The Business Master (4th Edition)

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SASI MarketEdge User Guide SASI Software Corp. P.O. Box 457 Sherwood, OR 97140 (503)625-5384 MarketEdge User Guide Page 2 TABLE OF CONTENTS Copyright (C) 1989 SASI Software Corp....................5 DEFINITION OF SHAREWARE..................................5 DISCLAIMER - AGREEMENT...................................6 REGISTRATION.............................................7 LIMITED WARRANTY (For registered owners).................7 USES AND RESTRICTIONS....................................8 TECHNICAL SUPPORT........................................8 CHAPTER 1................................................9 I. Introduction.........................................9 CHAPTER 2................................................12 II. Getting Started.....................................12 A. Making Copies...................................12 1. Making copies with one floppy drive........12 2. Making copies with two floppy drives.......12 B. System Requirements..............................12 C. Installation.....................................12 1. INSTALL Program.............................13 2. Manual Installation.........................13 3. Initial configuration-Hercules Display......13 4. Initial Configuration all other displays....13 D.System Configuration Considerations...............13 E. Running MarketEdge...............................15 1. Setting the Video Display...................15 2. Basics......................................16 3. Quick Start.................................16 CHAPTER 3................................................18 III. USER MENUS..........................................18 A. THE ALT_M menu...................................19 1. DATA_ENTRY..................................19 2. SET_DEFAULTS................................20 3. FILE_SAVE...................................20 4. VIEW_GRAPHS.................................21 5. Magnify.....................................22 6. EDIT........................................22 7. ALT_S.......................................22 8. QUIT........................................22 B. The ALT_S menu...................................22 1. STOCHASTICS.................................22 2.RSI_SENS.....................................23 3. TIME(RSI)...................................25 4. VIEW_GRAPHS.................................25 5. CONVERT.....................................25 6. BOL_BANDS...................................25 7. ALT_M.......................................26 C. THE "/" UTILITY menu.............................27 1. Worksheet Global Default....................27 2. Worksheet Status............................27 3. Worksheet Global Format.....................27 4. Range Format................................27 5. Range Erase.................................27 MarketEdge User Guide Page 3 6. Copy........................................28 7. Move........................................28 8. File Get....................................28 9. File Save...................................28 10. File Comb(Combine).........................28 11. File Erase.................................28 12. File List..................................28 13. File Dir (Directory).......................28 14. Print Printer, File........................28 15. Graph......................................29 16. System.....................................29 17. Video......................................29 18. Quit.......................................29 D. THE VIEW_GRAPHS menu.............................29 1. Saving Graphs...............................29 E. THE HELP menu....................................30 CHAPTER 4................................................32 IV. DATA ENTRY...........................................32 A. Miscellaneous....................................32 1. The Technical Index........................32 2. Data Required..............................32 3. Daily vs Weekly Data.......................33 4. Volume Data................................33 5. Minimum Data Requirements..................33 6. Data Entry.................................33 7. Dates......................................33 8. MarketEdge for Stock/Commodity analysis.....34 9. DOC4 Error..................................34 B. File/Data Manipulation...........................34 1. "name".WKB..................................34 a. Backups................................35 2. Paths and Directories.......................35 3. Cell Addresses..............................35 4. File Get....................................36 5. File Combine................................36 6. Saving Files (Archiving)...................37 7. Outputting Data for Other Programs..........37 C. Saving and Printing Graphs......................38 1. Saving and Printing Magnified Graphs.......38 2. The Print Program..........................38 CHAPTER 5................................................40 V. Indicators and Analysis Technique.....................40 A. Sensitivity......................................41 1. Default Sensitivity Settings................41 2. ENTRY and EXIT rules........................42 a. Three Day Rule.........................43 b. Contrary Rule..........................43 3. Aggressive Investor Settings................43 4. For The Trader..............................43 5. Time(RSI)...................................44 6. SENSET......................................44 B. Stochastics......................................45 1. Interpreting and Using Stochastics Curves..45 C. RSI..............................................46 MarketEdge User Guide Page 4 D. SASITOP..........................................47 E. McClellan Oscillator.............................48 F. Advance-Decline Index............................48 G. Sigma Limits.....................................49 H. SASI Oscillator..................................50 I. DJIA (DOW).......................................50 J. Technical Index..................................50 K. TECHVSDJIA.......................................51 L. RSI_VS_%E........................................51 L. Trend Line Analysis..............................52 M. Bollinger Bands..................................54 Appendix A...............................................56 Do's and Don'ts.....................................56 Appendix B...............................................57 Bibliography........................................57 Appendix C...............................................58 Check list..........................................58 Appendix D...............................................59 INDEX.....................................69 MarketEdge User Guide Page 5 Copyright (C) 1989 SASI Software Corp. Printed in the United States of America This Software "SASI MarketEdge" and User Guide are protected under copyright law. Unlawfully copying, duplicating, selling, or otherwise distributing these products is expressly forbidden. All rights reserved. This Software "SASI MarketEdge" and User Guide may not be reproduced, for the purpose of selling, in whole or in part, in any way or by any means, electronic or mechanical, including photocopying, recording or through storage and retrieval mechanisms without prior written consent of SASI Software Corp. SASI Software Corp. P.O. Box 457 Sherwood, OR 97140 (503)625-5384 DEFINITION OF SHAREWARE Shareware distribution gives users a chance to try software before buying it. If you try a Shareware program and continue using it, you are expected to register. Individual programs differ on details. some request registration while others require it, some specify a maximum trial period. With registration, you get anything from the simple right to continue using the software to an updated program with printed manual. Copyright laws apply to both Shareware and commercial software,and the copyright holder retains all rights, with a few specific exceptions as stated below. Shareware authors are accomplished programmers, just like commercial authors, and the programs are of comparable quality. (In both cases, there are good programs and bad ones!) The main difference is in the method of distribution. The author specifically grants the right to copy and distribute the software, either to all and sundry or to a specific group. For example,some authors require written permission before a commercial disk vendor may copy their Shareware. Shareware is a distribution method, not a type of software. You should find software that suits your needs and pocketbook, whether it's commercial or Shareware. The Shareware system makes fitting your needs easier, because you can try before you buy.And because the overhead is low, prices are low also. MarketEdge User Guide Page 6 Shareware has the ultimate money-back guarantee -- if you don't use the product, you don't pay for it. DISCLAIMER - AGREEMENT Users of MarketEdge must accept this disclaimer of warranty: MarketEdge is supplied as is. The author disclaims all warranties, expressed or implied,including, without limitation, the warranties of merchantability and of fitness for any purpose. The author assumes no liability for damages, direct or consequential, which may result from the use of MarketEdge. MarketEdge is a "shareware program" and is provided at no charge to the user for evaluation. Feel free to share it with your friends, but you may not give it away altered or as part of another system. The essence of "user-supported" software is to provide personal computer users with quality software without high prices, and yet to provide incentive for programmers tocontinue to develop new products. If you find this program useful and find that you are using MarketEdge and continue to use MarketEdge after a reasonable trial period, you must make a registration payment of $39.00 to .SASI Software Corp. The $39.00 registration fee will license one copy for use on any one computer at any one time. You must treat this software just like a book. An example is that this software may be used by any number of people and may be freely moved from one computer location to another, so long as there is no possibility of it being used at one location while it's being used at another. Just as a book cannot be read by two different persons at the same time. Commercial users of MarketEdge must register and pay for their copies of MarketEdge within 30 days of first use or their license is withdrawn. Site License arrangements may be made by contacting SASI Software Corp. Anyone distributing MarketEdge for any kind of remuneration must first contact SASI Software Corp. at the address below for authorization. This authorization will be automatically granted to distributors recognized by the (ASP) as adhering to its guidelines for shareware distributors, and such distributors may begin offering MarketEdge immediately. However; SASI Software Corp. must still be advised so that the distributor can be kept up to date with the latest version of MarketEdge. SASI Software Corp., P.O. Box 457, Sherwood, OR 97140 (503)625-5384 You are encouraged to pass a copy of MarketEdge along to your friends for evaluation. Please encourage them to register their copy if they find that they can use it. MarketEdge User Guide Page 7 REGISTRATION Registration Provides: 1. A current version of MarketEdge with up to date data. 2. Five years of historic technical data set up for MarketEdge. 3. A graph printing utility program (UNSUPPORTED). 4. One year of technical support. By phone or written. 5. The latest issue of SASI Market Timing newsletter. 