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Volume 4 Article List

Interview

Wilder's Back

An in-depth interview with J. Welles Wilder, developer of the popular Relative Strength Index and other technical indicators. By Melanie Bowman; pages 9-12.

The Wyckoff Method: Trading and Investing in Stocks

The first in a series of articles which outline the Richard D. Wyckoff method of trading stocks. This method provides a foundation for analyzing the fundamental relationships between the market's primary forces. Through the use of such techniques as volume analysis and studies of vertical line, figure and wave charts, Wyckoff developed a trading method which is still applicable to today's markets. By Jack K. Hutson; pages 14-17.

Mutual Funds

A basic look at mutual fundswho they are for, how to choose one, why and when to switch. Also included are several sources of information to use to get specifics when deciding on a mutual fund. By Bill Dunbar; pages 18-21.

The Last Wild Ride of the Gold Bears is Upon Us

Holleman, a CTA and CPO, offers his opinions on where gold prices may be headed. These predictions demonstrate how positions in the market are developed and show the factors that shape a trader's reasoning about a specific market. By Joseph Holleman; pages 22-23.

Does Pyramiding Make Sense?

The leverage obtained through pyramiding can be immense. But is it smart? Gehm examines the pyramiding technique and its possible consequences. By Fred Gehm; pages 24-25.

Optimizing RSI with Cycles

A look at Wilder's Relative Strength Index oscillator and an optimization using cycles. Also included is a BASIC computer program which follows the author's optimization processes. By John F. Ehlers; pages 26-28.

Software Review: Handbook for No-Load Fund Investors

By Bill Dunbar; pages 29-30.

Software Review: The Advanced Chartist

By John F. Kepka; pages 31-35.

A Christmas Story

Jaenisch, a student of Professor Allen Andrews, reviews some of the Andrews Median Line and pivot point techniques in a whimsical story about trading Santa's account. By Ron Jaenisch; pages 36-39.

Software Review: FUNDGRAF

By John Sweeney; page 40.

An Ultimate Oscillator Program for the HP-41C(v)

A program based on Larry Williams' "Ultimate Oscillator" designed to run on a Hewlett-Packard 41C(v) hand-held calculator. By Charles F. Johnson; page 47.

The Ultimate Oscillator on TradePlan

Another rendition of the Ultimate Oscillator, this time to be used with the TradePlan system. By Bob Wittmuss; pages 47-49.

Random Walk Prices

Dr. Sherry examines the statistical concepts of randomness and independence as they affect prices in the markets. He outlines a method of determining whether or not prices are random and/or independent by using probability density functions, quantile analysis and chi-square methodology. By Clifford J. Sherry Ph.D.; pages 50-51.

Skill or Luck?

Are your trades based on skill or luck? Sherry's simple "Skill Score" will show you how to determine whether your decisions are based on your trading prowess or the luck of the draw. By Clifford J. Sherry Ph.D.; page 53.

Product Review: TEM Cattle System

By Bruce Babcock; pages 54-56.

Discount Broker Blues Part 3

The conclusion to Weinberg's experiences as a novice trader learning how to play the game the hard way. By Dan Weinberg; pages 57-60.

Marshall Wave Theory

A look at John Marshall's Wave Theory for trading commodity markets. The system offers a heavily diversified trend-following method in Marshall's specialized vernacular. By John Sweeney; pages 61-62.

Software Review: Direc-Tree

By John Sweeney; pages 64.

Technical Analysis of Volume

You don't need a computer for volume studiesthe analysis presented here can be done with a calculator and The Wall Street Journal. This article provides an outline of technical tools derived from volume figures which can then be used for analysis to gauge the internal strength or weakness of a market. By Howard Waxenburg; pages 65-68.

Software Review: ProfitTaker

By William Taylor; page 69.

The Wyckoff Method, Part 2: Elements of Charting

The second of a series which presents the Richard D. Wyckoff method of trading stocks. In this article, the different types of charts upon which the Wyckoff method is based are examined. Vertical line, figure and wave charts are all essential to the study of the market using Wyckoff's techniques. By Jack K. Hutson; pages 70-73.

