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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (16414)	6/6/1998 2:49:00 PM
From: Lachesis Atropos	Respond to of 68434

Hi Harry, Its been a while! Got some news from the grapevine. MCI is bent on coming out with good earnings until the WCOM merger happens or not, for fear of what happened with the BT case. MCI is going in lean and mean for the next few quarters, if positive earnings mean anything in this market and if the controversy of the merger doesn't eclipse good earnings per share. iffy, iffy. I would suspect that systems trading in indices would be better but have not tried it. Indices are not as volatile as the individual stocks. A system has to compensate for volatility and still make a profit Using index is a good indictor. An index is composed of stocks if the index rises then this implies that the stocks making up the index are rising, which increases your changes of making a good trade if you trade in the direction of the index. Using indices gives on a good place to look. Using indices is a top down approach. I modeled sector rotation using graph theory, however model showed patterns similar to a random walk. Nothing one could exploit. A bottom up approach would use each stock and build unique indexes based in some criteria. What I suspect is that unique indexes based on price may be exploitable. I did notice that an $8.00 stock behaves more like other $7-$9 dollar stocks than to a $45 dollar stock. Even if all the stocks are in the same sector. The 200-day moving average and SD measurements are not very reliable. I'll ruffle a few TA feathers on this explanation. 200, 100 and 50-day moving averages, head and shoulder patterns are all classic TA portents. Now one has to ask the cause and effect question. Is it the stock or is it all the TA traders moving the prices. Like in literature when a pattern is well know is becomes a clich‚. Overall the 200-day ma shows the direction of the momentum. It is a good long-term indicator. For long- term trades it is better to buy into the momentum rather than oppose it on a SD indicator (I see the flames coming from the Bollinger group). Wait for the ma to change direction. I would not use a SD to for a change in trend. Unless one trades on spikes, which I have not simulated. The system I am using is still based on weighted moving averages but have modified to so that the MAs are dynamic from day to day. This way if a stock changes momentum the MAs will catch it before I loose too much money. Dynamic MAs have some neat characteristics. The concept of Bollinger bands is implicit in them-a better Bollinger -- and they reduce risk. They follow the principle of letting the winners run and cutting your losses short. However, some traders would freak out if they use this system. On the surface it appears to be very volatile but one has to look at the long run. It is very difficult to escape the power of an average and stock market momentum. It is a short-term inter-day (not intra-day) momentum trading system. I am in a stock for only 2 to 14 days. For example, here are some stocks that show up as good momentum plays: DSET using a 1 and a 5 day WMA LONG ICST using a 2 and a 3 day WMA LONG ELIX using a 1 and a 2 day WMA LONG INCY using a 1 and a 2 day WMA LONG The health indicator I use is how well the system does. A few weeks ago it was doing 13% very 40 days now it dropped down to the low 11%. To me this indicates momentum up and down is weakening. Also, it indicates to me that the using the system pushes the odds in my favor-- 89% chance of winning if one plays by the rules (But that is another story). Lachesis

To: Johnny Canuck who wrote (16414)	6/6/1998 2:54:00 PM
From: Tom Trader	Read Replies (2) \| Respond to of 68434

Hi Harry -- long time -- hope that you are doing well >>Tom Trader on the Tech Option Thread has stated many times that he has found that system trading works better on the indices as opposed to individual stocks. << I believe that what I said was that the system that I use to trade futures works better on the indices than on individual stocks. I have found that the system, with minor modifications, works great in different futures markets, but produces inconsistent results with different stocks. Never been able to figure out why this is so. I am inclined to believe that a mechanical system can be developed to trade stocks successfully. I have not been able to do it -- though in fairness, I have never put the effort to trying to develop one for this purpose. My regards

To: Johnny Canuck who wrote (16414)	6/6/1998 4:53:00 PM
From: Clint E.	Respond to of 68434