6. Specials for registered owners. A. One year subscription to SASI Market Timing newsletter. $89.00 B. Technical Historic Data (Daily). $5.00 per year. (Advances, Declines, Unchg, Upvol, Dnvol, Totvol, new Highs, new Lows) Registration Fee: $39.00. Checks, money orders, Visa, or MasterCard accepted. Send to SASI Software Corp., P.O. Box 457, Sherwood, OR 97140 or call (503)625-5384. LIMITED WARRANTY (For registered owners) The SASI MarketEdge package has a limited warranty of 90 days from date of purchase and is extended only to registered owners of the software package. Any damaged disk will be replaced free of charge during the 90 day limited warranty period. For a period of one year after the limited warranty expires, damaged disks will be replaced at a charge of $10.00 per disk. To replace damaged disk(s) send the damaged disk(s) to SASI Software Corp., P.O. Box 457, Sherwood, OR 97140 along with your name, address, phone number and a description of the problem. SASI Software Corp. excludes any and all implied warranties, including warranties of merchantability and fitness for a particular purpose and limits the end-user's remedy to return of the software for replacement. This warranty gives you specific legal rights which vary from state to state. Some states do not allow the exclusion or limitation of implied warranties, so the limitation may not apply to you. MarketEdge User Guide Page 8 This limited warranty is for 90 days from the date of registration of the software package and is extended only to the first user of the software package. SASI Software Corp. makes no warranty on data accuracy, performance, results, merchantability, or fitness for any particular purpose. The entire responsibility for results and performance of the program is assumed by you. Your sole and exclusive remedy is limited to replacement of damaged disk(s). No other remedy, including incidental or consequential damages for lost profits, lost sales, injury to person or property, or any other loss shall be available. USES AND RESTRICTIONS The SASI MarketEdge software package is for your personal use or in your business or profession. You may not use the SASI MarketEdge software package in any multiple user arrangement unless the individual users are registered owners of the SASI MarketEdge package. You may not make alterations in the software. You may not grant license, sublicense, leases or other rights to others. You may not distribute MarketEdge as part of another software package. Use of the SASI MarketEdge package will constitute agreement to all of the aforementioned conditions. This program is produced by a member of the Association of Shareware Professionals (ASP). ASP wants to make sure that the shareware principle works for you. If you are unable to resolve a shareware-related problem with an ASP member by contacting the member directly, ASP may be able to help. The ASP Ombudsman can help you resolve a dispute or problem with an ASP member, but does not provide technical support for members' products. Please write to the ASP Ombudsman at 545 Grover Road, Muskegon, MI 49442 or send a CompuServe message via CompuServe Mail to ASP Ombudsman 70007,3536." TECHNICAL SUPPORT Call or write (503)625-5384--Hours are 6 PM to 9 PM PST weekdays, and all hours on weekends. SASI Software Corp., P.O. Box 457, Sherwood, OR 97140. Technical support is provided in the areas of installation, system configuration, program usage, and general indicator interpretation. Technical support response will be by phone except in special circumstances. Always give a contact phone number when writing for support. For stock market timing advice you should subscribe to the SASI Market Timing newsletter. MarketEdge User Guide Page 9 CHAPTER 1 I. Introduction The SASI MarketEdge program is the result of five years research and applications development. It was developed to give the average investor tools and techniques used by professionals to time the market. New techniques and indexes developed by SASI Software Corp. keeps the investment timing simple and straight forward. The Technical Index created by SASI Software Corp. is at the heart of the package. Variable sensitivity and noise reduction has significantly enhanced the value of Stochastics and RSI analysis techniques. What is technical analysis? Technical analysis works from past data and assumes that the market will behave in the future similarly to what it has in the past. The stock market is made up of millions of investors and it is assumed that this statistical population will behave in the future similar to the past under similar circumstances. Very simply then, the data representing the market is analyzed to determine if relative to past performance it is in an overbought or oversold condition and if the trend is changing. No investment technique by itself is the total answer. The intent of technical analysis is to increase the odds in your favor of making the right investment decision at the optimum market entry or exit position. It is important to study the past behavior of the technical indicators under similar market trends and to integrate into the decision making process what the current overall investment climate appears to be, tempered with plain old common sense. This package should be considered as a toolkit to aid in identifying trend changes. It cannot directly forecast the future. As you gain experience in market formations, trend lines, and support/resistance, you can often set reasonable targets. Be prepared for the market to do the unexpected (i.e. the up market after the breakout of war with Iraq). There will be times when you will be whiplashed. If you follow the guidelines and react swiftly, the losses will be small and the gains due to staying with the major trend can be substantial. MarketEdge User Guide Page 10 You do not have to obey every signal. Use trend line analysis, support and resistance, economic news, and common sense before making a decision. The worst that can happen is you miss an up market or have to ride out a down market. Every individual situation is different. Go with the trend. Don't make up your mind and then try and interpret the indicators to support your decision. Study and use the package making paper trades until your confidence is established. GOOD LUCK AND GOOD INVESTING! MarketEdge User Guide Page 11 TABLE OF CONTENTS CHAPTER 2 CHAPTER 2................................................12 II. Getting Started.....................................12 A. Making Copies...................................12 1. Making copies with one floppy drive........12 2. Making copies with two floppy drives.......12 B. System Requirements..............................12 C. Installation.....................................12 1. INSTALL Program.............................13 2. Manual Installation.........................13 3. Initial configuration-Hercules Display......13 4. Initial Configuration all other displays....13 D.System Configuration Considerations...............13 E. Running MarketEdge...............................15 1. Setting the Video Display...................15 2. Basics......................................16 3. Quick Start.................................16 MarketEdge User Guide Page 12 CHAPTER 2 II. Getting Started The first task is to browse through the User Guide and get a general feel for the package organization and use. A. Making Copies The second step is to make working copies of the originals and use the copies for future work. For all important files it is always a good idea to make a backup on a floppy disk at regular intervals. 1. Making copies with one floppy drive. At the DOS prompt, type Diskcopy A: A: (leave a space between the first and second A:) press return, then follow the instructions on screen. 2. Making copies with two floppy drives. At the DOS prompt, type Diskcopy A: B: (leave a space between the A: and the B:) press return, then follow the instructions on screen. B. System Requirements Any DOS system with version 2.1 or higher, Graphics capability, 640K of RAM, and a hard disk with two megs available. All display modes (CGA, EGA, VGA) monochrome or color are supported. VGA color is highly recommended. These are minimum requirements. The program will load and run considerably faster if you have a Meg of RAM, math coprocessor, and CPU speed greater than 20 MHZ. C. Installation There are three 5 1/4 inch disks in the package. The install program is on disk #1. MarketEdge User Guide Page 13 1. INSTALL Program The INSTALL program automatically makes a directory c:\SASI and copies all the files to this directory. Place the INSTALL disk #1 in the appropriate drive. From your DOS prompt type A:INSTALL. You will be prompted to insert the other disks. If you are using B drive, follow the manual installation below. 2. Manual Installation If you are using B drive, do the following from the DOS prompt: a. To get to the root directory, type CD\. b. Make your directory with: MD C:\ANYNAME. c. Move to the new directory with CD C:\ANYNAME. d. Copy each program disk to the new directory with copy B:*.* 3. Initial configuration-Hercules Display Go to the SASI directory with CD C:\SASI. Type MSHERC and press return. Don't worry if it says no Hercules system present. 4. Initial Configuration all other displays The program should automatically detect your display type. If you encounter any display related problems run SETDISP and pick the appropriate display. D.System Configuration Considerations 1. Software/Speed A. On a 286 10 MHZ machine with 2Meg of RAM and a math coprocessor MarketEdge loads in 1 minute 30 seconds. Setting default takes 25 seconds. With an XT basic machine, 4.7MHZ, 640K RAM and no math coprocessor loading takes 11 minutes. Six of the 11 minutes is to set defaults (no coprocessor). The program uses approximately 400K of RAM to run. If there is not that much memory available then it uses hard disk space as virtual RAM at the expense of speed. MarketEdge User Guide Page 14 It is suggested you configure your machine so that 700K of expanded memory is available for MarketEdge for optimum speed performance. Consult your system and memory board documentation for specifics. MarketEdge will only use memory above the base 640K if it is expanded. If more memory is required, the program automatically uses hard disk storage as simulated virtual RAM. EXAMPLE: On a 386/486 machine with memory (say 2 MEG) set as extended for windows, put: Files=30 Buffers=20 Device=c:\path\himem.sys Device = C:\path\EMM386.SYS 640 in Config.Sys file to use 640K of extended as expanded memory. On a 286 or lower machine you must do the initial configuration to provide the expanded memory. This is hardware/board dependent so consult your documentation or get a knowledgeable friend to help. 2. Loading/Running Problems Almost all problems are related to memory and memory address conflicts with other programs. On a Hercules Video system you must run the program MSHERC.COM first before loading MarketEdge to get graphics: ie. 1. MSHERC return 2. RUN MES1 or RUN MER1 or RUN SASI depending on the version. If the program will not run or load properly, try getting rid of everything else. After it works, bring your other programs back one at a time. To clear the system rename your AUTOEXEC.BAT and CONFIG.SYS files and then delete the old ones. Create only a new CONFIG.SYS (no AUTOEXEC.BAT) with files = 30, buffers = 20 and your memory manager statements for your system, i.e. 1. Files = 30 2. Buffers = 30 3. Device = C:\DOS\EMM.SYS AT D000 208 Line 3 is for an Intel above board memory system running in an Epson Equity III+, 10 MHZ 286 computer. 