STOCKS & COMMODITIES magazine. The Traders' Magazine

Article Archive For OCT1992

  • A Gann Study of A Bull Move In Wheat by Richard Diaz

    ARTICLE SYNOPSIS ...A Gann Study of A Bull Move In Wheat by Richard Diaz Gann's methods have been studied for years and applied by many to trading stocks and commodities. Here, Richard Diaz of Refco, Inc., provides us with his Gann analysis of a bull market in wheat. Wheat futures rallied recently more than $1.88 to trade at the highest level since 1980. The move carried from the July 8, 1991, low made at 272-1/2 in the December 1991 contract to the high made at 463- 1/4 on February 10,1992, in the March 1992 contract. Several Gann factors were exceptionally helpful in calling the top price as well as its timi...

  • A Guide To Pyramiding by Nauzer J. Balsara

    ARTICLE SYNOPSIS ...A Guide To Pyramiding by Nauzer J. Balsara Pyramiding, the process of adding to the number of contracts during the life of a trade, needs to be distinguished from the strategy of increasing or decreasing the trading size contingent on the outcome of a closed-out trade. Typically, pyramiding is undertaken with a view toward concentrating resources on a winning trade, but pyramids could also be used to average or dilute the entry price on a losing trade. Adding to a losing position is essentially a case of good money chasing after bad and so, in this article, Nauzer Balsara examines the concept...

  • First Citizen Of Technical Analysis: Arthur Merrill by Thom Hartle

    ARTICLE SYNOPSIS ...First Citizen Of Technical Analysis: Arthur Merrill by Thom Hartle Arthur A. Merrill, currently of Merrill Analysis and Analysis Press and previously of Technical Trends, drew his first bar chart in 1930. His first, earliest calculations were made on slide rule, long before the pocket calculator or indeed the personal computer became a matter of course. Who else has had a chance to watch the markets evolve quite the way that Art Merrill has? Who else has experience quite like his to learn from? Stocks & Commodities interviewed Art Merrill on July 27, 1992, inquiring about today's markets comp...

  • Identifying Trends With The KST Indicator by Martin J. Pring

    ARTICLE SYNOPSIS ...Identifying Trends With The KST Indicator by Martin J. Pring The direction of price is influenced by different time cycles. Important market turns occur when a number of these cycles are changing direction. The KST indicator is an oscillator designed to identify market turns based on the existence of these time cycles. Here, noted author Martin Pring presents the application of different-length KSTs to identify important market moves. Last time, I introduced the KST indicator, which is an oscillator that combines several smoothed rates of change and then weights them according to their time ...

  • Interest Rates And The U.S. Dollar by John J. Murphy

    ARTICLE SYNOPSIS ...Interest Rates And The U.S. Dollar by John J. Murphy Veteran technician and leading proponent of intermarket analysis John Murphy continues to delve into the interrelationships between markets, this time between interest rates and the U.S. dollar. Previously, I have focused on intermarket linkages between commodities, bonds and stocks. The U.S dollar also plays an important role in the intermarket chain. The dollar, for example, is affected by movements in interest rate futures. The dollar, in turn, influences the direction of other markets such as gold, the CRB index, bonds and ultimately t...

  • Phase Transitions by Christopher K. Smith

    ARTICLE SYNOPSIS ...Phase Transitions by Christopher K. Smith Here's a concept to visually compare an indicator's historical profitability over a range of parameters simultaneously with the indicator's current standing, allowing the trader to identify those trading signals that have been historically profitable. Market technicians use technical indicators to help clarify some aspect of market behavior. For example, the price moving average helps clarify the longer-term trend of the market while eliminating shorter-term noise. One problem that arises in using indicators, however, is that it is often difficult t...

  • SIDEBAR Performance Summary by Technical Analysis, Inc.

    ARTICLE SYNOPSIS ...Performance Summary by Technical Analysis, Inc. Building on a February 1990 article by Jay Kaeppel, ""Formula Research"" report editor Nelson Freeburg and engineer/investor Charles Skelley introduce a stock market timing model using the Fed discount rate and the 13-week Treasury bill rate spread. By Nelson Freeburg and Charles Skelley...

  • SIDEBAR: INDICATOR PHASE by Technical Analysis, Inc.

    ARTICLE SYNOPSIS ...INDICATOR PHASE by Technical Analysis, Inc. The phase of an indicator is defined as the distance of an indicator above or below a median value. For indicators that are plotted together with the price such as moving averages and on-balance volume, the phase is simply the difference between the price and the value of the indicator at a certain time period....

