OCT 1991 STOCKS & COMMODITIES Magazine

Article Archive For OCT1991

An Issue/Volume Weighted Long-Term Arms Index by Jack Rusin

ARTICLE SYNOPSIS ...An Issue/Volume Weighted Long-Term Arms Index by Jack Rusin Consider, if you will, two vastly simplified trading days on the New York Stock Exchange (NYSE). On the first day, 10 issues advance and 10 decline with 100 shares of up volume and 200 shares of down volume. On the second day, the same 10 issues advance and the same 10 decline, but this time there are 200 shares of up volume and only 100 shares of down volume. Using the Arms index, or TRIN (for trading index), for the first day would result in [10/10]/[100/200] or 2. The TRIN for the second day would be [10/10]/[200/100], or 0.50. ...

AUTHOR: Jack RusinDATE: OCT1991

Compressing Candlestick Patterns by Jean-Olivier Fraisse and Kevin D. Armstrong

ARTICLE SYNOPSIS ...Compressing Candlestick Patterns by Jean-Olivier Fraisse and Kevin D. Armstrong Market action is similar to territorial claims between competing species in that bulls seek to expand their territory by increasing prices and, conversely, bears seek to expand their territory by decreasing prices. Candlestick charting depicts the ongoing struggle and provides valuable insights about the never-ending battle (see sidebar, ""Drawing candlesticks""). In particular: -A candle body measures the territory held by the bulls(white candle body) or the bears (black candle body) from the beginning to the en...

AUTHOR: Jean-Olivier Fraisse and Kevin D. ArmstrongDATE: OCT1991

Logarithmic Point & Figure by Arthur A. Merrill, C.M.T.

ARTICLE SYNOPSIS ...Logarithmic Point & Figure by Arthur A. Merrill, C.M.T. In the June 1991 STOCKS & COMMODITIES, I described how a turning point could be measured by filtering out minor market moves. The same filtering technique can be used to correct the failings of the traditional point and figure (P&F) chart and upgrade it to logarithmic status. The P&F chart, built on a filtering technique, is an old favorite. In a one point chart, moves of less than one point are ignored or filtered out; in a three-point chart, all moves of less than three points are filtered out. The idea here is great, but the chart m...

AUTHOR: Arthur A. Merrill, C.M.T.DATE: OCT1991

P/E Ratio Reliability by High Stokely and Ken Stewart

ARTICLE SYNOPSIS ...P/E Ratio Reliability by Hugh Stokely and Ken Stewart Alert traders can do well in financial instruments, but short-term trading usually averages out close to a zero-sum game -- that is, a dollar won tends to come directly out of the pocket of a less alert trader or investor. Finding positive-sum games--those in which everyone wins -- can improve the odds. Historically, growth stocks have provided a ""positive sum"" -- a growing investment pie that rewards the winner of a trade extremely well but also allows the loser to build investment value over time. Even in quick-response trading, a case e...

AUTHOR: High Stokely and Ken StewartDATE: OCT1991

Paul Merriman On Mutual Fund Timing by Thom Hartle

ARTICLE SYNOPSIS ...Paul Merriman On Mutual Fund Timing by Thom Hartle Paul Merriman, founder and president of The Merriman Investment Management Company, manages the portfolio of the Merriman Mutual Funds. He also publishes a newsletter and hotline service called ""Fund Exchange,"" specializing in market timing no-load mutual funds. He wrote Market Timing with No-Load Mutual Funds, which was published 1987, and has a new book due out in January 1992, Investing for a Lifetime. Merriman's philosophy is that the main purpose of timing is not to maximize profits in a bull market but to limit losses in a bear marke...

AUTHOR: Thom HartleDATE: OCT1991SUBJECT: Interview

Price Changes During Non-Trading Hours by George R. Arrington and Howard E. Arrington

ARTICLE SYNOPSIS ...Price Changes During Non-Trading Hours by George R. Arrington and Howard E. Arrington One frustrating aspect of trading commodities is the price changes that occur during non-trading hours. It is difficult enough to make a profit when markets are open and buy and sell orders can be executed within a relatively short time. When markets are closed, however, the trader is faced with even more obstacles. Positions cannot be changed until the markets reopen, and in the interim traders are exposed to the risks of changes in circumstances and prices. Most commodities futures markets are open seven ...

AUTHOR: George R. Arrington and Howard E. ArringtonDATE: OCT1991

SIDEBAR: CALCULATING PERR

ARTICLE SYNOPSIS ...CALCULATING PERR Price/earnings ratio reliability (PERR) is simply 100 � the R-square that measures the correlation between the logarithms of price and earnings. PERR is most easily visualized through scatter charts: Article Figure 2 shows Merck's high PERR of 85.5, with scatter points keeping close to the 45-degree line that bisects the price and earnings axes, while Article Figure 4 shows uncorrelated scatter with Alcoa's low PERR of 15.9. Normally, R-square is encountered as a byproduct of a regression analysis, which often reports R-bar-square, adjusted for degrees of freedom. PERR uses ...