3. Monochrome Monitor Do not use MarketEdge with a monochrome monitor and a CGA, EGA, or VGA video card. You will not be able to do graphics. If you use a monochrome monitor be sure to use a monochrome graphics video display card. MarketEdge User Guide Page 15 4. SETDISP.EXE MarketEdge should automatically sense what your video system is (except for Hercules) and set up accordingly. If you think there is a problem with recognizing the correct video system, use SETDISP to force the system. Type SETDIST with no parameters to get an instruction screen. Replace sample.EXE or sample with your version name (MES1, MER1, SASI) and an "OVR" extension. Example for using SETDISP: SETDISP MES1.OUR /VGA for VGA resolution. You only change the "/" options. E. Running MarketEdge Command syntax: Run path\"name".ovr path\"name".wkb. From C:\SASI type RUN MES1, MER1, or SASI, depending on version and press return. The title screen will appear while the program is loading. Be patient, on slower systems it can take several minutes. You will end up in the [ALT_M] main menu. To get past the registration screen press any key. If any problems develop during the initial loading of the program it is usually due to a conflict with another program. Disable any activated programs, reboot the system, and rerun MarketEdge. If problems persist, rename your AUTOEXEC.BAT then erase it. Edit your CONFIG.SYS file so it only has BUFFERS and FILES set to 30. Reboot and rerun MarketEdge. Some times added memory and a memory manager can cause a problem. 1. Setting the Video Display After the program is loaded you may need to set the video display. The system default is for color. If you have a Liquid Crystal, plasma panel, or monochrome display use the "/" UTILITY menu (use EDIT in the ALT_M menu to get to the READY mode first) and select VIDEO. Choose the correct display. There are a number of video display parameters you can control from the VIDEO menu. If you change the video settings, use the SAVE selection in the VIDEO menu to save your video configuration to a [anyname.vid] file. From then on,at startup use LOAD in the VIDEO menu to bring back your settings. To Access the "/" UTILITY menu Initially you will be in the ALT_M menu. To get to the utility menu, choose EDIT in the ALT_M menu. This will put you in the work area in the READY mode (READY indicator is in bottom right corner). Bring up the UTILITY menu with the"/"key. The UTILITY menu will be horizontal across the top of the screen. MarketEdge User Guide Page 16 2. Basics Using the program is straight forward. You enter data, set sensitivity and view graphs of the indicators. There are four functional menus plus the HELP menu. These are: a. ALT_M menu. b. ALT_S menu. c. "/" UTILITY menu. d. VIEW_GRAPHS menu. e. HELP menu. The SASI MarketEdge program is a compiled spreadsheet and retains many of the attributes and appearance of a spreadsheet. The "/" UTILITY menu provides access to spreadsheet type tools (for more details on menus see the menu section of the User Guide). 3. Quick Start a. From ALT_M menu choose DATA_ENTRY. b. Enter data to bring program up to date. Required data is for the NYSE: Date, DJIA (Dow Jones Industrial Average), Advancing Issues, declining Issues, unchanged issues, up volume, down volume, total volume, new highs, and new lows. The volume data is entered in thousands. i. e. 1,000,000 is entered as 1000. c. After entering data and choosing to exit the data entry program you will be back in the ALT_M menu. SET_DEFAULTS is automatically run by the DATA_ENTRY program so choose VIEW_GRAPHS. d. The VIEW_GRAPHS menu is a horizontal menu at the top of the screen. e. Select and view the graphs using [NAME] [USE] and the arrow keys to choose the graph name. f. To remove a graph from the screen and return to the graph menu, press any key. g. To exit the graph menu choose [QUIT]. This puts you back in the READY mode. MarketEdge User Guide Page 17 TABLE OF CONTENTS CHAPTER 3 CHAPTER 3................................................18 III. USER MENUS..........................................18 A. THE ALT_M menu...................................19 1. DATA_ENTRY..................................19 2. SET_DEFAULTS................................20 3. FILE_SAVE...................................20 4. VIEW_GRAPHS.................................21 5. Magnify.....................................22 6. EDIT........................................22 7. ALT_S.......................................22 8. QUIT........................................22 B. The ALT_S menu...................................22 1. STOCHASTICS.................................22 2.RSI_SENS.....................................23 3. TIME(RSI)...................................25 4. VIEW_GRAPHS.................................25 5. CONVERT.....................................25 6. BOL_BANDS...................................25 7. ALT_M.......................................26 C. THE "/" UTILITY menu.............................27 1. Worksheet Global Default....................27 2. Worksheet Status............................27 3. Worksheet Global Format.....................27 4. Range Format................................27 5. Range Erase.................................27 6. Copy........................................28 7. Move........................................28 8. File Get....................................28 9. File Save...................................28 10. File Comb(Combine).........................28 11. File Erase.................................28 12. File List..................................28 13. File Dir (Directory).......................28 14. Print Printer, File........................28 15. Graph......................................29 16. System.....................................29 17. Video......................................29 18. Quit.......................................29 D. THE VIEW_GRAPHS menu.............................29 1. Saving Graphs...............................29 E. THE HELP menu....................................30 MarketEdge User Guide Page 18 CHAPTER 3 III. USER MENUS There are five menus to become familiar with. These are: Menu Name How to access A. ALT_M ALT + M key, F4 or Esc from READY mode B. ALT_S ALT + S key, F7 from READY mode C. VIEW_GRAPHS From ALT_M menu D. "/" Utility Forward "/" key E. HELP F1 key The F1 HELP key will bring up the help menu from just about anywhere. The other menus can be exited by choosing the proper selection. From the ALT_S menu you choose the ALT_M selection which takes you back to the main ALT_M menu. From the ALT_M menu you choose EDIT to quit the menu and access the work area in the READY mode. You can also exit the ALT_M and ALT_S menus by pressing the appropriate function key (F4 for the ALT_M menu, and F7 for the ALT_S menu) and then the Escape key. You will get a beep when you press the function key. This escape sequence takes you to the ready mode and is useful when you want to briefly get rid of the menu to view what is behind it. Pressing the escape key will bring the ALT_M menu back. From the READY mode you access the UTILITY menu with the forward slash key and use QUIT to exit back to the READY mode. All menu selections can be activated by either using the cursor arrow keys and moving to the selection orby pressing the first letter or highlighted letter of the menu. i.e. for FILE SAVE in the UTILITY menu press /FS and return. MarketEdge User Guide Page 19 Getting to and moving around the work area. The work area is columns A thru J, and rows 5 thru 259. The work area has a name of WA. for instance to erase the work area, type /REWA from the READY mode. From [ALT] [M] menu select EDIT. This puts you in the work area at the end of the data set. EDIT must be used to unprotect the data in the work area. Use the arrow keys, [PgDn], [PgUp] and [Home] keys to move around in the work area. The work area is named WA and is the rectangle defined by cell address's A5..J259. You can also move quickly by using the [END] key in conjunction with the up arrow and down arrow keys. If yu ever get lost, press the [Home] key which takes you to cell A5, or press [ALT] [M] keys for main menu. Then use EDIT selection to get to the work area. To enter or correct data. Choose [EDIT] from [ALT] [M] menu. Move the cursor to the desired cell. Type the entry and press the return key. Return to menu with [ALT] [M] keys (HINT: after typing in a new number, if you move the cursor, the data will be entered in the cell you are leaving). After entering or correcting data, always run SET_DEFAULTS in the [ALT] [M] menu before viewing graphs. A. THE ALT_M menu 1. DATA_ENTRY Use this selection to enter new data. You will be prompted to enter the appropriate data. If you make a mistake, it can be corrected if you have not pressed the return key. If the return key has been pressed you must continue and correct manually later using the EDIT selection. a. Data Required: The data required is from the NYSE (New York Stock Exchange): Date, DJIA (Dow Jones Industrial Average), Advancing Issues, Declining Issues, unchanged issues, up volume, down volume, total volume, new highs, and new lows. b. The volume data is entered in thousands. i. e. 1,000,000 is entered as 1000. MarketEdge User Guide Page 20 c. Dates: In the Data Entry program, you enter the date as Mo Day Year. The program enters the "/". If you want to enter a date manually or change it, go to the EDIT mode, and place the cursor on the previous date. A value will be shown in the upper left corner of the screen. Move the cursor to the next cell and type in the next consecutive number except remember to skip for weekends and holidays. To make the cell look like a date you may have to format the cell. To format, type /RFD4 and press return. See Dates in Chapter #4 for more explanation on date numbers. 2. SET_DEFAULTS The SET_DEFAULTS selection must be run after any manual data addition or change including FILE GET or FILE COMBINE. SET_DEFAULTS is run automatically when the program is first loaded and after using the DATA_ENTRY selection in the [ALT] [M] menu. SET_DEFAULTS sets the sensitivity and time to conservative values and recalculates the entire worksheet. DEFAULT SETTINGS INDICATOR SENSITIVITY TIME INDEX Stochastics .02(99 days) fixed 5 days Technical RSI .02(99 days) .133(14 days) Technical Bollinger Bands NA 20 days Technical 3. FILE_SAVE When you activate FILE_SAVE in the [ALT] [M] menu it shows the current path and file name. Press return to accept or type in a new name. Press escape once to list available filenames. Press escape twice to retrieve path and then type filename. Press escape three times to type in complete path and filename. If you press escape four times the file will be saved with the name SENSET. A good habit to get into is to use FILE_SAVE immediately after entering data. MarketEdge User Guide Page 21 4. VIEW_GRAPHS This selection brings up the graph menu. In the graph menu, use the [NAME] and [USE] keys to select a graph for viewing. Use the arrow keys to scroll the names. Graph Name Description ADV-DEC Advance-Decline Line BOLBANDS Bolinger Bands DOW Dow Jones Industrial Average (DJIA) MCCLELLAN_SUM McClellan Oscillator with Summation Index MCCLELLAN_TECH McClellan Oscillator with Technical Index RSI Relative Strength Index RSI_VS_%E RSI and Stochastics %E SASITOP SASI Indicator for Tops and bottoms SASI_OSCIL SASI Indicator for market strength/weakness/trend SIGMA Plus and minus 3 Sigma Limits STOCHASTICS % of range over time window TECH INDEX Master Market Breadth Index TECHVSDJIA Normalized comparison of Technical Index to DJIA The indicators which are most reliable in giving entry and exit signals are: (for the default sensitivity settings) a. Stochastics b. RSI c. SASITOP The other indicators and graphs should be used as alerts and confirmation. To get rid of a graph on screen press any key. When finished with the graph menu press [QUIT]. This puts you back in the worksheet in the READY mode. Saving Graphs The settings for the last viewed graph are retained in memory until another graph is viewed. To save the last graph viewed, use the SAVE selection. Type in a name up to 15 characters (Do not include spaces, commas, semicolons, or the characters + * - / & > < { @ # in graph names). The graph will be saved with a [.PIC] extension and can be printed later from the SASI directory using PICPRT (HINT: When in the READY mode the F10 key will display the last graph viewed). MarketEdge User Guide Page 22 5. Magnify This selection allows magnification of the time axis. You enter the beginning and ending dates of the section you want to magnify, choose the graph and press enter twice. Once for the total graph and once for the magnified graph. You can then continue to view graphs at the current settings (a prompt will appear at the top of the screen) or exit by entering 2 at the prompt. 