STOCKS & COMMODITIES magazine. The Traders' Magazine

Article Archive For SEP1994

  • A New Advance-Decline Line by Daniel E. Downing

    ARTICLE SYNOPSIS ...A New Advance-Decline Line by Daniel E. Downing Here's a trading tool that uses a unique version of the daily advance-decline line of the New York Stock Exchange (NYSE). This version helps in our short- and long-term trading of index options and stock index futures. It gives many good short-term trading signals and excellent but infrequent longer-term signals. As with all technical tools we develop, two factors are most important. First, the tool must be easy to construct and maintain, and second, the tool must use as few layers of analysis as possible, not layer upon layer of if-then conditi...

  • Candlesticks and the Malaysian Stock Market by Gary S. Wagner, Bradley L. Matheny and F.Tam

    ARTICLE SYNOPSIS ...Candlesticks and the Malaysian Stock Market by Gary S. Wagner, Bradley L. Matheny and F.Tam Here's a look at how candlestick technique is applied to the Malaysian stock market, from the developers of Candlestick Forecaster and the director of PI Capital Research in Malaysia, who teaches Malaysian traders on Western technical analysis. The dynamic moves of 1993 in Southeast Asian stock markets have gained the attention of traders globally. The Kuala Lumpur stock market in Malaysia, for example, has experienced a super bull market that began in August 1992. The pinnacle of that bull market sa...

  • Momentum Trading Using Fourier/WAMI Optimization by Anthony W. Warren, Ph.D.

    ARTICLE SYNOPSIS ...Momentum Trading Using Fourier/Wami Optimization by Anthony W. Warren, Ph.D. Technical analysis and the use of indicators may lend itself to well-defined rules for trading, but most traders develop their methods into more of an art form. Here, a longtime Stocks & Commodities contributor explains the use of prestored indicator designs and ways to evaluate and refine custom trading rules. Previously, I described a method for using Fourier analysis and a new momentum indicator for momentum optimization and trade timing, which I called Warren's momentum indicator (WAMI for short). That article ...

  • SIDEBAR: Calculating the Bandpass Indicator

    ARTICLE SYNOPSIS ...SIDEBAR: Calculating the Bandpass Indicator The bandpass indicator is an oscillator-type indicator using two filters. This sidebar give the formulas for using this indicator as described in John Ehler's article, in Excel. In calculating the bandpass indicator, the first step is the calculation of the two Butterworth filters using two different cutoff periods (P). Sidebar Figure 1 has the cutoff period 10 for filter 1 placed in cell I1, and for filter 2, the cutoff period is 35 and is placed in cell L1. You can use any cutoff period your analysis warrants....

  • SIDEBAR: Calculating the RSI

    ARTICLE SYNOPSIS ...SIDEBAR: CALCULATING THE RSI The relative strength index (RSI) is a momentum indicator that uses the net difference of closing prices for up days and down days. The following are steps by which to build a 14-period RSI, using as an example the price data for Boeing (BA)....

  • SIDEBAR: Fourier Analysis

    ARTICLE SYNOPSIS ...SIDEBAR: Fourier Analysis Market data is considered to be a complex wave form composed of cycles with different lengths or frequencies. When you look at a price chart, you can see that there are upward trends with countertrend declines or downward trends with countertrend rallies. Each price movement has a varying number of days between consecutive tops and bottoms; in other words, the price action appears to be the sum of cycles with different cycle lengths. A fast Fourier transform (FFT) of a complex wave form such as market data decomposes the time series into its underlying frequency co...

  • Stephen Leeb Of Personal Finance And The Big Picture by Thom Hartle

    ARTICLE SYNOPSIS ...Interview: Stephen Leeb Of Personal Finance And The Big Picture by Thom Hartle If a diverse educational background ever lent itself to analyzing the markets, surely that of Personal Finance and The Big Picture newsletters editor Stephen Leeb would do so, with degrees in economics, mathematics and psychology. With that in mind, how does he see the markets? We decided to find out. Leeb spoke to Stocks & Commodities about what his work shows are the important driving forces for the market, his longer-term view of inflation and the indicators he uses. Q: Stephen, how did you begin your career a...

  • The Bandpass Indicator by John F. Ehlers

    ARTICLE SYNOPSIS ...The Bandpass Indicator by John F. Ehlers Here's an indicator that can be adjusted to be a leading indicator of market reversals based on the cycles in the price data, presented by a longtime S&C contributor. The bandpass indicator is an oscillator-type indicator. It makes full use of the digital computational power of your computer and therefore is superior to conventional oscillators such as the relative strength index (RSI) or the stochastic indicator when the market is in a cycle mode. If you were to stop and think about what an oscillator does, you would conclude that it performs two fu...

  • The Relative Strength Index by Bruce Faber

    ARTICLE SYNOPSIS ...The Relative Strength Index by Bruce Faber Here's a primer on the relative strength index, which helps identify market reversals and trends. The relative strength index (RSI), which was created by J. Welles Wilder, was first presented in his New Concepts in Technical Trading Systems. It is a popular indicator among traders and can be found in many technical software packages. It is, first of all, a momentum indicator of an individual stock, commodity or market index; it does not measure a comparison of one stock relative to another stock or market index, such as the relative strength rankin...

  • Traders' Tips

    ARTICLE SYNOPSIS ...Traders' Tips Here are the custom formulas to create a relative strength index (RSI) ratio used in ""Trading the ratio of the RSI"" by Russell Rhoads presented in MetaStock; the formulas for CompuTrac SNAP and Behold! for the money flow index discussed in the August 1994 article "On trendlines, money flow index and the Elliott wave" by Brian D. Green; and the TradeStation code for the "First-hour breakout system," which was introduced in July 1994 (page 282)....

  • Trading Hesitation by Ruth Roosevelt

    ARTICLE SYNOPSIS ...Trading Hesitation by Ruth Roosevelt At one time or another, traders may second-guess their own methods and fail to follow their strategies to disastrous results. The founder of the Wall Street Hypnosis Center explains how to return to consistent performance. Let me tell you about two traders. The first trader would hesitate whenever he would get a signal from his methodology. He would wait for confirmation. He'd go over all the reasons the trade wouldn't work. He'd get confused and start to feel clammy. When confirmation finally did come, he would throw himself headlong into the trade, whi...

  • Trading The Ratio Of The RSI by Russell Rhoads

    ARTICLE SYNOPSIS ...Trading The Ratio Of The Rsi by Russell Rhoads Here's a method for trading the spread between the Swiss franc and the Deutschemark. The technique involves using the ratio of the relative strength index (RSI) of each currency to identify trading points. The correlation between the Deutschemark and the Swiss franc, considering the strong fundamental economic ties between the two countries due to their close geographic proximity, always seemed to be obvious to me. So when I discovered that a floor trader was using technical signals from the Deutschemark to trade the franc, it occurred to me th...








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