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<DIV><FONT size=4>A / D - The Advance Decline Line</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2><FONT size=2><FONT size=2><U>Advance-Decline Line
</U></FONT></FONT></FONT></DIV>
<DT>
<DIV><FONT size=2><FONT size=2><FONT size=2>The advance decline line is simply a
cumulative total of the number of advancing issues minus the number of declining
issues.</FONT></FONT></FONT></DIV>
<DT><FONT size=2>
<DT><FONT size=2><FONT size=2><U>Advance-Decline Line - Calculation
method</U></FONT></FONT>
<DT>
<DIV>First, a large number is chosen, e.g. 20,000. Each day thereafter, the
difference between the number of advancing issues and</DIV>
<DT>
<DIV>declining issues is added or subtracted, eg e<FONT size=2>ach day's number
of declining issues is subtracted from the number of advancing</FONT></DIV>
<DT>
<DIV><FONT size=2>issues which results in the net difference. This net
difference is then added to a running sum if the difference is positive
or</FONT></DIV>
<DT>
<DIV><FONT size=2>subtracted from the running sum if the difference is
negative. </FONT> Usually, New York Stock Exchange data is used for the
calculation.</DIV>
<DT>
<DIV></FONT> </DIV>
<DT><FONT size=2><FONT size=2><FONT size=2><FONT size=2><U>Advance-Decline
Line - Reviewed</U></FONT></FONT></FONT></FONT>
<DT><FONT size=2>The problem with the advance decline line is that it can be
quite subjective in interpretation. </FONT><FONT size=2>In retrospect, large
divergence's can</FONT>
<DT><FONT size=2>be seen. However, it is hard to see them developing when the
analyst needs the information the most. </FONT><FONT size=2>This is not a
forward</FONT>
<DT><FONT size=2>looking indicator. At best it can be used as a trend indicator
(source <A href="http://www.e-analytics.com/techdir.htm";>Technical
Analysis</A> by <A href="http://www.e-analytics.com/index.htm";>Equity
Analytics, Ltd.</A>).</FONT>
<DT><FONT size=2></FONT>
<DT><FONT size=2>For example, by plotting a 20-day CMO or 14-day RSI based
upon the advance decline line, a far better indication can be
</FONT><FONT size=2>made</FONT>
<DT><FONT size=2>visable for </FONT><FONT size=2>the (NYSE)
market(s)</FONT><FONT size=2> internals and how it progresses in
time and most important, at the moment.<BR></FONT>
<DT>
<DIV><FONT size=2>The A / D Formula for MetaStock:</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>{In the Downloader click Help to find out how to
create</FONT></DIV>
<DIV><FONT size=2>Composite Charts, then create a composite security
of</FONT></DIV>
<DIV><FONT size=2>Advancing Issues minus Declining Issues. In
MetaStock</FONT></DIV>
<DIV><FONT size=2>click Help to find out how to create Custom
Indicators, then</FONT></DIV>
<DIV><FONT size=2>open the chart of the created composite security and
plot</FONT></DIV>
<DIV><FONT size=2>this formula as a single custom indicator, eg
drag this</FONT></DIV>
<DIV><FONT size=2>indicator down from the Indicator Quicklist and have
it</FONT></DIV>
<DIV><FONT size=2>released on the Chart to create its -own- inner
window}</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>Cum(CLOSE)</FONT></DIV>
<DIV><BR>Regards,<BR>Ton Maas<BR><A
href="mailto:ms-irb@xxxxxx";>ms-irb@xxxxxx</A></DIV>
<DIV> </DIV>
<DIV><FONT size=2>Below some related indicators taken from the Equis'
website <A
href="http://www.equis.com/customer/support";>http://www.equis.com/customer/support</A>
</FONT></DIV>
<DT>
<DIV><FONT size=2>some originate from the TASC's Stocks &
Commodities-magazine <A
href="http://www.traders.com/";>http://www.traders.com/</A></FONT></DIV>
<DIV><FONT size=2>==============================================</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=5>The New Advance Decline Line</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>rev. 01/06/97</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>The formulas and steps necessary to do the New Advance
-Decline Line from the September 1994 Technical Analysis of Stocks &