6. EDIT This selection takes you to the work area, for manual data entry or correction of existing data. It is also the only way to unprotect data in the work area. Remember that the work area is named "WA" and is the area from cell address A5 to J259. 7. ALT_S The ALT_S menu selection activates the secondary menu. The secondary menu is used to set analysis sensitivity and choose the index for analysis (Technical or DJIA) for Stochastics, RSI, and Bollinger Bands. RSI time is also set in this menu. 8. QUIT The QUIT selection exits the program and returns you to the DOS prompt. You can choose to save and exit, just exit, or abort. If you ever press [ctrl][break] to abort a menu selection it can lock up the system. If the system ever locks up for any reason, you must re-boot the system). Keep a current backup of the "WKB" file. B. The ALT_S menu 1. STOCHASTICS The STOCHASTICS selection in the ALT_S menu is used to pick either the DJIA or Technical Index for analysis and to set the analysis sensitivity. MarketEdge User Guide Page 23 What is Stochastics? Stochastics was invented by George Lane. It is the analysis of a set of data relative to its range over a time window. The price or Index being evaluated is plotted as a percent of it's range. SASI Stochastics utilizes statistical analysis and exponential smoothing to simplify interpretation. How is SASI Stochastics used? The variable plotted is called %E. The nominal range for %E is 30% to 70%. For the default settings, SASI Stochastics has the unique property of flattening out at 70% in a BULL trend and flattening out at 30% in a BEAR trend for low to mid-range sensitivities. This makes interpretation relatively easy From the 70% level when the Stochastics %E curve turns down and crosses the 65% level, this is the EXIT signal. From the 30% level when the Stochastics %E curve turns up and crosses the 35% level, this is the ENTRY signal. Establish positions from the extremes. The region between 40% and 60% is called NO-MANS LAND. In NO- MANS LAND it is easy to be "whiplashed" so be careful of taking positions when the Stochastics %E indicator turns in this region. The recommended way to solve this problem is to establish the market trend and never take a position against the market trend. Establishing Trend Lines The 20 day moving average on the Technical Index is a good short term support and resistance line, whereas the 100 day moving average on the Technical Index is a good long term support and resistance line. The other way to establish trends is to draw straight lines on a hard copy of the Technical Index connecting up the highs or the lows. The more distinct lows and highs which are connected increases the trend credibility. Connecting highs establishes resistance and connecting lows establishes support. A Stochastics sensitivity setting of 0.02 using the 65% and 35% rules will give entry and exit signals for intermediate to long term trend changes. 2.RSI_SENS The RSI_SENS selection in the ALT_S menu is used to pick either the DJIA or Technical Index for analysis and to set the RSI analysis sensitivity. MarketEdge User Guide Page 24 What is RSI? RSI (Relative Strength Index) was invented by Welles Wilder Jr. It compares the average up action to the average down action over a time window of typically 14 days. The standard RSI is a very good indicator but fairly volatile, and many times will give entry and exit signals much too early. The SASI RSI analysis technique uses exponential smoothing and modified averaging techniques to provide user control of volatility and simplify interpretation. How is RSI used? At midrange sensitivity (.1) and time (.133) RSI varies between 0% and 100%. In a market BULL trend, RSI will flatten out at 100%, and in a BEAR trend it will flatten out at 0%. As long as RSI stays at the 100% or 0% level thattrend is in effect until RSI breaks away from those levels. This makes it relatively easy to stay with the trend for the majority of the move and ignore normal minor market variations. The general rules for using RSI are as follows: (For default settings) a. If RSI is above 90%, turns down and breaks through 90% and breaks its 20 day moving average at the same time; this is an exit signal. b. If RSI is below 10%, turns up and breaks through 10% and breaks its 20 day moving average at the same time; this is an entry signal. c. The region between 20% and 80% is NO-MANS land. If RSI reverses in this region wait and see if the 20 day moving average holds as resistance or support. If it does not hold, exit the position and wait for another set of signals. d. In NO-MANS LAND it is easy to be "Whiplashed" so be careful of taking positions when the RSI indicator turns in this region. The recommended way to solve this problem is to establish the market trend and never take a position against the market trend. (see trendlines in Appendix B) MarketEdge User Guide Page 25 3. TIME(RSI) This selection in the ALT_S menu sets the time window for RSI calculations. The allowable range is .01 to .5. 0.01 is equivalent to 199 days and 0.5 is equivalent to 3 days. The recommended setting is 0.133 and is equal to 14 days. TIME IN DAYS = (2/SENSITIVITY)-1 SETTING TIME IN DAYS 0.5 3 DAYS 0.133 14 DAYS 0.1 19 DAYS 0.05 39 DAYS 0.0198 100 DAYS 0.01 199 DAYS 4. VIEW_GRAPHS This selection brings up the graph menu. In the graph menu, use the [NAME] and [USE] keys to select a graph for viewing. Use the arrow keys to scroll the names. To get rid of a graph on screen press any key. When finished with the graph menu press [QUIT]. This puts you back in the worksheet in the READY mode. The main menu can be accessed with [ALT] [M] keys. 5. CONVERT The CONVERT selection in the ALT_S menu is used when the data area is full through row 259. It frees up thirty rows in the work area for data entry. You must still save the file at the end of the session. 6. BOL_BANDS Bollinger Bands were developed by John Bollinger who was the technical analyst for Financial News Network and CNBC. He is a pioneer in applying statistical analysis techniques to technical analysis of the stock market. Mr. Bollinger has made his work available to software companies and the public. However, the following comments, interpretation and discussion with respect to the "BOLLBAND" template and graphic examples are from SASI Software. MarketEdge User Guide Page 26 The Bollinger Bands are dynamic channel or volatility bands that encompass most of the normal expected price/value action of an index. The variables which are used are (short to intermediate term) +2 Sigma, -2 Sigma, 20 day moving average and the actual value or price of the index set being evaluated. (The Sigma Limits are calculated over a 20 day time window). What has been observed is that the +2 Sigma Band and -2 Sigma Band act as dynamic channel boundaries for the index action. The 20 day moving average has long been recognized as an important resistance and support line. When these variables are graphically plotted together theygive a quick visual picture of expected price goals, resistance, and support. In strong moves, either up or down price action tends to follow the +2 Sigma Band or -2 Sigma Band. In very strong moves it will move outside of the bands for a short time and indicates price strength or weakness depending on which band we are at.When price moves away from the upper or lower band towards the 20 day MA, the normal expectation is that the price will move to the 20 day MA and test it as support or resistance. If the price breaks through the 20 day MA, the normal expectation is a move to or towards the appropriate 2 sigma Band. In a strong up trend, price will tend to break sharp and fast towards the -2 Sigma Limit but will not spend much time there relative to the time spent at the upper 2 Sigma Limit. The opposite would be true in a down trend. Buy and sell signals are not generally produced by the 2 Sigma Bands and their relation to price action. Rather they are used as confirmation of other technical indicators and as an estimate of the expected extent of a short term price move. 7. ALT_M The ALT_M selection in the ALT_S menu returns you to the primary ALT_M menu. MarketEdge User Guide Page 27 C. THE "/" UTILITY menu You will probably only need to use a few of the selections. To use the "/" UTILITY menu you must be in the READY mode. You get there by using EDIT in the ALT_M menu. Interaction between the user and the program will center around the work area. The work area is the rectangle defined by addresses A5, J5, J259, A259. It has a name "WA". For instance, in preparation to a FILE GET command you should erase the work area. You can use either cell addresses (/REA5..J259 specify adjacent corners separated by periods) or (/REWA). Before trying any commands save your file with /FS. Now try /REWA and then /FGMES1.WKB to bring your data back. Don't be afraid to try menu selections; however, use FILE SAVE in the UTILITY menu and choose BACKUP to have a current backup. BACKUP is a save of the version just before any changes. A brief description of the primary selections follows: 1. Worksheet Global Default Use this to set the printer interface if necessary and file directory. Settings only remain in effect for the session. 2. Worksheet Status This selection reports on memory, and other housekeeping functions. Under memory, virtual is how much of the hard disk free space is being used. 3. Worksheet Global Format Don't use - It is only necessary for Range Format. 4. Range Format Allows date formatting, and decimal formatting. 5. Range Erase Use to erase anything from single cells up to the entire work area. Do not try and erase outside of the work area. You will get a protected cell error. Use cell addressing i.e. A5..J10 or /REWA to erase the entire work area. MarketEdge User Guide Page 28 6. Copy Use to copy data from one part of the work area to another. Do not copy a block on top of itself. This will cause erroneous results. 7. Move Use to move data within the work area. 8. File Get Use to retrieve a data file previously saved. Erase the work area first with /REWA, otherwise residual data from the current file can be retained if the new file is smaller. 9. File Save Use to save the current file and to BACKUP the current file. 10. File Comb(Combine) Use to bring in portions of a data file. The Entire-File selection does the same as File Get. Use Copy Named-Range. Always place the cursor at the cell where you want the data to begin. When asked for the range to combine in, give the range in cell addresses for the source file, i.e. A10..J15, and then you will be asked for the name of file to combine (i.e. the source file). You can move the cursor to it or type in a path and name. 11. File Erase Use to permanently delete a file. You can access other drives by typing in the complete path and filename. i.e. A:ANYNAME.WKB. 12. File List Use to list data files (.WKB), graph files (.PIC) or all other types. Again type in any legitimate path. i.e. C:\SASI\FILES. 