Optimizing Directional Movement with Cycles

Directional Movement, an approach which weighs the daily difference between highs and the difference between lows, can be optimized by applying cycle concepts. Ehlers explains the process and includes a BASIC computer program which features the optimized Directional Trend Indicator. By John F. Ehlers; pages 77-80.

A "MAP" for the Trading Jungle

Most of the common methods used by traders can be classified under three main theories. Noble outlines these trading methods, then recommends a strategy for choosing those that best fit your trading style. His "MAP" allows you to Minimize the time and money you spend, Analyze and compare valid methods, and Personalize what you find to fit your own account. By Grant D. Noble; pages 81-82.

Software Review: Winning on Wall Street

By John Sweeney; pages 83.

Interview

Prechter on the Elliott Wave Theory

The Elliott Wave Theorist's Robert Prechter discusses his views on Elliott analysis and how he thinks the markets work. By Melanie Bowman; pages 89-92.

Trading Channels

You don't have to examine price charts very long before you can picture the prices varying around a trendline in a trading channel. This article outlines methods to help you visualize channels and identify price turns. By John F. Ehlers; pages 93-97.

Software Review: Relevance III

By Herbert R. Sorock; pages 98.

Detecting a Dependent Process

If you know the price of a commodity today, can you predict what the price will be tomorrow? Can you predict whether the price will increase or decrease? Dr. Sherry proposes a statistical method that allows you to determine which prices are random and/or independent. By Clifford J. Sherry Ph.D.; pages 101-104.

The Wyckoff Method, Part 3: Market Trends in Composite Averages

By looking at Vertical Line charts of composite averages using Wyckoff analysis, you can learn where the market is taking your individual and group stock picks. This third part of the Wyckoff Method series you shows clues to pinpointing future market actions. By Jack K. Hutson; pages 106-108.

She Flashes Signals from the Pit at CBT

A close-up look at life in the pitstrading on the floor at the Chicago Board of Trade. By Phyllis Brock; pages 109-110.

Modeling with Pattern Recognition Rules

Empirical decision rules can help you recognize patterns in price actions. Earle provides detailed buy and sell rules along with examples using data on gold price changes over time. By Ted C. Earle; pages 111-119.

Personal Computer Hardware: IBM Microcomputer

A look at the basic IBM PC hardware configuration. By Jack K. Hutson; page 120.

Product Review: Iomega Corp.'s Bernoulli Box

By Jack K. Hutson; page 123.

Sweeney Agonistes

A personal look at what's moving and shaking in the trading world. By John Sweeney; pages 127-129.

Detecting Dependence, Part 2

A continuation of Sherry's statistical technique for determining whether dependence exists between prices in a time series. By Clifford J. Sherry, Ph.D.; pages 132-135.

Wyckoff in Action

An example of the Wyckoff Method of trading as used to determine price swings in Treasury Bonds. Weis runs through his reasoning step-by-step through the price action in June 1982 bonds over a 30-day period. By David H. Weis; pages 136.

Product Review: The Market Forecaster

By Thomas R. Sewell; page 139.

Product Review: Market News

By John Sweeney; page 140.

Fine-tuning the Demand Index

The Demand Index, which utilizes price and volume, calculates the buying pressure and selling pressure exerted on prices. These can be used to create an oscillator to identify accumulation or distribution in both stocks and commodities. By Thomas E. Aspray; pages 141-143.

Cumulative Volume

Do you need any direction before buying or selling a stock? Do you need to know the right time to buy or sell stocks? Cumulative Volume, a technical tool based on supply and demand, can do just that. By Stuart Thomson; pages 144-149.

Software Review: The Right Time Programs

By John Sweeney; pages 150-153.

Book Review: Computer-Assisted Investment Handbook

By John Sweeney; page 154.

