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<DIV><FONT size=2>Nicholas,</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>Using 5-34-5 MACD, which is my own standard, rather than
12-26-9 classic values, I think the upside was reached earlier this week. As a
small cap, thinly traded stock, any bullish news would spike the stock upward
and bearish news would spike the stock downward. The stock is sufficiently
illiquid that market makers are making more money than investors/speculators
because of the bid/ask spread.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>Back to TA. My own sense of my MACD indicator is that price
rallies from Friday's close are limited. Elliott Wave analysis further adds that
this stock might be in a C-wave that will finish in the $1-or-under price range,
a sizable percentage decline from the current level of $1-5/8. Before that
predicted low is reached, however, I lean to the idea that the stock might dip
to 1-5/16 and rally yet again to 1-15/16, making a flat formation, before it
makes the final leg down to $1.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>Illiquidity or thin volume reduces the value of Elliott Wave
analysis, and a lot of technical analysis, by the way, because you cannot depend
on a flowing market to deliver fair prices. For example, in the recent move to
1-15/16, you can conclude that some customer paid that price to buy the stock,
but the bid price you would have received to sell that stock most likely was
decidely in favor of the market maker. This is a NASDAQ stock (probably with one
market maker) and not an open-auction market like the NYSE and AMEX. I think
taking a look at time-and-sales for this stock might be worth the time spent as
you come to understand something about how the market maker is making money in
it.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>Joe</FONT></DIV>
<DIV> </DIV>
<DIV> </DIV>
<BLOCKQUOTE
style="BORDER-LEFT: #000000 2px solid; MARGIN-LEFT: 5px; PADDING-LEFT: 5px">
<DIV><FONT face=Arial size=2><B>-----Original Message-----</B><BR><B>From:
</B>Nicholas Kormanik <<A
href="mailto:nkormanik@xxxxxxxxxx";>nkormanik@xxxxxxxxxx</A>><BR><B>To:
</B>metastock@xxxxxxxxxxxxx
<<A
href="mailto:metastock@xxxxxxxxxxxxx";>metastock@xxxxxxxxxxxxx</A>><BR><B>Date:
</B>Saturday, July 10, 1999 07:20 PM<BR><B>Subject: </B>A bit of real life
analysis<BR><BR></DIV></FONT>I'm not exactly asking for a buy/sell
recommendation with the following<BR>request. I am more interested in
your collective learned technical analysis<BR>opinions, using a particular
stock as an example.<BR><BR>After studying the charts, I placed the following
onto an EWEB discussion<BR>thread:<BR><BR>+++++++++++++++++++++<BR>"Finally,
for now, look at the following technical analysis site, type in<BR>EWEB, and
click the upper right little window menu and bring up the MACD....<BR><BR><A
href="http://www.equis.com/java/ms4jbig.html";>http://www.equis.com/java/ms4jbig.html</A><BR><BR>I
use the full MetaStock program, and have examined EWEB in about every way<BR>I
can, but this little applet's MACD shows extremely clearly what
is<BR>**exceedingly** likely to happen to EWEB price (IMHO) --- there
basically is<BR>no way in hell that that MACD is not going to break above the
zero line, and<BR>soon, and head up for a while. Please look so that you know
what I'm talking<BR>about. Based on that there standard MACD **alone** I feel
assured that EWEB<BR>has some moving up to do, starting in the coming
days."<BR>+++++++++++++++++++++<BR><BR>I'd like to ask any of you folks so
inclined to take a look at the above<BR>MACD example, and tell me if it looks
to you, as it does to me, that this<BR>particular MACD seems to **shout** that
this stock is imminently heading<BR>higher. I view it as about as near a
TA certainty as one could ask for.<BR><BR>Is there anything that you would add
from a TA standpoint, saying, "Ahhhh,<BR>but my young Nicholas, have you also
considered the
.....??"<BR><BR>Thanks,<BR>Nicholas<BR><BR><BR><BR></BLOCKQUOTE></BODY></HTML>
</x-html>From ???@??? Sun Jul 11 10:36:54 1999
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Date: Sun, 11 Jul 1999 12:22:17 -0400
From: Vitaly Larichev <vitaly@xxxxxxxxxxxxx>
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To: metastock@xxxxxxxxxxxxx
Subject: Optimal f and diversification
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Status:
Hi everybody,
I've been following the optimal f discussion with a great interest. Thanks a lot to those ready to
share the knowledge.
Still, there is a thing I stumble over and over again regarding the optimal f. I have few books on
money/management, and those I could look through at a book store didn't help either (though I might
miss the answer).
Let's take again the classical example of coin tossing. If the game has a positive expectation,
you'll profit, but the amount depends critically on the fraction of the capital you are willing to
risk on each trade. OK, fair enough. To be specific, let's assume my system does, say, 30 trades a
year, and with optimal f the profit is highest. If f is less than optimal, assume it's two times
less, then it would take, roughly speaking (I understand, there is not a direct proportionality
here), 60 trades or 2 years to achieve the same gain. Now, being a wise guy <g>, I know a thing
about diversification. So, I figure, instead of buying each time the same stock (market), why not to
buy two stocks with half money I would allocate otherwise. It would make f two times less optimal
for each stock, but if they are "uncorrelated" and, one more assumption to make my case, have the
same statistics with the respect to my trading system, it will look like trading the same stock 60
times a year with half f optimal that would deliver the same annual profit as a single stock with 30
trades and f optimal. But the risk of loosing money including drawdowns size is much less here. Then
one would be encouraged to go further and diversify even more where payments per trade (commissions,
slippage) may become a critical factor. So Kelly formula for finding f optimal which applies to a
single stock case, seems a bit too irrelevant to any practical implications?
Do I miss something here?
Thanks.
Cheers, Vitaly
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