  • SIDEBAR: LOGARITHMIC POINT & FIGURE by Technical Analysis, Inc.

    ARTICLE SYNOPSIS ...SIDEBAR: LOGARITHMIC POINT & FIGURE by Technical Analysis, Inc. The point and figure chart, which is built on a filtering technique, is an old favorite. In a one-point chart, moves of less than one point are filtered out; in a three-point chart, all moves of less than three points are filtered out. The idea is good, but this type of chart has several drawbacks. First, the chart makes the error of using points and not percentages. Points are a poor measure of importance in a stock chart. One point can be very important in a $10 stock but be a very minor move in a $100 stock. Another limitatio...

  • SIDEBAR: ODD-LOT SHORTS by Technical Analysis, Inc.

    ARTICLE SYNOPSIS ...ODD-LOT SHORTS by Technical Analysis, Inc. Short interest--the sale of a borrowed stock--is one of the most useful tools of the technician....

  • Seasonal Variations In A Semiconductor Stock by Jack Karczewski

    ARTICLE SYNOPSIS ...Seasonal Variations In A Semiconductor Stock by Jack Karczewski Do seasonal variations exist in the heavily traded and researched stock market? Recently, a securities analyst was quoted as saying that semiconductor stocks declined an average of 40% from their seasonal highs to their seasonal lows. Jack Karczewski presents this primer on the analytical procedure of investigating seasonal fluctuations in the stock market using a semiconductor stock as an example. Predictable seasonal variations in commodities are both well known and documented. Whether the same kind of patterns can be detected...

  • Selecting The Best Futures Price Series For Computer Testing by Jack Schwager

    ARTICLE SYNOPSIS ...Selecting The Best Futures Price Series For Computer Testing by Jack Schwager One problem that traders studying commodity markets face is the fact that individual futures contracts have price characteristics that are not continuous with other contracts within the same market. Jack Schwager, author and director of futures research at Prudential Securities, has some suggestions on dealing with this problem. System traders who wish to test their ideas on futures prices face a major obstacle: the limited life span of futures contracts. In contrast to the equities market, where a given stock is ...

  • Sidebar: Calculating the KST by Technical Analysis, Inc.

    ARTICLE SYNOPSIS ...Sidebar: Calculating the KST by Technical Analysis, Inc. The suggested parameters for short, intermediate and long term can be found in sidebar Figure 1. There are three steps to calculating the KST indicator. First, calculate the four different rates of change....

  • Stocks Yield To Bonds by Tushar S. Chande

    ARTICLE SYNOPSIS ...Stocks Yield To Bonds by Tushar S. Chande A stock's price may be considered a mechanism to adjust its dividend yield. In the short run, the dollar amount of the dividend is fixed, and so stock prices change to accommodate changes in bond yields. Lags occur because it takes time to convince most participants that bond yields have changed meaningfully. Here's an example of quantitative intermarket analysis, analyzing the relationship of bond yields to stock dividends. The general relationship between stocks and bonds is widely recognized. Stock dividends and interest rates play an important r...

  • Timing The Stock Market With A Discount/T-Bill Spread by Nelson Freeburg and Charles Skelley

    ARTICLE SYNOPSIS ...Timing The Stock Market With A Discount/T-Bill Spread by Nelson Freeburg and Charles Skelley Building on a February 1990 article by Jay Kaeppel, ""Formula Research"" report editor Nelson Freeburg and engineer/investor Charles Skelley introduce a stock market timing model using the Fed discount rate and the 13-week Treasury bill rate spread. Tracking two well-known interest rates -- the Federal Reserve discount rate and the 13-week Treasury bill rate -- allows us to build a powerful stock market timing model, one that backtesting over the past 40 years shows could have consistency outperformed ...

  • Traders' Tips by Technical Analysis, Inc.

    ARTICLE SYNOPSIS ...Traders' Tips by Technical Analysis, Inc. MetaStock Professional 3.0 The Discount Rate/T-Bill Spread...

  • Trading The Equity Curve by Joe Luisi

    ARTICLE SYNOPSIS ...Trading The Equity Curve by Joe Luisi Technical analysis is typically applied to prices to determine the trend and changes in the trend. Now consider applying the same concept to analyzing your equity curve to determine those times when your equity may not be trending in the preferred direction. Money management may be the single most important aspect in trading, but few traders spend the necessary time required for successful trading. Generally, it is a rule of thumb that traders should spend 30% of their time analyzing the markets and 70% of their time split between looking for low-risk, ...







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