The Optimization of a Trading Program

Bob Pelletier, president of Commodity Systems, Inc., discusses the merits of testing different parameter combinations to find the most effective methods for maximizing profits. By Robert C. Pelletier; pages 155-156.

CTCR's Bruce Babcock

Bruce Babcock, publisher of Commodity Traders Consumer Report, offers his opinions of trading systems and the "watchdog" role of CTCR. By Melanie Bowman; pages 163-168.

Left Brain, Right Brain, Reality and Trading the Markets

Are you reaching your full potential in your trading? Analytical techniques alone do not allow you to use all of the resources your brain commands. Here, McMaster discusses the concept of synergy and how, by using both hemispheres of your brain, you can trade more effectively. By R.E. McMaster; pages 169-171.

How Useful Are Stochastics for Trading?

Stochastics have become relatively popular in recent years. But just how effective are they for trading? Using several different parameter sets, the authors tested stochastics on a hypothetical $1.3 million commodity portfolio. Their results may surprise you. By Jack Schwager and Norman Strahm; pages 172-175.

Product Review: Precision Ratio Compass

By John Sweeney; page 176.

Using Basic Statistics for Stops

Using the mean, the standard deviation and the coefficient of variation, price volatility can be gauged to help you place protective stops. This in turn can help your money management and trading overall. By Robert W. Hull; pages 177-183.

Winning in the Futures Market

Hanson, a former floor broker, outlines the different type of market orders used by brokers on the floor. In addition, he describes some of the "tricks of the trade" that professional brokers use to determine the right climate for a trade. By Allen D. Hanson; pages 185-187.

The Wyckoff Method, Part 4: Understanding Group Stock Behavior

Group stock behavior guides the trader to sections of the market that look promising. By comparing group averages to broad market trends you can find signals that allow you trade both the up and down sides of the market profitably. This fourth part of the Wyckoff Method series also explains the Process of Rotation that large-scale operators use to their advantage as supply and demand shift. By Jack K. Hutson; pages 188-190.

Software Review: MESA (Maximum Entropy Spectral Analysis)

By John Sweeney; pages 191-193.

A Mechanical Trading System

When used correctly, swing charts can help the trader plan exit points and show the trade's exact risk exposure. Here, the author outlines his mechanical system which uses short-term swing charts to set stop points and limit losses. By William F. Eng; pages 194.

U.S. Trading Championship After Three Years

A recap of the top finishers in the U.S. Trading Championship over the past three competitions. By Norm Zadeh; page 200.

How W.D. Gann Tipped Me on R.H. Macy

Does Gann analysis really work? In this case it did! The author outlines the basic premises of Gann's Seven Zones of Stock Activity and how they clued him in on accumulative activity in R.H. Macy stock. By Hans Hannula; pages 205.

Succeeding With Options, Part 1

Professional programmer and software developer Lenny Yates describes how your computer can help put you on the right track in calculating the "fair value" of options and in making the smartest option trade. By Leonard Yates; pages 207.

A Comparison of the Fourier and Maximum Entropy Methods

By describing prices mathematically, the trader can extend the equation into the future to predict what the prices will be. Cycle analysis makes this easier to accomplish. Here, Ehlers examines two of the more well-known methods, Fourier analysis and Maximum Entropy, and compares their relative usefulness in predicting future prices. By John F. Ehlers; pages 209.

Fears of the Trader

Fear and greed play large roles in trading psychology. But, if you know your system, you can beat these demons and keep your head when trading. By Ron Jaenisch; pages 216-216.

Are Junk Stocks Really Dogs? Part 1

Can "bottom fishing" for winning junk stocks be profitable? Dunbar studies past "dogs" to find out. By Bill Dunbar; pages 217-219.

Book Review: Options as a Strategic Investment

By John Sweeney; page 220.

Applying the Elliott Wave Theory

A copper trading example allows the author to outline the practical application of Elliott wave theory to price movements. By Clarence J. Liautaud; pages 221-223.

Book Review: Strategic Investment Timing

By Alexander Elder; page 224.

