Krausz's article is an approach using pattern recognition based on a combination of classic techniques and one of his own indicators. For traders who like a simpler set of specific patterns, there's Walt Downs' "The Tactical Trader," in which Downs identifies specific patterns as setup for positions and provides a long list of markets and performance summary tables. (As with any of the techniques described within these pages, you should thoroughly review the methods presented to ensure that you can accept both the inevitable drawdowns and the upside performance.)
An article with a more philosophical bent is Henry Pruden's "Life Cycle Model Of Crowd Behavior." If the author's name sounds familiar, that may be because we interviewed Pruden in our September 1998 issue. Back then, he touched upon changes occurring in the academic world with regards to the efficient market hypothesis and the shift toward behavioral finance. This time, Pruden elaborates on how the concept is used to understand market behavior as well as how the participants driving the market interact.
As I write this in early November, I'm watching the remarkable volatility of the bond market. Over a month ago, the bond market plunged to a record low yield, only to bounce back with the same swiftness. With that in mind, I thought that a talk with a fixed-income specialist might be informative and relevant. Check out our interview with McCarthy, Crisanti & Maffei's Bruce Kamich, senior vice president for research for MoneyWatch, an electronic financial service. In the interview, he talks about some interesting analytical methods he's brought over from the equity side, and he also mentions that the techniques you use need to be based on the way the markets function -- sound advice for those developing their own technical tools.
For me, the real challenge lies in covering a range of topics diverse enough to interest the readers of STOCKS & COMMODITIES month after month, but don't get me wrong; that makes my job a pleasure as well as a challenge. I gain as much as you from reading about such a wide assortment of subjects, and as the New Year begins, I can promise you I'm going to continue to provide you with the diversity that we all need to trade the best we can.Trade well!
Thom Hartle, Editor