Commodities, page 14 by<BR>Daniel Downing are:</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>Taken from Stocks & Commodities, V. 12:9 (363-365): A New
Advance-Decline Line by Daniel E. Downing</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>"Here's a trading tool that uses a unique version of the daily
advance-decline line of the New York Stock Exchange (NYSE). This
version<BR>helps in our short- and long-term trading of index options and stock
index futures. It gives many good short-term trading signals and excellent
but<BR>infrequent longer-term signals…</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>The philosophy behind this tool is that the short-term
trader's capital is finite and that traders have to reliquify their holdings
after a period.<BR>Traders can buy and try to push the equities higher only so
many times before they need to reliquify, just as only a finite amount of
selling<BR>waves can take place before the sellers are out of supplies. A tool
that points to when short-term traders need to reliquify their positions
will<BR>also spot when the markets will soon reverse their trends."</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>For the Windows versions of MetaStock:</FONT></DIV>
<DIV><FONT size=2><FONT size=2> * </FONT>Load the
advances</FONT></DIV>
<DIV><FONT size=2> * Load the declines<BR> * Drag the
plot of the advances into the chart of the declines<BR> * Plot the
following custom formula directly on the plot of advances.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>Cum( If( P ,>= ,1000 ,If(C ,< ,1000 , + 1 ,0 ) ,If( C
,>= ,1000 ,-1 ,0 ) ) )</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>For the DOS versions of MetaStock:</FONT></DIV>
<DIV><FONT size=2> * Load the advances<BR> * Plot the
formula C<BR> * Press Ctrl + B and Save to the
buffer.<BR> * Load declines<BR> * Press Ctrl + B and
Restore the buffer.<BR> * Plot the custom formula:</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>Cum( If( P ,>= ,1000 ,If(C ,< ,1000 , + 1 ,0 ) ,If( C
,>= ,1000 ,-1 ,0 ) ) )<BR></FONT></DIV>
<DIV><FONT size=2><FONT
size=2>========================================================= </DIV>
<P><FONT size=5>Advance / Decline Line with Negative Volume</FONT>
<P><FONT size=1>rev. 01/06/97<BR></FONT>
<P><FONT size=2>There is a way to get the negative volume on an advance-decline
line chart in MetaStock™ for Windows™.<BR></FONT>
<P><FONT size=2>The requirement is: Each security must have both the number of
issues and the volume in the file. Advancing issues with advancing volume in one
security and declining issues with declining volume in one security file. These
files may be obtained from Reuters Trend Data by way of The DownLoader for
Windows. You will also need to create a composite security of the
Advance-Decline line, which is the advances - declines.<BR></FONT>
<P><FONT size=2>The following steps will get you an advance-decline line with
negative volume where applicable. Follow these steps once and save as a CHART.
When you want to use it simply load the chart and the program will calculate the
new volume plot using the new data.<BR></FONT>
<UL>
<LI><FONT size=2>Create a NEW chart of the advancing issues. </FONT>
<LI><FONT size=2>Create a NEW chart of the declining issues.</FONT>
<LI><FONT size=2>Create a NEW chart of the advance-decline composite. </FONT>
<LI><FONT size=2>Create a NEW INNER WINDOW on the declining issues
chart.</FONT>
<LI><FONT size=2>Delete the volume plot on the advance-decline composite
chart. </FONT>
<LI><FONT size=2>Copy the volume from the advancing issues chart and paste it
into the new inner window on the declining issues chart.</FONT>
<LI><FONT size=2>Drop the custom formula, P-V on the advancing volume plot in
the declining issues chart, creating a new scale.</FONT>
<LI><FONT size=2>Copy that plot to the empty inner window (where the volume
was) of the advance-decline composite.</FONT>
<LI><FONT size=2>Save that chart as the adv-decl chart (perhaps advdecl.mwc).