Runs: A Method for Detecting Rhythms in Prices

Sequences of price changes (runs) can be used in statistical formulae to determine whether price increases or decreases are random or not. By Clifford J. Sherry, Ph.D.; pages 225.

Software Review: Comex the Game

By William T. Taylor; page 228.

The Wyckoff Method, Part 5: Prelude to Individual Chart Reading

The "physics" of investment forces allow market action to be described by phasesaccumulation, mark up, distribution and mark down. By seeing the market in terms of these phases, as large operators do, you can anticipate price movements and position your trades accordingly. This segment of the Wyckoff Method series explains these phases and how to read them on vertical charts. By Jack K. Hutson; pages 229-332.

SpreadsheetsA Universal Technical Analysis Program?

Computer spreadsheets can make the trader's life easier. Stuart Meibuhr explains how. By Stuart G. Meibuhr; pages 233-236.

Software Review: TechniFilter

By John Sweeney; pages 241-243.

Considering Risk

Fine-tuning your assessment of risk can help you initiate better trades, place your stops and limit your losses. Bryce offers some suggestions to help you in this all-important endeavor. By James Covington Bryce; pages 254.

Assessing Risk on Wall Street, Part 1: A Philosophy of Investing

The random walk theory provides a way of evaluating risk before an investment is made. By asking "what if" questions based on a security's price, both risk and expected profit can be better determined. This first of a series of articles outlines the basic premises for determining how much risk is too much. By Thomas A. Rorro; pages 256-258.

Software Review: N-Squared Analyzers

By John Sweeney; pages 259-260.

Daily Price and Volume Study: Trading Windows

Using the chi-square analysis as outlined by Clifford Sherry, Tarkany has analyzed the closing prices of the Dow Jones Industrial Averages and the daily total volume figures for the New York Stock Exchange to determine if they were random and/or independent. What he found were statistically significant trading windows in both series. This article explains how he found them and what it could mean to your trading strategy. By Frank Tarkany; pages 261-266.

Succeeding With Options, Part 2

Yates continues his look at options with three reliable methods for succeeding in options without having to forecast the price of the underlying security. He also includes a basic glossary of specialized option vocabulary useful for novice option traders. By Leonard Yates; pages 267-274.

The Relative Strength Quality Factor

Jones and Stromquist revise the calculation of the popular Relative Strength Index to make it more sensitive to individual markets. Their "Quality Factor" is based on the life-of-contract historical average of a particular future's RSI. By Donald Jones and Tod Stromquist; pages 275-278.

Book Review: Agricultural Options

By Alexander Elder; page 43.

The Wyckoff Method, Part 6: Figure Charts

Figure charts allow the analyst to quickly see where and how strongly supply or support is building and actually calculate the distance a price should rise or fall. It also shows horizontal formations, price lines that show where and how strongly the forces of demand and supply are gathering. This installment of the Wyckoff series includes examples of point-and-figure chart patterns which can be very effective when combined with more detailed vertical charts. By Jack K. Hutson; pages 279.

Software Review: Profit Stalker II

By Hans Hannula; pages 284.

Software Review: BLUE CHIPS

By John Sweeney; pages 288.

Weekly Price and Volume

Do trading windows exist in weekly closing price and volume data? This continuation of Tarkany's chi-square analysis shows that there are and how to find them. By Frank Tarkany; pages 295-298.

Letter to Jake

A real-world trade and the reasoning behind it form the basis of this letter between two traders. By detailing a trade in Comex gold, the complex combinations of tools and techniques which factor into a trader's decision-making process can be seen. By Stuart J. Pahn; pages 299-300.

Applied Artificial Intelligence

Advanced computer technology has allowed for the development of artificial intelligence (AI) techniques. These sophisticated decision making tools can allow traders to use more of the information available more effectively. By Jerry Felsen; pages 301-304.

A Sojourn Through Random Territory

A short comparison of the probability similarities between New York Stock Exchange Advance- Decline data, dice and roulette. By Henry S. Patricoff; page 305.