13. File Dir (Directory) Use to set directory where program will look for files during the current session. 14. Print Printer, File There are several options which are self explanatory, both for Printer and for File. The difference between printer and file is where the output goes. Choose printer to set directly to the printer. Choose file to save as an ASCII text file to be used later. MarketEdge User Guide Page 29 15. Graph This is the same menu as under VIEW_GRAPHS in ALT_M and ALT_S menus. Use to view graphs, save graphs for printing later with PICPRT, choose grids, the x-axis scale skip factor (default is 60) and set color or black and white. 16. System Use to quickly go to the DOS prompt. To return from DOS to the program type EXIT. 17. Video This selection is used to configure the video settings of your display. You choose your display type color, Liquid Crystal or Mono and then can set various background and foreground attributes of the display, text, and cursor. If you want to use the same settings over again choose the FILE SAVE and save your settings as a [.VID] file. At the next session use FILE LOAD and bring up the [.VID] file. You can also set text size if you have a VGA system. Experiment with the VIDEO settings. Defaults are always available. 18. Quit Use to exit to DOS and exit the session. D. THE VIEW_GRAPHS menu The VIEW_GRAPHS menu is activated from any of the other menus. In the graph menu, use the [NAME] and [USE] keys to select a graph for viewing. Use the arrow keys to scroll the names. To get rid of a graph on screen press any key. Use the VIEW_GRAPHS MENU, to save graphs for printing later with PICPRT, choose grids, the x-axis scale skip factor (default is 60) and set color or black and white. When finished with the graph menu press [QUIT]. This puts you back in the worksheet in the READY modein. 1. Saving Graphs The settings for the last viewed graph are retained in memory until another graph is viewed. To save the last graph viewed, use the SAVE selection. Type in a name up to 15 characters (do not include spaces, commas, semicolons, or the characters + * - / & > < { @ # in graph names). The graph will be saved with a [.PIC] extension and can be printed later from the SASI directory using PICPRT (HINT: When in the READY mode the F10 key will display the last graph viewed). Use Quit to exit the graph menu and return to the READY mode. MarketEdge User Guide Page 30 E. THE HELP menu The F1 key will bring up the HELP menu from just about anywhere. It has a main index to choose subjects from. The escape key exits you from the HELP menu. MarketEdge User Guide Page 31 TABLE OF CONTENTS CHAPTER 4 IV. DATA ENTRY...........................................32 A. Miscellaneous....................................32 1. The Technical Index........................32 2. Data Required..............................32 3. Daily vs Weekly Data.......................33 4. Volume Data................................33 5. Minimum Data Requirements..................33 6. Data Entry.................................33 7. Dates......................................33 8. MarketEdge for Stock/Commodity analysis.....34 9. DOC4 Error..................................34 B. File/Data Manipulation...........................34 1. "name".WKB..................................34 a. Backups................................35 2. Paths and Directories.......................35 3. Cell Addresses..............................35 4. File Get....................................36 5. File Combine................................36 6. Saving Files (Archiving)...................37 7. Outputting Data for Other Programs..........37 C. Saving and Printing Graphs......................38 1. Saving and Printing Magnified Graphs.......38 2. The Print Program..........................38 MarketEdge User Guide Page 32 CHAPTER 4 IV. DATA ENTRY A. Miscellaneous The DATA ENTRY section of the User Guide covers a number of subjects, not all directly related to data. 1. The Technical Index The SASI MarketEdge program relies heavily on the Technical Index which is a Master Market Breadth Index created by SASI Software. The DJIA (Dow Jones Industrial Average) is provided for price comparison. The DJIA can be replaced if you want with some other index like the S&P 500. Just manually enter the data and run SET_DEFAULTS (See File Combine). The Technical Index integrates technical market data (advances, declines, up volume, down volume, new highs, and new lows) to produce a MASTER MARKET BREADTH index. The Technical Index can be generated for other major exchanges such as the Toronto, Tokyo, London, etc., if the data is available. The Technical Index is used to do analysis such as Stochastics and RSI. Technical Index as Leading Indicator The Technical Index often will signal the future market price direction by its divergence with a price index like the DJIA. Divergence is when the Technical Index makes subsequent lower highs and lows when the DJIA is making higher highs and lows (indicates a future down turn in the market) or the Technical Index makes higher highs and lows while the DJIA is making lower highs and lows (indicates a future up turn in the market). The graph TECHVSDJIA is useful to spot divergence. This divergence of the Technical Index with the DJIA is often a sign of underlying strength or weakness. Divergence does not always occur, but when it does be very alert to future moves in the indicators. 2. Data Required The data required is from the NYSE (New York Stock Exchange): Date, DJIA (Dow Jones Industrial Average), Advancing Issues, Declining Issues, unchanged issues, up volume, down volume, total volume, new highs, and new lows. MarketEdge User Guide Page 33 3. Daily vs Weekly Data Daily data is supplied and recommended but weekly data can be used. Weekly technical data is available from Barons weekly newspaper and daily data can be summed up. If you use weekly data the sensitivity should probably be increased to cut down on the time lag. 4. Volume Data The volume data is entered in 1000's. i.e. 1,000,000 is entered as 1000. 5. Minimum Data Requirements Due to the nature of the starting conditions of the calculations you should always have at least 100 entries and preferably 200 for the analysis to be meaningful. 6. Data Entry Data can be entered manually from the READY mode in the work area or by using the DATA_ENTRY program in the ALT_M menu. In any case, you need data in every cell. If you are missing data, make an educated guess based on other similar market days. 7. Dates In the Data Entry program, you enter the date as Mo Day Year. The program enters the "/". If you want to enter a date manually or change it, go to the EDIT mode, and place the cursor on the previous date. A value will be shown in the upper left corner of the screen. Move the cursor to the next cell and type in the next consecutive number except remember to skip for weekends and holidays. To make the cell look like a date you may have to format the cell. To format, type /RFD4 and press return. Dates are manipulated as a number that began at 1 on January 1, 1900. If you go to EDIT mode and place the cursor on a date cell in column A at the top left of the screen, you will see the date value that is actually in the cell, i.e. for 7/26/91 the number is 33445. If you manually add dates or correct dates use these date numbers. Example: Assume 7/26/91 is cell A252 (value 33445) add 3 days (2 for the weekend), 33445+3 = 33448. In cell A253 you would type the value 33448 and it would show up as 7/29/91. Practice a little. Remember if you don't save the session nothing is changed no matter what you do. MarketEdge User Guide Page 34 8. MarketEdge for Stock/Commodity analysis MarketEdge can be used to analyze any data string, Stocks, Commodities, or Indexes. All you need to do is replace the DJIA data in column B with the new data and the dates in column A if you have them. You only need closing prices. If possible align the data so it meshs with the technical data in time. If this is not possible, ignor the Technical index graphs. Better yet put "1's" in columns C thru J in row 5 and copy them to the end of the data set. You always need data in all the columns (B thru J) even if it is meaningless. After you have the data in column B (type it in manually or use FILE COMBINE with data in a spreadsheet), then use the ALT_S menu to set the STOCHASTICS, RSI_SENS, and BOL_BANDS and pick DJIA (whatever is in column B) for analysis. Save each template with a different name and build a library. i.e. IBM.WKB, LUMBER.WKB, or BONDS.WKB as examples. 9. DOC4 Error If you get the D0C4 error, "Data is missing in the work area" and can't find anything wrong, just do a range erase of all the empty cells. What has probably happened is a null text character has been entered by pressing the space bar. For example, if your first empty row starts at cell A230, then from the EDIT mode do /REA230..J259 to erase all the empty cells. B. File/Data Manipulation 1. "name".WKB There are three primary files that the program needs to run. These are RUN.EXE, "name".OVR , and "name".WKB. "name" is your version. i.e. MES1, MER1, or SASI. For the user, the most important is the data file "name".WKB. Keep a routine backup of the "WKB" file. A file can be corrupted numerous ways but power surges or failures or shutting off the computer while you are in the program can ruin "name".WKB. Never throw the power switch while you are in the program. Use QUIT in the ALT_M menu or QUIT in the utility menu to return to DOS before shutting the computer off. MarketEdge User Guide Page 35 a. Backups The copies you made of the originals are satisfactory for "name".OVR and RUN.EXE since they never change. "name".WKB should be backed up regularly both on a floppy and on the hard disk. Hard Disk Backup With "name".WKB loaded go to the READY mode with EDIT in the ALT_M menu. Use the "/" Utility menu file save. It will have a backup choice. Choose backup and press return. The backup selection saves the file prior to any changes. The Backup file has a .BAK extension. i.e. "name".BAK. Floppy Backup (from SASI Directory) You only need one floppy which you use over and over. Just set your directory to a file SAVE and proceed as follows: 1. Use EDIT in ALT_M menu to get to READY mode. 2. Place your backup floppy in drive A: 3. Type /FILE DIRECTORY type in A:, press return. 4. Type /FILE SAVE type in name and choose REPLACE. The very first time it will just save since there is no file to replace. 5. Don't forget to change your directory back with /FILE DIRECTORY and type in the path. i.e. C:\SASI. 2. Paths and Directories When you are asked for a filename during operations like FILE SAVE, or FILE GET it tells you at the top of the screen what the current path and directory is at. You change it by typing in a new one (i.e. C:\SASI\FILES). To pick a different filename from existing ones press escape for a listing of filenames. During FILE GET the file name listing will occur immediately on the current directory that is set. If you want a listing of some other directory use /FILE DIRECTORY and /FILE LIST from the READY mode. Always keep an eye on the path or you may end up saving to locations you hadn't planned on. 3. Cell Addresses The entire program template is set up like a spreadsheet. Each data entry occupies a cell defined by a column letter (A, B, C, etc) and a row number (1, 2, 250, etc). Some of the "/" Utility menu commands like FILE COMBINE, or Range Erase will accept cell addresses for the range. MarketEdge User Guide Page 36 To specify a single cell type in the address (i.e. A25). To specify a block of cells type in the adjacent corner addresses for the block rectangle separated by one or more periods. A5 D5 i.e. A5..D8 A8 D8 4. File Get This selection is accessed with the "/" Utility menu. It is used to retrieve previously saved files. Proceed as follows: a. Use EDIT in ALT_M menu to get to the READY mode. b. Erase work area with /REWA (WA is the name of the work area. Cell addresses A5..J259). c. Type /FG and either type in the file name, path and file name, or point to the file in the horizontal file list at the top of the screen d. After retrieving the file bring up the ALT_M menu and run SET_DEFAULTS. 