</FONT></LI></UL>
<P><FONT size=2>This will be the chart you load to do your study of the
advance-decline line with negative volume.</FONT></P>
<P></FONT></FONT><FONT
size=2>==============================================</FONT><FONT size=2><FONT
size=2> </P>
<P><FONT size=5>Arms Index (TRIN )</FONT>
<P><FONT size=1>rev. 01/06/97<BR></FONT>
<P>The Arms Index, also known as TRIN, is a market indicator that shows the
relationship between the number of stocks that increase or decrease in price
(advancing/declining issues) and the volume associated with stocks that increase
or decrease in price (advancing/declining volume). The Arms Index was developed
by Richard W. Arms, Jr. in 1967.<BR>
<P>The Arms Index is primarily a short term trading tool. The Index shows
whether volume is flowing into advancing or declining stocks. If more volume is
associated with advancing stocks than declining stocks, the Arms Index will be
less than 1.0; if more volume is associated with declining stocks, the Index
will be greater than 1.0.<BR><BR>
<P>The formula for the Arms Index is:<BR><BR>(Advancing Issues / Declining
Issues) / (Advancing Volume / Declining Volume)<BR><BR>
<P>To calculate the Arms Index in MetaStock™ for Windows you will need to first
collect the four pieces of data.<BR>
<UL>
<LI>Reuters Trend Data (RTD) supplies this data in two files. The tickers are
X.NYSE-A (Advances, number and volume) and X.NYSE-D (Declines, number and
volume). <BR>
<LI>Dial/Data also supplies this data in two files. Advances, number and
volume and Declines, number and volume. The tickers are @*NAZ_K and @*NDZ_K.
<BR>
<LI>CompuServe supplies this data in 4 files. The tickers are NYSEI
(Advances)use the cusip 00000157 rather than the symbol; NYSEJ (declines);
NYUP (Advance volume) and NYDN (decline volume). <BR></LI></UL>
<P>After the data has been collected follow these steps:<BR>
<P>For data from RTD or Dial Data
<UL>
<LI>In the DownLoader™ create a composite security of the Advances / Declines.
<LI>In MetaStock open the composite.
<LI>Create and plot the custom formula: C/V </LI></UL>
<DIV>This gives you the Arms Index (TRIN). <BR><BR></DIV>
<P>For data from CompuServe
<UL>
<LI>In the DownLoader create the two composites.
<UL>
<LI>Advancing Issues / Declining Issues
<LI>Advancing Volume / Declining Volume </LI></UL>
<LI>In MetaStock open both composites.
<LI>Tile the charts so they can both be viewed.
<LI>Drag the plot of the Adv. Volume/Dec. Volume composite into an inner
window in the Adv. Issues/Dec. Issues chart.
<LI>Create the custom formula: C/P
<LI>Plot this formula on top of the Adv. Volume/Dec. Volume plot (the Adv.
Volume/Dec. Volume plot will turn a purplish color to signify the formula will
be plotted on it). </LI></UL>
<P>You will know have the Arms Index (TRIN) plotted. You can drag it to its own
inner window if you prefer.<BR>
<P>For interpretation refer to Mr. Arms book, <I>The Arms Index</I>.
<BR></P></FONT></FONT>
<P><FONT size=2>==============================================</FONT></P>
<DIV><FONT size=2>----- Original Message ----- </FONT>
<DIV><FONT size=2>From: Charl Marais <<A
href="mailto:pcmarais@xxxxxxxxxxxxx";>pcmarais@xxxxxxxxxxxxx</A>></FONT></DIV>
<DIV><FONT size=2>To: <<A
href="mailto:metastock@xxxxxxxxxxxxx";>metastock@xxxxxxxxxxxxx</A>>; <<A
href="mailto:stocks@xxxxxxxxx";>stocks@xxxxxxxxx</A>></FONT></DIV>
<DIV><FONT size=2>Sent: zaterdag 10 april 1999 23:12</FONT></DIV>
<DIV><FONT size=2>Subject: Advance-Decline formula</FONT></DIV></DIV>
<DIV><BR></DIV><FONT size=2>> Hello<BR>> <BR>> Anyone got the formula
for the Advance-Decline indicator<BR>> in Metastock ?<BR>> <BR>>
Thanks<BR>> Charl<BR>> ################################<BR>> Charl
Marais<BR>> <BR>> M.Sc.Eng. (Chemical Engineering)<BR>> University of
Stellenbosch<BR>> Tel. +27-21-8083163<BR>> Fax. +27-21-8084967<BR>> <A
href="http://www.sun.ac.za/polymer/pcm.jpg";>http://www.sun.ac.za/polymer/pcm.jpg</A><BR>>
<A
href="http://www.sun.ac.za/polymer/students.htm#MSc";>http://www.sun.ac.za/polymer/students.htm#MSc</A><BR>>
look under MSc STUDENTS : OTHER DEPARTMENTS<BR>> <BR>>
Address:<BR>> ---------------------<BR>> Huis De Villiers E304<BR>> 2
Murray Street<BR>> 7600 Stellenbosch<BR>> South Africa<BR>> Tel.
