARTICLE SYNOPSIS ...Archiving The Experts by Jason S. Glazier If the experiential technical and fundamental knowledge of the stock experts were merged with the technical and fundamental buy/sell indicators found in books and software, a more accurate market prediction system could be formed. Knowledge-based expert systems (KBES), an area of artificial intelligence (AI), is the methodology I have used to develop the basis for the market prediction system that is discussed here. A knowledge-based expert system is a computer program that mixes textbook knowledge and human experience for a narrow application domain...

  • Basic Programming For Technical Analysis, part 2 by Steve Notis

    ARTICLE SYNOPSIS ...Basic Programming For Technical Analysis, part 2 by Steve Notis Last month I explained the advantages of doing some of your own programming for technical analysis. I showed you a program called MSTRLST, which allows you to see the real names of CompuTrac and MetaStock files. In addition, I wrote about Microsoft QuickBASIC as my choice for a beginner's programming language. Since then, I have read an article in Byte by William Gates, founder of Microsoft and coauthor of the first BASIC interpreter for the IBM personal computer. The article was occasioned by BASIC's 25th birthday, and reading i...

  • Defining Advance/Decline Indicators by Fay H. Dworkin, Ph.D.

    ARTICLE SYNOPSIS ...Defining Advance/Decline Indicators by Fay H. Dworkin, Ph.D. The notion is simple. When fewer and fewer issues participate in the upward trend of a primary bull market, ""bad breadth"" warns of a market turnaround. Although it is easy to track advancing and declining issues, it's not as easy to know what to do with the data afterward. I have encountered an astonishingly large number of ways to construct ""advance/decline"" (A/D) indicators. From one period to the next, the closing price of a traded vehicle can advance, decline or remain unchanged. These three outcomes are the basic components...

Letters to S&C

  • Member/Odd Lot Trading by Arthur A. Merrill, CMT

    ARTICLE SYNOPSIS ...Member/Odd Lot Trading by Arthur A. Merrill, CMT Stock exchange members, the group that makes up the member trading statistics, should be more knowledgeable than the rest of us, the great ""public."" The members should be smart money -- at least, they should be smarter most of the time. In recent years, the odd lot market has been used by large operators to avoid tick change rules. Usually, though, odd lot trades represent the operations of a group not as knowledgeable as the exchange members. A comparison of the operations of smart money with those of the not-so-smart could be useful. If so,...

  • SIDEBAR: Portrait of a cycle

    ARTICLE SYNOPSIS ...SIDEBAR: Portrait of a cycle Combining volume indicators, my new high and new low indicators and the advance/decline line (ADL) helps me to define cycles in the Dow Jones Industrial Average (DJIA) or other broad indices such as the New York Stock Exchange Index or Standard & Poor's 500 stock index. The charts in Figures 1-4 show how these three sets of indicators detect a DJIA cycle. Figure 1 is an overview and shows five complete DJIA cycles delimited by my new low indicator (NL), the single best indicator I have found for defining cycles. Figures 2-4 are close-ups of the last cycle in Figu...

  • The Advance/Decline Line by Mike Burk

    ARTICLE SYNOPSIS ...The Advance/Decline Line by Mike Burk The advance/decline line, used with the volume percentage ratio and the new high/new low indicator, two indicators I've developed, helps me distinguish cycles in the Dow Jones Industrial Average (DJIA) and other indices. The advance/decline line (ADL) is simply a plot of the running total of the number of issues that advanced in price minus the number of issues that declined in price. I tried improving on this traditional formula -- by calculating percentages, by factoring in the number of unchanged issues, by considering each datum separately and by calcu...

  • The January Barometer: Myth And Reality by Jay Kaeppel

    ARTICLE SYNOPSIS ...The January Barometer: Myth And Reality by Jay Kaeppel Some claim the January Barometer is a great forecasting tool, while others say it is totally without value. As usual, the truth lies somewhere in between. First, let's define exactly what the January Barometer is. Originally, the theory behind the January Barometer was that ""as January goes, so goes the year."" If the market closed January with a gain, the market should close that year with a gain. Conversely, if January was down, then the year as a whole should be down. For our purpose of attempting to use the January Barometer as an a...

  • The Overlay Profile For Current Market Analysis Part 2 by Donald Jones and Christopher Young

    ARTICLE SYNOPSIS ...The Overlay Profile For Current Market Analysis Part 2 by Donald Jones and Christopher Young Perhaps the best way to learn how to apply long-term overlays to trading is by example. Normally, the trader follows the overlay until an equilibrium time period is identified. The breakout is then noted, the trend is traded and, finally, a new equilibrium is reached and the process begins again. The Treasury bond September 1988 contract from March 21 through June 7, 1988, begins with an equilibrium (bracketing) period (March 21-31), moves into a downward trend (April 4-May 31) and then rebounds from...

  • Trading Tomorrow's Wall Street Journal by Hans Hannula, Ph.D., C.T.A.

    ARTICLE SYNOPSIS ...Trading Tomorrow's Wall Street Journal by Hans Hannula, Ph.D., C.T.A. W.D. Gann once remarked some people would not be able to make money even if they had tomorrow's Wall Street Journal, just because they would be held hostage to fear. In October 1987, I had the trading equivalent of tomorrow's Wall Street Journal. I made more money trading in one day than I thought possible. I must admit, however, that Gann was right. If I hadn't been at least partly filled with fear, I could have made a lot more than I did. I could have paid off my mortgage. To start with, 1987 had been a good year for more...







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