5. File Combine Use /FILE COMBINE in the Utility menu to bring in portions of a data file. The Entire-File selection does the same as File Get. Use Copy Named-Range. Always place the cursor at the cell where you want the data to begin. When asked for the range to combine in give the range in cell addresses for the source. i.e. A10..J15, and then you will be asked for the name of file to combine (i.e. the source file). You can move the cursor to it or type in a path and name. File Combine can be used to bring in data from Lotus(R) 1-2-3(R) spreadsheets release 2.0 or later. MarketEdge User Guide Page 37 For instance if you have the S&P500 index over the same time span as the Technical data, you might want to create a data file with the S&P500 replacing the DJIA. Proceed as follows: a. Set the directory where data source file is located with /FD and enter directory path. b. Erase the old data first. From the READY mode type /RE and type in the range cell addresses of what you want to erase. i.e. /REA5..B259 (this erases the first two columns of data). c. Place your cursor where you want the new data to begin (i.e. A5 if you were bringing in two columns of data, where the first column is the Date and the second column is the S&P500). d. From the "/" Utility menu choose FILE, COMBINE, COPY, NAMED-RANGE, type in the cell address or range name. i.e. A5..B259 and then enter the source file name. Check the data to see if it aligns properly with the existing data. Use the MOVE command if you need to. The last step is to run SET_DEFAULTS in the ALT_M menu. 6. Saving Files (Archiving) At each session (if data was updated), you should save the "name".WKB data file. After saving it as "name".WKB you can also save it as any other name such as 1991. This allows you to build up a data library with time. Each time that CONVERT is run, the first 30 rows of data is erased. About every eight months save the file with an archival name of your choice. Do it now to begin your archival library (i.e. /FS archival name). To retrieve these files use /FILE GET. 7. Outputting Data for Other Programs. The data in MarketEdge is saved as a "name .WKB" file. These files are fully compatible with spreadsheets that use ".WK1" format. You can also save data areas to an ASCII text file for use with other programs. To do this use the "/Utility" menu from the EDIT/READY mode and print to a file instead of the printer. MarketEdge User Guide Page 38 The basic commands are: /Print File (enter name) range (enter range) GO. i.e. /PFDummy (press enter key) A5..J259 (press enter key) G (you can either point to commands with the cursor and arrow keys or just type in the first or highlighted letter of the command). C. Saving and Printing Graphs You enter the graph menu by using VIEW_GRAPHS in the ALT_M menu, or [/GRAPH] in the Utility menu. Use the SAVE selection to save the last graph viewed. Choose a name up to 15 characters. The graph will be saved with a [.PIC] extension. Make sure the path is correct. i.e. C:\SASI\ANYNAME. Don't include the [.PIC] extension in the filename. The program does this automatically. 1. Saving and Printing Magnified Graphs. Use MAGNIFY in the ALT_M menu. When asked to enter 1 to view other graphs or 2 to exit, enter 2. This puts you back in the ALT_ M menu. The settings for the last graph viewed are retained in memory. We save these settings as follows: 1. Select EDIT to go to READY mode. 2. press /GS (Graph Save). 3. Pick from the list of old names that comes up at the top of the screen or press escape key and type in a new name. You can erase the old path with the backspace key and type in a new path and name or keep the current path and just type in a name. The extension will be added automatically. 4. To print the saved graph, if you are a registered user, use the PICPRT program which came with MarketEdge, otherwise use a graphic or spreadsheet program that recognizes .PIC formats. 2. The Print Program A graph is printed outside of the SASI MarketEdge program using the PICPRT program. To use PICPRT, make sure you are in the C:\SASI directory (use cd\SASI to get there). To activate the print program type PICPRT and press return. The program is menu driven. The first time it is used you will need to change some of the defaults and save the configuration. Details on using the PICPRT program are contained in Appendix D. MarketEdge User Guide Page 39 TABLE OF CONTENTS CHAPTER 5 CHAPTER 5................................................40 V. Indicators and Analysis Technique.....................40 A. Sensitivity......................................41 1. Default Sensitivity Settings................41 2. ENTRY and EXIT rules........................42 a. Three Day Rule.........................43 b. Contrary Rule..........................43 3. Aggressive Investor Settings................43 4. For The Trader..............................43 5. Time(RSI)...................................44 6. SENSET......................................44 B. Stochastics......................................45 1. Interpreting and Using Stochastics Curves..45 C. RSI..............................................46 D. SASITOP..........................................47 E. McClellan Oscillator.............................48 F. Advance-Decline Index............................48 G. Sigma Limits.....................................49 H. SASI Oscillator..................................50 I. DJIA (DOW).......................................50 J. Technical Index..................................50 K. TECHVSDJIA.......................................51 L. RSI_VS_%E........................................51 L. Trend Line Analysis..............................52 M. Bollinger Bands..................................54 Appendix A...............................................56 Do's and Don'ts.....................................56 Appendix B...............................................57 Bibliography........................................57 Appendix C...............................................58 Check list..........................................58 Appendix D...............................................59 INDEX.....................................69 MarketEdge User Guide Page 40 CHAPTER 5 V. Indicators and Analysis Technique Ten indicators and indexes are provided to analyze the market. These are: Stochastics RSI SASITOP McClellan Oscillator Advance-Decline Line Sigma Limits SASI Oscillator DJIA Technical Index Bollinger Bands In addition there are several comparison graphs (TECHVSDJIA, and RSI_VS_%E), the 20 day moving average, and the 100 day moving average which are short and long term support and resistance plus trend indicators. The indicators which are most reliable in giving entry and exit signals are: a. Stochastics b. RSI c. SASITOP The other indicators should be used as alerts and confirmation. Trend lines should always be established and used in conjunction with the indicators. A position should never be taken against the dominant trend (i.e.the 100 day MA on the Technical Index). The SASI analysis techniques and indicators work best in trending markets. In a nutshell, the technical analysis techniques used in SASI MarketEdge determine when the trend is changing. The sensitivity setting determines if signals are given for short term trend changes, intermediate trend changes, or long term trend changes. Short? or Long? What is short term, intermediate term and long term is very subjective and depends on your own trading or investment orientation. Personally I tend to think of short term as 10 to 60 days, intermediate term as 3 to 12 months, and long term as greater than one year. MarketEdge User Guide Page 41 Calculations To allow the user flexibility in choosing RSI and Stochastics sensitivity, the calculations in the software are redone each time a new choice is made. Because of the need for start-up conditions for some of the calculations it takes 20 to 30 entries for the indicators to become accurate. You may notice with time that the amplitude of an indicator will change as it moves towards the beginning of the data set. The relative shape remains constant but the actual amplitude may vary. In making comparisons of an indicator, try to ignore the first 30 entries at the beginning of the graph. A. Sensitivity It is highly recommended that you use the default settings for any real investing until you feel that you understand the effects and the risk of higher sensitivity settings. The sensitivity settings allow the user to preset their market volatility tolerance. In other words, if you are an aggressive trader set sensitivity high, if you favor long term commitment set sensitivity low. The best way to become familiar with the effects of sensitivity is to vary itand observe the effects on the indicators. The allowable range for sensitivity is 0.005 to 1.0. The setting of 0.005 is low sensitivity and a setting of 1.0 is the highest. Settings above 0.1 are for aggressive trading. You will need to be prepared for numerous whiplashes. 1. Default Sensitivity Settings When the program is started and at the end of the DATA_ENTRY selection the default settings are automatically set. The settings are tabulated in table #1 below (Note: SASITOP always has the same sensitivity settings as Stochastics): DEFAULT SETTINGS INDICATOR SENSITIVITY TIME INDEX Stochastics .02(99 days) fixed 5 days Technical RSI .02(99 days) .133(14 days) Technical Bollinger Bands NA fixed 20 days Technical SASITOP .02(99days) fixed 5 days Technical The default settings are set low for the long term oriented investor. To give you a better perspective, the Stochastics setting of .02 on the Technical Index gave 9 sets of entry/exit signals from 1984 through early 1991. MarketEdge User Guide Page 42 A. Sensitivity Picking Indexes When you use the STOCHASTICS or RSI_SENS sensitivity selection in the ALT_S menu, you can pick which index (DJIA or Technical Index) to do the analysis on; however, the graph title or reference index always remain the same. In other words, if you do STOCHASTICS on the DJIA, the stochastics graph will still have the Technical Index plotted as a reference even though the actual stochastics is on the DJIA. Just remember what you have chosen for analysis. The summary screen which appears also tells you what is currently being analyzed. Sensitivity settings cannot be saved from session to session. Each time the program is run the defaults are automatically set. 2. ENTRY and EXIT rules The following table summarizes exit and entry signals for sensitivities of 0.01 to 0.1 and RSI time of 0.133. For higher sensitivities use direction changes of the indicators, market experience, and common sense. At higher sensitivity, be prepared for some whiplashes. ENTRY AND EXIT SIGNALS INDICATOR ENTRY EXIT STOCHASTICS From below to above 35% From above to below 65% RSI From below to above 10% From above to below 90% SASI_TOP From below to above 300 From above to below 900 SASI_OSCIL Up crossing of signal Down crossing of signal curve by SASI_OSCIL curve by SASI_OSCIL Up and down crossings of the 20 day MA and 100 day MA by the Technical Index are also entry and exit signals. The majority of indicators should be giving a signal before obeying. Entry and Exit positions should be taken at the extremes just as the indicator gives a signal. The region between the signal levels (60% to 40% for Stochastics, and 80% to 20% for RSI) is called NO-MANS LAND. In this region it is very easy to second guess yourself and be whiplashed. One way to minimize this is not to hold a position against the trend. The ENTRY and EXIT rules are guidelines. Each situation is always different. Listen to the news, read your stock company reports, stand back and look at the Big Picture, go over your check list, don't get caught up in decimal points, integrate it all together, then use common sense and make your decision. MarketEdge User Guide Page 43 a. Three Day Rule If you like rules, use the three day rule. If an indicator turns in NO-MANS LAND wait and see if it holds the new direction for another three days. If it does then reverse your position (this is for the default sensitivities). This rule was used over the period of 1984 to 1991 with good results. However, do not go against the long term 100 day trend line on the Technical Index unless you desire to trade rather than invest and understand the increased risk. b. Contrary Rule When an Exit or Entry signal is just occuring, if the close for that day is opposite to the signal direction, ignore the signal and wait for the next day to see what developes. 