The Wyckoff Method, Part 7: Coordinating Vertical and Figure Charts for More Effective Forecasting:

By using Vertical and Figure charts in tandem, Wyckoff analysts can determine where trends are headed and how far they will go. In this installment of the Wyckoff Method series, the coordinated use of various charts is explained. By Jack K. Hutson; pages 306-308.

Applying the Random Walk: Assessing Risk on Wall Street, Part 2

Using the Random Walk theory to statistically model stock price movement can fine-tune your assessment of the risk involved in trades. By Thomas A. Rorro; pages 309-314.

Book Review: Trading Tactics: A Livestock Futures Anthology

By John Sweeney; page 315.

Are Junk Stocks Really Dogs? Part 2

Is speculating in junk stocks like playing roulette? Not necessarily. Author Bill Dunbar analyzed the past performance of junks to find out just how much risk was involved. By Bill Dunbar; pages 316-318.

Detecting Hidden Signals

By using the relatively simple statistical technique of averaging, you can analyze data to determine if a signal is buried in noise. By Clifford J. Sherry, Ph.D.; pages 319-320.

Technical Analysis of the Dow 20 Bond Index

Over the years, the correlation between moves in the bond market and the stock market has been tremendous. So it makes sense to be able to predict the movement of the debt market. Here, Waxenburg outlines how to use several technical tools to monitor this vital market via the Dow 20 Bond Index. By Howard K. Waxenburg; pages 321-324.

Interview

Cycle Analysis à la Peter Eliades

Master cycle finder Peter Eliades shares his insights into cycles and their effects on the market in this in-depth interview. By Melanie Bowman; pages 325-328.

Assessing Risk on Wall Street, Part 3

In this conclusion to his series on assessing risk, Rorro explains how computer spreadsheets can be used to keep track of the myriad calculations necessary to gauge risk factors in the markets. By Thomas A. Rorro; pages 331-333.

Alpha-Beta Trend-Following Revisited

Using the Standard & Poor's 400 stock index as an example, the effectiveness of the alpha-beta trend-following method (outlined in the June and December 1985 issues) is examined. By Anthony W. Warren, Ph.D.; pages 334-336.

Investigating Chart Patterns Using Markov Analysis

The predictive capabilities of pattern recognition can be enhanced using a statistical method known as Markov analysis. This method is used to study natural processes (like the weather) in which previous events influence, but do not rigidly control, subsequent events. Since today's prices are influenced by prices yesterday, Markov analysis can be used to identify which transitions from one pattern to another are statistically significant. By Curtis McKallip, Jr.; pages 338-339.

The Wyckoff Method, Part 8:

Trendlines: Refinements in Charting

Trendlines can aid Wyckoff analysts in interpreting chart formations by graphically representing the momentum imparted to stock prices. Part 8 of the Wyckoff series describes how to implement trendlines on Vertical and Figure charts to get a more complete view of the market. By Jack K. Hutson; pages 340-342.

The Relative Strength Index

Here is the original Relative Strength concept as conceived by J. Welles Wilder, Jr. In this reprinted chapter from Wilder's well-known book, New Concepts in Technical Trading Systems, the original calculations for the Relative Strength Index are outlined along with examples. In addition, two BASIC computer subroutines by Jack K. Hutson are provided which allow users of the Dow Jones Market Analyzer and CompuTrac to implement the Relative Strength Index on their systems. By J. Welles Wilder, Jr.; pages 343-348.

Evaluating the COMMODEX System

The longevity of the COMMODEX system makes in unusual in the rapidly changing world of trading systems. Here, author Ron Goodis (who once worked for COMMODEX founder Philip Gotthelf) explains the concepts behind the system and evaluates its effectiveness after 27 years in operation. By Ronald R. Goodis; pages 352-354.

The n-Method

Are large increases or decreases in the price of a given stock or commodity evenly distributed throughout the trading day? The trading week? The trading month? Cliff Sherry offers this simple statistical method to confirm patterns in price changes. By Clifford J. Sherry, Ph.D.; pages 355.