January 2002 Letters To The Editor
or return to January 2002 Contents
The editors of S&C invite readers to submit their opinions and
information on subjects relating to technical analysis and this magazine.
This column is our means of communication with our readers. Is there something
you would like to know more (or less) about? Tell us about it. Without
a source of new ideas and subjects coming from our readers, this magazine
would not exist.
Address your correspondence to: Editor, STOCKS & COMMODITIES,
4757 California Ave. SW, Seattle, WA 98116-4499, or e-mail to editor@traders.com.
All letters become the property of Technical Analysis, Inc. Letter-writers
must include their full name and address for verification. Letters may
be edited for length or clarity. The opinions expressed in this column
do not necessarily represent those of the magazine. -Editor
BALANCE OF MARKET POWER
Editor,
In "Balance Of Market Power" (S&C, August 2001), author
Igor Livshin constructs an oscillator based on three types of rewards.
But I think it lacks one more type of reward: today's open minus yesterday's
close; that is, overnight action on digesting news by market participants.
Without this, the oscillator may interpret the situation incorrectly.
Suppose the Nasdaq opened down with a gap of 100 points, then rallied
from the open 50 points, and closed at the high of the day. Say the situation
repeated five days in a row. Calculating the oscillator's value based on
the four intraday values (today's open, high, low, close) will indicate
a very bullish bias, when in reality the price was dropping like a stone.
Anna Mozhaeva, via e-mail Russia
Ivor Livshin replies:
This suggested addition to the BMP formula would cover the after-the-market-close
activity (specifically, gaps). However, I personally would not include
this part in the BMP calculation for the following reasons:
1. Gaps happen relatively seldom, and their impact on multiple days' (say,
14 days) aggregate value of the BMP indicator is minimal. I can't ever
remember seeing five gaps in a row.
2. Very often, the overnight activity is wrong and has a short-lived
impact on the market direction.
POSITION TRADING THE S&P
Editor,
Clifton Mitchell's article "Position Trading The S&P"
in the October 2001 S&C uses linear regression to predict short-term
trend changes of the Standard & Poor's 500. The following list of articles
and follow-up letters to the editor from past issues of S&C may be
of interest to those readers who wish to further pursue Mitchell's teachings.
"The End Point Moving Average" by Patrick E. Lafferty
(October 1995)
Follow-up letter to the editor: "End Point Moving Average"
(February 1996)
"Smoothing Techniques For More Accurate Signals" by Tim
Tillson (January 1998)
Follow-up letter to the editor: "Smoothing Techniques" (March
1998)
[and "T3 Indicator," Letters to S&C (August 1998)-Editor]
"How Smooth Is Your Data Smoother?" by Patrick E. Lafferty
(June 1999)
Follow-up letter to the editor: "Excel Code For Trend-Following
Method" (December 1999)
[and "More Responsive Moving Averages," Letters to S&C
(June 2000), and
"More Responsive Moving Averages And End Point Moving Average,"
Letters to S&C (August 2000) -Editor]
"More Responsive Moving Averages" by Joe Sharp (January
2000)
Follow-up letters to the editor: "Searching Traders' Tips"
(March 2000), and
"More Responsive Moving Averages" (June 2000), and "More
Responsive Moving Averages And End Point Moving Average" (August 2000)
Hugh Logan, via e-mail
CUP AND HANDLE
Editor,
In the September 2001 S&C, you published an interesting article
by Rick Martinelli and Barry Hyman, "Trading Within The Cup."
The article presented an algorithm for using pattern recognition for a
modified cup and handle. The article also referred to Stan Weinstein's
stage recognition chart system.
I'm starting to develop a rudimentary exploration using MetaStock
6.52 (I have been a longtime user of Equis's software and also a longtime
reader of your magazine), and I was hoping that you were planning on presenting
an exploration of your own in your Traders' Tips column. Any plans toward
this? Have you already published one for MetaStock users, which I could
find in archives or elsewhere?
Fred Naef, via e-mail
Sorry, we have not published a MetaStock exploration on the cup and
handle. Please contact Equis International at equis.com.-Editor
CHARTING SERVICE
Editor,
I was wondering if you offer a chart service in which paper copies
of charts are mailed out to clients on a weekly basis. If you don't, do
you know of anyone who does?
Melany, via e-mail
We don't sell charts, but try Chartcraft (30 Church St., New Rochelle,
NY 10801, 914 632-0422, usinfo@chartcraft.com, www.chartcraft.com). Chartcraft
offers long-term historical charts and offers a weekly chart service.-Editor
POINT & FIGURE CHARTING SOFTWARE
Editor,
Can you recommend software that can build point & figure charts
with intraday data (15-minute charts) for equities and commodities?
Guillermo Velez, via e-mail
We simply are not familiar with all the specific features of all the
charting software products available. There are several programs that plot
point & figure charts, but offhand, we don't know which ones build
15-minute charts. For starters, go to the Software category of the Traders'
Resource at our website, Traders.com. Use the search facility there to
plug in the parameters "intraday" for data type and "point
& future" for chart type.
For more on point & figure charting, see David Penn's article
in this issue, "Point & Figure Charting."-Editor
ERRATA
On page 59 of the November 2001 S&C, we inadvertently dropped a
line of text from the sidebar. The first line of text in the sidebar should
have read: "As it stands now, the spreadsheet computes the differences..."
We regret the error.
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