3. Aggressive Investor Settings These settings are for the person who is willing to assume more risks, especially in terms of whiplashes, and is willing to trade four to eight times a year. Aggressive Settings INDICATOR SENSITIVITY TIME INDEX Stochastics 08(24 days) fixed 5 days Technical RSI .1(19 days) .133(14 days) Technical Bollinger Bands NA fixed 20 days Technical SASITOP .08(24days) fixed 5 days Technical 4. For The Trader Use these settings if you are super aggressive and can stand the stress of constant whiplashes. You can also use these settings to fine tune an exit or entry position. Super Aggressive Settings INDICATOR SENSITIVITY TIME INDEX Stochastics 1.0(1 days) fixed 5 days Technical RSI 1.0(1 days) .133(14 days) Technical Bollinger Bands NA fixed 20 days Technical SASITOP 1.0(1 days) fixed 5 days Technical MarketEdge User Guide Page 44 5. Time(RSI) The Time(RSI) setting in the ALT_S menu only applies to RSI. It sets the time window for RSI calculations. The default setting is 0.133 which is equivalent to 14 days. The following table gives some other settings. The time setting can be used to fine tune a given RSI setting. In general leave the RSI time set at 0.133. Setting Time in Days 0.5 3 Days 0.25 7 Days 0.2 9 Days 0.1 19 Days 0.05 39 Days 0.02 99 Days 0.01 199 Days 6. SENSET Table #3 SENSET is what appears on the screen a good part of the time. It summarizes the current settings for sensitivity and on what indexes. As an example, in the table below, under the STOCHASTIC CHOICE line is DJIA which says that Stochastics is being done on the DOW JONES INDUSTRIAL AVERAGE. The second line down on the left gives the sensitivity that is set for Stochastics. The same status is given on RSI. The Index chosen for the Bollinger Bands is listed at the bottom left of the table. The right side of the table gives some sensitivity settings as examples and the equivalent in terms of exponential moving average. TABLE #6 SENSET CURRENT SETTINGS USE ALT S MENU TO CHANGE SENSITIVITY = 2/(MOVING AVG + 1) STOCHASTICS SENSITIVITY 0.02 SENSITIVITY MOVING AVG(DAYS) RSI SENSITIVITY .25 7 0.02 .133 14 RSI TIME WINDOW SENSITIVITY .095 20 0.133 .05 39 STOCHASTIC CHOICE .0198 100 TECH INDEX .00995 200 RSI CHOICE TECH INDEX ALT M KEYS GETS MAIN MENU. BOLLINGER CHOICE TECH INDEX F1 key for HELP menu. MarketEdge User Guide Page 45 If you are in the EDIT/READY mode, and want to see the table, use the F5 (GoTo) key, type in SENSET and press return. To get back to the work area press the [HOME] key. B. Stochastics Stochastics was created by George Lane. The standard Stochastics is the analysis of an index or set of data relative to its range over a time window. Standard stochastics uses the high and low of the index over the time window to calculate the current percent of a range. SASI Stochastics utilizes statistical analysis and noise reduction techniques to make the use and interpretation of Stochastics very easy. In the MarketEdge package, SASI Stochastics is one of the three primary indicators (RSI and SASITOP are the other two). At sensitivities in the range of 0.005 to 0.1 a very useful effect occurs. When an index trend is under way, the stochastics curves flatten out at 70% (BULL PHASE) or 30% (BEAR PHASE) and remain there for the duration of the trend. This effect makes it relatively easy to stay with the trend for the full duration and enter or exit a position within several days of major turning points. When stochastics is flat along the 70% line the index is in a "BULL" phase and when stochastics is flat along the 30% line the index is in a "BEAR" phase. Between 60% to 40% is the transition zone which is better known as "NO-MANS LAND". Trades should be initiated from the extreme turning points. In "NO-MANS LAND" it is very easy to be "WHIPLASHED" or "KNEE JERKED". 1. Interpreting and Using Stochastics Curves. SASI Stochastics at the default sensitivity of 0.02 is one of the primary indicators for ENTRY and EXIT signals. The SASI stochastics calculations generate a set of data called %E. %E is the variable plotted on the STOCHASTICS graph. The %E curve is a typical oscillator that nominally ranges between 30% and 70%. SASI Stochastics has the unique property of flattening out at 70% in a BULL trend and flattening out at 30% in a BEAR trend for low to mid-range sensitivities. This makes interpretation relatively easy. MarketEdge User Guide Page 46 For the Default Settings From the 70% level when the Stochastics %E curve turns down and crosses the 65% level, this is the EXIT signal. From the 30% level when the Stochastics %E curve turns up and crosses the 35% level, this is the ENTRY signal. Establish positions from the extremes. The region between 40% and 60% is called NO-MANS LAND. In NO-MANS LAND it is easy to be "whiplashed" so be careful of taking positions when the Stochastics %E indicator turns in this region. The recommended way to solve this problem is to establish the market trend and never take a position against the market trend. The three Day rule discussed under EXIT and ENTRY rules at the default settings is also a way to handle %E direction changes in NO-MANS LAND (See Figure #1A). Use trend line analysis to see if support or resistance has been reached at the same time that Stochastics makes its turn. If the turn in the %E Stochastics curve is not confirmed by support or resistance, then be vary careful. Patient in the stock market is usually rewarded. You always get another good opportunity if you preserve your capital. C. RSI RSI (Relative Strength Index) was invented by Welles Wilder Jr. It compares the average up action to the average down action over a time window of typically 14 days. The standard RSI is a very good indicator but fairly volatile, and many times will give entry and exit signals much too early. The SASI RSI analysis technique uses exponential smoothing and modified averaging techniques to provide user control of volatility and simplify interpretation. SASI RSI is one of the primary indicators. How is RSI used? At the default settings, RSI varies between 0% and 100%. In a market BULL trend, RSI will flatten out at 100%, and in a BEAR trend it will flatten out at 0%. As long as RSI stays at the 100% or 0% level that trend is in effect until RSI breaks away from those levels. This makes it relatively easy to ignore normal minor market variations. MarketEdge User Guide Page 47 The general rules for using RSI are as follows: (For default settings) 1. If RSI is above 90%, turns down and breaks through 90% and breaks its 20 day moving average at the same time; this is an exit signal. 2. If RSI is below 10%, turns up and breaks through 10% and breaks its 20 day moving average at the same time; this is an entry signal. 3. The region between 20% and 80% is NO-MANS land. In NO- MANS LAND it is easy to be "Whiplashed" so be careful of taking positions when the RSI indicator turns in this region. The recommended way to solve this problem is to establish the market trend and never take a position against the market trend (see trendlines in Appendix B). You can also use the 3 Day Rule. Watch the 20 day MA on RSI and see if it provides support or resistance. D. SASITOP SASI analysis uses elementary statistical analysis on the chosen Index (Technical Index or DJIA) and generates upper and lower sigma limits. The sigma limits can be thought of as dynamic channel lines expressing market volatility. From this data SASI Software has created an indicator called SASITOP. The SASITOP indicator indicates both market tops and market bottoms by it's action. How To Use The SASITOP indicator is more volatile than Stochastics or RSI. It's nominal range for the default settings is zero to 1200. In a BULL market phase it will vary between 900 to 1200, and in a BEAR market phase between 100 and 300. An EXIT signal is generated when SASITOP breaks out of it's upper range and sharply moves below 900. From it's lower range, when SASITOP breaks sharply upward above 300 that is an ENTRY signal. The Stochastics sensitivity sets the SASITOP sensitivity. The Stochastics default setting of 0.02 is the recommended setting for the SASITOP indicator. MarketEdge User Guide Page 48 In the region between 300 and 900, if the indicator turns and reverses direction use the three day rule. In general, the SASITOP indicator will go from one extreme to the other and not spend very much time in NO-MANS LAND which is between 300 and 900 for this indicator. E. McClellan Oscillator The McClellan Oscillator is a widely followed standard type oscillator that orks on the Advances minus Declines data, and is a measure of market breadth. Very simply, the McClellan Oscillator is a plot of the difference between two exponential smoothing curves on the raw daily Advances-Declines from the NYSE. Long time empirical observation has shown that the nominal limits are +100 and -100. At +100 the market is thought to be overextended and at -100 the market is thought to be oversold. In strong moves, the McClellan Oscillator will move outside these limits. The Summation Index is the accumulated sum of the McClellan Oscillator and is thought to be a indication of the market trend. A 20 day moving average of the McClellan Oscillator is plotted. The McClellan Oscillator by itself is very volatile and tends to give signals on the early side. Technicians use the crossing of the zero line by the Oscillator as the signal. Another reasonable approach is to use the crossing of the zero line by the 20 day moving average as the signal. It is recommended that the McClellan Oscillator be used only as an early warning and confirmation indicator. Two graphs are plotted with the McClellan Oscillator. One has the Summation Index for reference and the other has the Technical Index as reference. F. Advance-Decline Index The Advanced-Decline Index is the accumulated sum of the daily net of Advances minus Declines as a percentage of the total issues traded. The Advance-Decline Index is a long recognized market breadth indicator. It is a primary component of the Technical Index. On the ADV-DEC graph a 20 day moving average and a 100 day moving average is plotted as short term and long term resistance and support lines. MarketEdge User Guide Page 49 On the Advance-Decline Index, trend lines can be constructed. Watch this index for confirmation of moves in the price indexes like