Sorry, Harry. I meant to post Dwight but I noticed that I had posted you instead............That's what happens when you switch between work & pleasure! Did you know that by mistake I have sometimes sold puts when I wanted to buy them or shorted stocks that I actually wanted to buy? Perils of electronic trading... I tend to take it easy for a couple of days when that happens! Clint

To: Johnny Canuck who wrote (16414)	6/6/1998 11:21:00 PM
From: Clint E.	Read Replies (1) \| Respond to of 68434

Harry, one more thing before I get a ton of posts.....seems like the norm these days...... My comment w/r to my wife & women and stocks not mixing, has to do with married couples and situations that husbands are involved in the stock market and tell their wives about day-to-day fluctuations/volatility in their accts. I am just expressing my own experience, based on what I have seen in my own wife and friends' spouses. In no way or shape I said or mean to say that women cannot trade stocks. I happen to know a couple of good ones myself. I don't even know how I ended up on this subject. I am sorry that I even brought this up. Clint

To: Johnny Canuck who wrote (16414)	6/7/1998 4:20:00 PM
From: Lachesis Atropos	Read Replies (2) \| Respond to of 68434

Harry sorry about the last response. I missed a few vowels and the run on sentences ran away on me. I hope it is readable. Tom's Trading system trades futures or options? I would think, an options trading system would be risky. Or is it like trading futures? The way I understand futures' trading, is that one can loose 4 out of 5 trades and still come out ahead. Even given this, trading stocks seems to be more forgiving, you can make a few bad trades and then make up the difference on the next few days. With the 4 out 5 assumption one can get runs of 20 bad trades (not uncommon) in a row which could be devastating if one did not have a lot of resources. Also, I was told that futures' trading is governed by Technical Analysis more than Fundamental Analysis. Comments? Lachesis

To: Johnny Canuck who wrote (16414)	7/9/1998 10:25:00 PM
From: Lachesis Atropos	Read Replies (1) \| Respond to of 68434

>>Tom Trader on the Tech Option Thread has stated many times that he has found that system trading works better on the indices as opposed to individual stocks. Another reason this may be so, is that good data on stocks is very difficult to find. For example, I've been doing regression tests on my system and bad data rears its ugly head over and over again. I am using Windows on WallStreets pro edition CD with 1/4ly updates. And have found 144 US stocks trading on holidays, Saturdays and some on Sundays. There are price fluctuations in excess of 1200%, when in fact there were no such prices. So far I have gone through 4 data sources for historical data and all significantly impact a trading system. Main stream indices are more closely watched and data anomalies are identified and corrected quickly. As for stock data one is left to pick out the bad data by visual inspection. Arg..... Testing looks good so far. Now to fix the bad data. I will try to compare data from three sources and identify the inconsistencies. Then back to random sampling and testing trading strategies. It appears that my trading (haven't lost in the last 3 months, 39 trades) was due to a run of luck rather than systematic trading--Of coarse I though it was due to a superior system. Though the money I made was not significant:( Lachesis.

To: Johnny Canuck who wrote (16414)	7/30/1998 12:48:00 PM
From: Lachesis Atropos	Read Replies (3) \| Respond to of 68434

Harry They are using the number of stocks two standard deviations above their 200 day moving average as the measure health of the market I seem to recall, but perhaps my memory is failing, that you posted something about the S&P500 being 2 SDs above 200 day ma. Looks like it was a good portent given the correction we are going through right now. Still rebuilding my database. It is a lot more work than I really wanted to do. It is shaping up and should be stable enough to use shortly. I hear the weather has been great in BC. Have you been up to Lynn (sp) Valley -- its great for hot weather! I'll be in BC in a few weeks, Kootenay Lake area. Hope the weather holds out. I am stilling playing short side. ENML has been a wind fall so far and just entered a short on WCAP this morning. WCOM, MCI merger should be complete before Labour Day. I four states California, Montana .. have a ruling body that equals the FCC at the state level. These states have to approve the deal which may delay the Labour Day merger date. Lachesis