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.
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- Parent Category: Departments
- Category: Letters To The Editor
- Written by Technical Analysis, Inc.
PE RATIOS AND MARKET SECTORS
I read with great appreciation your monthly issues. I got “sucked in” with your sample issues, and what great articles there were in those samples (for example, Teresa Fernandez’s “Dogs Of The Dow”; Trent Gardner’s “Using VIX To Forecast The S&P 500”; Ron McEwan’s “Lunar Cycles And Stock Market Volatility”; and the latest article by Mark Vakkur, “Sell In May And Go Away”). Keep them coming — they’re thought-provoking!
As for Vakkur’s latest, “Sell In May” — why, I wonder? It appears that buy & hold from December 1979 at 107.9 through December 2012 at 1426.2 would yield fully as good with no selling but with dividends, when available. Still, great article!
Now I would like to see greater information about PE ratios for the 10 market sectors, for example, the Case-Shiller CAPE (cyclically adjusted price earnings) ratio and its effect on those sectors. Does the PE ratio reveal highs & lows (which may indicate tops & bottoms and market in & out information)? If so, it could be one more indicator to help investors.
Thanks for a great magazine. Awaiting your next issue.
Thank you for your comments. We appreciate feedback from our readers.
As for Vakkur’s May 2013 article: It is true that the market has an upward bias over time, and buying & holding over long periods is usually a profitable approach. But the point of the article had more to do with testing this market adage. Rather than simply assuming the truthfulness of oft-repeated market sayings, technical analysts prefer to test them to try to find out whether they are actually reliable and have proved to be true, at least on historical data. Further, since not everyone can buy & hold for three decades (!), or for those who prefer a shorter-term style of investing, a study such as this one on timing and seasonality can be helpful.
Finally, it can be useful to compare a simple buy & hold approach to timing methods over long periods to find out whether buy & hold can be improved on and made more profitable by adding timing techniques. Subscribers can find several articles on this topic in the article archives at our website, Traders.com.
For more on the topic of buy & hold and how to know when may be a good time to sell long-term holdings, see the article by Thomas Bulkowski in this issue, “Trading Buy & Hold.”
As for PE and CAPE: One recent article we’ve published on this topic is “A Fundamental Lesson For The Technically Minded” by Matt Blackman, which you’ll find at our website at http://premium.working-money.com/wm/display.asp?art=841 (or navigate to this article from our homepage at Traders.com, then click on “Working Money” toward the top; login is required).—Editor
SWING TRADING STRATEGY
I have a couple of questions in regard to Sylvain Vervoort’s article in the May 2013 issue, “Indicator Rules For Swing Trading Strategies, Part 1.”
- Can these rules be used for commodities and forex along with stocks?
- Where can I get the programming code to insert these indicators into a trading program? Are all the indicators available on CD? It seems that Vervoort provides the programming code for MetaStock, yet I will be using either TD Ameritrade’s thinkorswim platform or NinjaTrader.
I am looking to purchase Vervoort’s book Capturing Profit With Technical Analysis. Thanks for your time.
Author Sylvain Vervoort replies:
My technique can be applied to any market or tradable that makes moves suitable for swing trading, meaning regular moves of sufficient size.
As for your second question about the programming code, in part 2 of my article series, which appeared in the June 2013 S&C, I offered code for NinjaTrader (that is, written in NinjaScript) in a .zip file format for import, which is available from my website at http://stocata.org/ninjatrader/formulas.html as well as from the Stocks & Commodities website, Traders.com, in the Subscriber Area (http://technical.traders.com/sub/sublog4.asp) as well as at www.traders.com/files/Vervoort-NinjaTrader.html.
Readers can find some related code for other platforms or software, contributed by the respective software developers or coding specialists, in the Traders’ Tips section of the June 2013 issue as well as at the Stocks & Commodities website at http://www.traders.com/index.php/sac-magazine/departments/traders-tips (that is, from Traders.com, click on “Traders’ Tips” under “Departments”).
Most of the indicators discussed in my book Capturing Profit With Technical Analysis have been covered by S&C in various articles. Those articles are available from the Stocks & Commodities website at Traders.com in the article archives area. The indicators are generally available in the other platforms you mention.
MORE ON SWING TRADING STRATEGY
I was very interested in Sylvain Vervoort’s article in the May 2013 issue of S&C, “Indicator Rules For Swing Trading Strategies, Part 1.”
I programmed as many of his indicators as possible in my thinkorswim charting platform. The utility of his indicators was immediately apparent. I had used variations of them previously, but not in concert, as his article suggests. I’m eagerly awaiting his future articles in the series.
I am an active option and futures trader. Are any of his systems applicable to futures trading, specifically the NQ, ES, and TF equities futures markets? I am more of a swing trader than a daytrader, and I find his analytic approach very appealing.
I would also like to ask him: Would any of the materials/systems advertised at his website be applicable to my equities futures trading based on a four-hour time frame?
Author Sylvain Vervoort replies:
Ideally, a trend-following system is applied to an underlying with moves that are sufficiently large. You can apply these systems also to futures or forex, even independent of the time frame used. However, you will need to find the time frame that gives the best results with acceptable stop-loss settings.
My experience in the minute range gives best results using either a small range (three minutes) or a larger range (30 minutes). All other ranges are not as good. As for products available from my webiste, you could try my BBS expert system. It’s a simple formula that should be easy to apply on any platform.
Editor: Readers will find part 2 of Vervoort’s seven-part article series on IRSTS in the June 2013 issue of S&C, and part 3 appears in this issue beginning here (“The Step Candle Pattern”).