MAY 1998 STOCKS & COMMODITIES Magazine

Article Archive For MAY1998

A 10-Year Overview Of Market Sentiment by Joe Duarte, M.D.

ARTICLE SYNOPSIS ...A 10-Year Overview Of Market Sentiment by Joe Duarte, M.D. Crowd psychology plays a role in the development of market tops and bottoms. In theory, a bottom forms when the majority of investors are extremely pessimistic, and a top occurs when the investors are uniformly bullish. Here's a review of the past performance of a collection of indicators used to measure investor sentiment. In my January 1992 STOCKS & COMMODITIES article, I described a group of seven indicators which, when combined, produced an extremely accurate forecaster for higher prices in the Standard & Poor's 500 index. Over ...

AUTHOR: Joe Duarte, M.D.DATE: MAY1998SUBJECT: Basic Techniques

About Managed Futures And Commodity ... Gary Spitz by Thom Hartle

ARTICLE SYNOPSIS ...About Managed Futures And Commodity Trading Advisors -- Interview with Gary Spitz by Thom Hartle Gary Spitz, principal of CTA Research Corp., recognized early on the value of professional money managers in the futures markets as an asset class for investors. Further research led him to develop an index to track the performance of Commodity Trading Advisors in ways that reveal those managers who are consistent performers. Stocks & Commodities Editor Thom Hartle interviewed Spitz via telephone on February 19, 1998, about his views on what investors should look for when considering this asset cl...

AUTHOR: Thom HartleDATE: MAY1998SUBJECT: Interview

Automated Support And Resistance by Mel Widner, Ph.D.

ARTICLE SYNOPSIS ...Automated Support And Resistance by Mel Widner, Ph.D. Support and resistance analysis is a proven method for selecting key price levels for trading decisions; traders usually perform the analysis by hand. The automatic charting method and new oscillators presented here are easy to implement and give a precise comparison of price to these important levels. Sir Isaac Newton's first law of motion is one that is familiar to us all, stating that "Every body continues in its state of rest, or in uniform motion in a straight line, unless compelled to change that state by forces impressed upon it."...

AUTHOR: Mel Widner, Ph.D.DATE: MAY1998SUBJECT: New Techniques

Matching Money Management With Trade Risk by Daryl Guppy

ARTICLE SYNOPSIS ...Matching Money Management With Trade Risk by Daryl Guppy Manage your trades using technical analysis by identifying risk points as well as setting profit objectives. This Australia-based author shares some of his favorite techniques. Most of us think trading is a rational process, but many private traders approach trading the same way that other people approach a wishing well. Those people throw money into the well, make a wish and wait for their wish to come true. In the same vein, some private traders throw money into the market and all they wish for is a profit. Sometimes the wish comes ...

AUTHOR: Daryl GuppyDATE: MAY1998SUBJECT: Classic Techniques

Stocks & Commodities V.16:5: Letters

ARTICLE SYNOPSIS ...Letters to S&C This month's letters discuss ""The New Gann Swing Chartist"" by Robert Krausz, provide an introductory reading list of technical analysis books, and author Jeffrey Owen Katz replies to a reader's inquiries into seeming misconceptions in his July 1997 article "Evaluating trading systems with statistics.""...

AUTHOR: Technical Analysis, Inc.DATE: MAY1998SUBJECT: Letters To S&C

Surfing The Linear Regression Curve ... by Dennis Meyers, Ph.D.

ARTICLE SYNOPSIS ...Surfing The Linear Regression Curve With Bond Futures by Dennis Meyers, Ph.D. Linear regression, a statistical technique that fits a straight line to data points, can also be a proxy for a market trend. Here's a trading system that uses the measured percentage change of the trend of the Treasury bond market. The US Treasury bond futures contract is one of the most actively traded exchange contracts in the world. The US Treasury bond future is traded on the Chicago Board of Trade (CBT) and is used by major banks, institutions, and trading firms to trade, arbitrage and hedge their bond portfo...

AUTHOR: Dennis Meyers, Ph.D.DATE: MAY1998SUBJECT: New Techniques

The Phase Method: 1998 by Christopher L. Cagan, Ph.D.

ARTICLE SYNOPSIS ...The Phase Method: 1998 by Christopher L. Cagan, Ph.D. Here's a unique technique to understand the cycles prevalent in the markets. The broad movement of the stock market, as measured by the Dow Jones Industrial Average (DJIA), tends to rise and fall on a roughly cyclic basis super-imposed on a long-term trend of growth. Here is a new method of analyzing these motions, called the phase method. First, take the monthly Dow index and divide by a deflator (for our purposes here, the average of the Consumer Price Index [CPI] and Producer Price Index [PPI], with 1982-84 = 1.00 as the base period)...

AUTHOR: Christopher L. Cagan, Ph.D.DATE: MAY1998SUBJECT: New Techniques

Traders' Tips

ARTICLE SYNOPSIS ...Traders' Tips This month's selections of Traders' Tips cover Mel Widner's article ""Automated support and resistance"", providing code for MetaStock for Windows, TradeStation/SuperCharts, TechniFilter Plus, and Wave Wi$e. And for you Fibonacci enthusiasts, there is a Traders' Tip that describes how SMARTrader can count from a user-supplied date to determine Fibonacci time zones and apply a graphic to the chart reflecting each zone ...

AUTHOR: Technical Analysis, Inc.DATE: MAY1998SUBJECT: Traders' Tips

Using Barrier Stops In Exit Strategies by J. Katz, Ph.D., and D. McCormick

ARTICLE SYNOPSIS ...Using Barrier Stops In Exit Strategies by J. Katz, Ph.D., and D. McCormick A simple technical method for exiting a trade is the break of a trendline on a chart. This article measures the performance of using this strategy as an exit rule. In recent articles, we explored the topic of exits and experimented to see whether the behavior of simple exit strategies could improve the performance of a system whose trade entries were essentially random. Our first exploration was of an exit strategy that involved a profit target exit, a stop-loss exit, and a time-based exit. Then we examined the behav...

AUTHOR: J. Katz, Ph.D., and D. McCormickDATE: MAY1998SUBJECT: Money Management

Volatility Of Returns by John Sweeney

ARTICLE SYNOPSIS ...Volatility Of Returns by John Sweeney Designing a profitable trading system is key, but the way that profits and losses vary can have an impact on your long-term success. Here's why looking at how the returns deviate can help you design your own system. Traders spend a lot of time worrying about the proper trading signals. Then they think about stops, and sometimes they even worry abut exits. (Not to mention complementary trades, diversification and capital management.) Hardly anyone, assessing his trading system, worries too much about its volatility. In most trading system evaluation sof...

AUTHOR: John SweeneyDATE: MAY1998SUBJECT: Novice Traders' Notebook