|
PureBytes Links
Trading Reference Links
|
My reference by Zweig was written for general audiences and does not discuss
a requirement for 9:1 down day precursor events to give validity to 9:1 up
day events. I would be interested in reading more about this requirement
and a generally available reference would be appreciated.
I would also be interested in a conceptual discussion of why, although it
has not been tested, Nasdaq index behavior in regard to 9:1 advancing to
declining volume is diferent from what has been tested with the NYSE. Has
it simply not been tested against the Nasdaq or am I missing a fundamental
difference between the two indexes that limit the application of the idea
without testing?
Thank you for your help.
Dan
>From: "Norman E. (5)" <n-2001@xxxxxxxx>
>Reply-To: realtraders@xxxxxxxxxxx
>To: realtraders@xxxxxxxxxxx
>Subject: Re: [RT] NDX Update
>Date: Thu, 04 Jan 2001 10:54:44 -0800
>
>You are correct Steve, and lets remember that the most important rule is to
>get
>the rules correct.
>
>Norman E.
>
>"Steven W. Poser (psn)" wrote:
>
> > Dan -
> >
> > Let me preface this by the fact that though I am a professional market
> > technician, I am no expert on the 90% rule. However a few warnings
>regarding
> > that "rule" (there has been much discussion of it amongs members of the
> > Market Technicians Association of late):
> >
> > (1) The rule only comes into affect after multiple 90% down days. We
> > probably do not qualify for that.
> >
> > (2) The rule is based on the NYSE and not the NASDAQ. There are no
>studies
> > of whether it works on the NASDAQ. We have not had a 90% up day or down
>day
> > in this whole run on the NYSE as far as I can remember.
> >
> > Steve Poser
> >
> > ---
> > Steven W. Poser, President
> > Poser Global Market Strategies Inc.
> > http://www.poserglobal.com
> > swp@xxxxxxxxxxxxxxx
> > Tel: 201-995-0845
> > Fax: 201-995-0846
> >
> > -----Original Message-----
> > From: Dan Harels [mailto:harelsdb@xxxxxxxxxxx]
> > Sent: Thursday, January 04, 2001 1:44 AM
> > To: realtraders@xxxxxxxxxxx
> > Subject: Re: [RT] NDX Update
> >
> > Martin Zweig put out a book in 1986 called "Winning on Wall Street". It
> > presents a good, well documented, introduction to technical analysis
>from a
> > statistical and market point of view. In other words, it focuses more
>on
> > markets and averages than on candlesticks and price patterns.
> >
> > A couple of indicators he presents seem particularly pertinent at this
>time.
> > First, he analyzes the ratio of advancing volume to declining volume
>and
> > its predictive value. He found that "when 90 percent or more of the
>volume
> > is on the upside on a given day, it is a significant sign of positive
> > momentum". Zwieg goes on to say, "Every bull market in history, and
>many
> > good intermediate advances have been launched with a buying stampede
>that
> > included one or more 9 to 1 up days". The volume on the Nasdaq on
>January 3
> > was 2,898,963 advancing to 213,592 declining which equates to over 13 to
>1
> > advancing to declining volume. Breadth on the NYSE was not nearly so
> > positive and a ratio of only 2.5 to 1 resulted.
> >
> > The second indicator Zweig presents that seems especially pertinent here
>is
> > his Fed Indicator. This indicator is calculated by awarding or
>deducting
> > points every time the Fed lowers or raises the discount rate. Points
>are
> > also added or subtracted based on the length of time since a give
>discount
> > rate change and based on a reversal in the direction of changes. The
>points
> > associated with a given interest rate change are dropped from the
> > calculation after six months and Zweig considers them stale. Zweig's
>book
> > states that the indicator will normally range from -4 or -5 to + 6 or
>+7.
> > A reversal in the direction of discount rate changes wipes out any
>positive
> > or negative points and a cut, as occurred on January 3, kicks in 2
>positive
> > points. Zweig classifies levels of +2 and above as "extremely bullish"
>and
> > states that "there is no 'moderately bullish' rating simply because
>ratings
> > of +2 led to excellent stock market performance".
> >
> > I have found "Winning on Wall Street" to be a good resource and a
>bargain at
> > 15 dollars. Vic Sparando's book "Trader Vic; Methods of a Wall Street
> > Master" has also proven to be valuable. He details a technique for
> > identifying trend reversals and thus buying or selling opportunities.
> > According to this technique, a trend line is drawn from the recent high
>so
> > that it just touches the lower high that occurs immediately before the
>most
> > recent lowest low. A trend reversal is indicated when the price
>violates
> > the trendline and then moves back to test the low before the trendline
> > violation. The reversal is confirmed when prices move back above the
>high
> > that was put in when the trendline was violated. A chart that
>illustrates
> > what might be a trend reveral in ORCL is attached for reference. Note
>also
> > that an enfulging, bullish candlestick was put in on January 3. Paging
> > through the top 50 Nasdaq stocks by capitalization yields the follwing
>list
> > of stocks that appear to be reversing their downtrends. Presumably
>these
> > are among the strongest stocks on the Nasdaq because they are furthest
>along
> > in their reversals.
> >
> > ORCL, QCOM, NTAP, CHKP, TLAB, BEAS.
> >
> > FITB also looks interesting as a retracement from a breakout.
> >
> > Those of you who have read my previous posts know my advice is worth
>exactly
> > what you pay for it. In other words, be very careful and perform your
>own
> > analysis.
> >
> > Dan
> >
> > _________________________________________________________________
> > Get your FREE download of MSN Explorer at http://explorer.msn.com
> >
> > To unsubscribe from this group, send an email to:
> > realtraders-unsubscribe@xxxxxxxxxxx
> >
> > To unsubscribe from this group, send an email to:
> > realtraders-unsubscribe@xxxxxxxxxxx
>
_________________________________________________________________
Get your FREE download of MSN Explorer at http://explorer.msn.com
To unsubscribe from this group, send an email to:
realtraders-unsubscribe@xxxxxxxxxxx
|