+27-21-8875240 <BR>> ------oooOooo------<BR>> </FONT></DT></BODY></HTML>
</x-html>From ???@??? Sun Apr 11 09:58:44 1999
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Subject: Re: Trading Strategies: CPQ
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Very interesting comments. Sounds like good advice. Apparently the voice of
experience.
One possible addition might be the Gann type of claim that there exists
"natural" support/resistance at 25 and to a lesser extent, 23 1/2 - 7/16
etc. as minor 1/8 points.
M. R.
-----Original Message-----
From: Gitanshu Buch <OnWingsofEagles@xxxxxxxxxxxxx>
To: metastock@xxxxxxxxxxxxx <metastock@xxxxxxxxxxxxx>
Date: Sunday, April 11, 1999 7:53 AM
Subject: Re: Trading Strategies: CPQ
>>Does anyone have experience/advice in trading large gapping stocks (as
>>expected from Compaq on Monday)? I am currently short the stock but not
>>sure if I should cover at the open or wait until the end of the day. I
>>would appreciate any suggested technical indicators for these type of
>>'gapping' stocks.
>
>
>Jay
>Here is how I trade 'em:
>
>a/ The open is the best time to cover a short like you have. It represents
>the peak of fear and the maximum imbalance between buyers and sellers, so
>the specialists take them down as much as it takes to find other buyers at
>some price level to help them share their burden of making the market in
the
>stock.
>
>b/ By "the open" I mean the first 10 minutes of trading. The stock will
>open - say at 26 and trade down to 24 in 3 minutes. All these orders
getting
>filled will be pre-existing orders on the specialists' system and it will
be
>virtually impossible to trade off the screen since the fills get reported
>late on days like this. You are therefore better off having a GTC limit
>order to buy at 1 buck above whatever the opening indication looks like,
and
>be sure to have your order logged before 9:30 regardless of opening delay
on
>the stock. Once the limit is hit it turns into a market order, and you will
>be given a lower fill if price gaps through your target. Thus it is almost
>immaterial where your limit price to buy is on CPQ, a 30 or a 28 or a 25 or
>a Market order will get you the same fill if it gaps open to 22.
>
>I would do the above on at least 50% of the position.
>
>For the balance, here is what I do since I am never really sure if the
>opening gap is filled by a retracement on the same day:
>
>There normally is buying pressure immediately after the open. This lifts
the
>stock up a couple of bucks, and this gap also lets the bottom fishers come
>in and buy - who think they are getting what was once a $50 stock for half
>that value due to a temporary "Wall St Knee-jerk". All this combines to
>bring the stock back up for 2 or 3 days - maybe for CPQ may also be a week
>since it is already so low.
>
>My trailing stop on the remaining position is therefore 1 buck above Friday
>close - if you still want to be strategically bearish and ride the
downtrend
>and have half a position.
>
>Equities like CPQ almost never make a V bottom. There usually a retest of
>the new lows (within about 1 dollar) a few days or a couple of weeks later,
>at which point I re-evaluate whether a double bottom is being formed or
>should I ride the trend.
>
>Here are a few examples whose daily charts you could pull up to see what
>happened. The only difference between these and CPQ is that they were
riding
>bull trends when they gapped down open, and CPQ has already been in an
>established downtrend. Given that, one HAS to respect the fact that this
may
>be an exhaustion gap happening on Monday.
>
>PMTC - Parametric Technology
>CA - Computer Associates.
>
>I no longer have intraday charts on these but the dailies convey the
>picture.
>
>Most technical indicators I know of fail, due to the largeness of the gap.
>The only reference points therefore are prior support levels and intraday
>price action on a 5 to 15 minute chart.
>
>Regards
>Gitanshu
>
>
>
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