the DJIA or for divergence. G. Sigma Limits The Sigma Limits are generated from statistical analysis of the data set and represent the index volatility. You can think of the Sigma Limits as dynamic channel lines. On the SIGMA graph the plus 3 sigma, minus 3 sigma and smoothed index are plotted. A very useful effect occurs with respect to the Sigma Limits relative to the smoothed index. When a strong trend is in effect, (default settings) the upper and lower Sigma Limits will move parallel to each other while the trend is in effect and will not deviate significantly during minor market moves. In an up market the smoothed index will be closer to the upper Sigma Limit and in a down market the smoothed index will be closer to the lower Sigma Limit. Pinching of the Sigma Limits occur when the trend changes at market tops or market bottoms and in major sideways consolidations. Sometimes there will be several pinches before the final breakout. The Sigma Limit graphs do not have a market reference plotted. If you look close you will see the chosen index (DJIA or Technical Index) between the Sigma Limits. The Sigma Limit sensitivity is set by the Stochastics sensitivity in the ALT_S menu. There are several general observations that can help in determining the index direction when the pinching occurs. At tops the upper Sigma Limit will tend to turn down while the lower Sigma Limit is still going up. At bottoms you have the reverse effect. The lower Sigma Limit will turn up while the upper Sigma Limit is still in a down trend. These effects are what cause the over all pinching effect. The pinching together of the Sigma Limits lags the price action by several days. When the pinching occurs look and see which direction the actual price is moving. If the price is moving up as the pinching occurs, it indicates an up continuation and if the price is moving down when the pinching occurs, it indicates that it is a down continuation. MarketEdge User Guide Page 50 Two other formations occur with the Sigma Limits that help to identify trend changes and the new trend direction. When a trend change occurs the upper limit and the lower limit will diverge from each other. The price direction that causes this will indicate the new trend direction. The trend change is confirmed when either the upper or lower Sigma Limit turnsand moves in the same direction as the other Sigma Limit. In other words, if after diverging, the lower Sigma Limit turns up in the direction of the upper limit, the trend is up. Conversely, if the upper limit turns down after the initial divergence in the direction of the lower limit (down), then the trend is down. These are general observations and should be used as such. H. SASI Oscillator This is a special oscillator created by SASI Software. It utilizes the Technical Index data. It should be used as an early warning or confirmation tool. It is not a primary signal generator. On the SASI_OSCIL graph there are three curves. 1. The actual Oscillator. 2. The signal curve that the Oscillator must cross. 3. The Technical Index as a market reference. I. DJIA (DOW) The DJIA is the Dow Jones Industrial Average. If you use the Stochastics, RSI, or Bolbands settings in the ALT_S menu you can pick the DJIA to do the analysis on. It is included since it is so heavily followed as representing the market. You can replace the DJIA in column B with some other index if you like. The DOW graph contains the DJIA, a 20 day moving average, and a 100 day moving average. If you replace the DJIA in column B, just remember in the future that any graph or choices labeled DJIA or DOW will be on your new data J. Technical Index The Technical Index is a Master Market Breadth Index. It integrates the Advance/Decline data, Volume data, new Highs, and new Lows. Due to the way it is constructed, the Technical Index has a built in damping mechanism that reduces volatility and improves other analysis techniques like Stochastics and RSI. MarketEdge User Guide Page 51 The TECH INDEX graph has three curves plotted. 1. The Technical Index. 2. A 20 Day moving average. 3. A 100 Day moving average. The 20 Day MA and 100 Day MA on the Technical Index are excellent intermediate to long term support/resistance/trend lines. The 100 Day MA on the Technical Index is not penetrated too often. When it is penetrated, a substantial market move is usually in the making. It may be broken several times, as in the 1990 top formation, before the main move occurs. In this particular case, the main move occured in July 1990. Another feature of the Technical Index is the tendency to lead market direction especially in consolidations. Watch for divergence between the Technical Index and the DJIA using the TECHVSDJIA graph. Divergence is most often resolved in the direction of the Technical Index. K. TECHVSDJIA This graph is used to compare the Technical Index against the DJIA. It is useful to spot divergence. Both the DJIA and Technical Index data is normalized from zero to 100 % for plotting on this graph. Divergence does not always show up prior to market moves, but when it does, it pays to stay alert!!! L. RSI_VS_%E This graph is used to help spot whiplashes and either avoid them or get in early and trade them. Plotted on the graph is RSI, Stochastics, and the Technical Index as a reference. What you do is set the sensitivity for one indicator fairly high and leave the other at the default setting. The high sensitivity indicator alerts you to normal market variations and the default setting indicator keeps you posted as to the main market trend. Until the default sensitivity indicator gives a signal any signals by the high sensitivity indicator are normal market variations. MarketEdge User Guide Page 52 L. Trend Line Analysis This is an old technical analysis technique that is very reliable and in conjunction with other techniques and indicators is a powerful tool to determine support, resistance and price trend changes. If I was restricted to using only one analysis technique, for market timing, without hesitation I would pick Trend Line analysis. Trend line analysis is covered in many books on technical analysis (John J. Murphy's, Technical Analysis of the Futures Markets, is an excellent reference) so I'm not going to reinvent the wheel but will mention a few high points. The price of a stock or commodity does not move straight up or straight down. Prices will make a series of highs and lows, and it is the overall direction or trend of this series of price moves that establishes the price or Index trend. Trendline analysis consists of connecting lows to lows, and highs to highs with straight lines and then extending the lines as future support and resistance. Technicians generally agree that the lows have more validity in establishing trends than the highs. Short? or Long? What is short term, intermediate term and long term is very subjective and depends on your own trading or investment orientation. Personally I tend to think of short term as 10 to 60 days, intermediate term as 3 to 12 months, and long term as twelve months or greater. Terminology Trend lines are called by several names depending on what the discussion is about. If you connect up highs, it is a resistance line, and if you connect up lows, it is a support line. The support line is also called the Trend line. When a market goes into a trading range, which usually happens in major consolidations, the resistance and support lines are called channel lines. The longer a trend line is in effect, the more valid it becomes, and the more times the trend line acts as support or resistance the more credibility it has. Trend lines can be started with two points, but validity is increased as more points are confirmed. MarketEdge User Guide Page 53 Trend Changes Trend lines need to be redrawn as new structure developes. If a trend move is very strong, then there is a good chance that the trend line will reduce it's slope and you will need to redraw your trend line as structure becomes available. Conversely when a weak move gains strength the trend line will probably have to be adjusted upwards. Trend Line Construction Trendline analysis consists of connecting lows to lows, and highs to highs with straight lines and then extending the lines as future support and esistance. Two points are needed to get started. SASI has evolved a technique to generate channel lines with only three points total. You need either two lows and one high between the lows, or two highs with one low between the highs. Take the case of two highs and one low. Draw a line connecting the two highs and extend the line as an initial estimate of resistance. Next draw a line parallel to this line which touches the low and extend it. This is your initial estimate of the current trading range or channel and the slope indicates the index trend. When the index approaches either line, watch the technical indicators for entry and exit signals. Next, take the case of two lows with one high. Draw a line connecting the lows, and extend the line as an initial estimate of support. Next draw a line parallel to this line which touches the high and extend it. This is your initial estimate of the current trading range or channel. When the index approaches either line, watch the technical indicators for entry and exit signals. When a breakout occurs and holds, then a new short term trend line should be drawn. The old resistance line now becomes a longer term support line. For quick trendline analysis, place a soft straightedge directly on the monitor screen, and visually connect the highs or lows. The edge of a floppy disk jacket or a business card works well. Also, when you draw your lines, use a wide tip marker. Don't get so involved that you get caught up in decimal points. Drawing trend lines can be "Arty". Practice a lot, study the historical data and study some reference sources. MarketEdge User Guide Page 54 You can purchase a low cost resident graphics program which will allow you to draw trend lines directly on the graphs without exiting. Ask your local software store for recommendations. For drawing parallel lines on hard-copies a set of parallel rules like you use in navigation is excellent. M. Bollinger Bands The Bollinger Bands were developed by John Bollinger who was the technical analyst for Financial News Network and CNBC financial news network. He is a pioneer in applying statistical analysis techniques to technical analysis of the stock market. Mr. Bollinger has made his work available to software companies and the public. However, the following comments, interpretation and discussion with respect to the Bollinger Bands and graphic examples are from SASI Software. The Bollinger Bands are dynamic channel or volatility bands that encompass most of the normal expected price/value action of an index or investment vehicle such as stock equities. The variables which are used are (short to intermediate term) +2 Sigma, -2 Sigma, 20 day moving average of price and the actual value or price of the data set being evaluated. (The Sigma Limits are calculated over a 20 day time window). What has been observed is that the + 2 Sigma Band and - 2 Sigma Band act as dynamic channel boundaries for the price action. The 20 day moving average has long been recognized as an important resistance and support line. When these variables are graphically plotted together they give a quick visual picture of expected price goals, resistance, and support. In strong moves, either up or down price action tends to follow the + 2 Sigma Band or -2 Sigma Band. In very strong moves it will move outside of the bands for a short time and indicates market strength or weakness depending on which band we are at. When the index moves away from the upper or lower band towards the 20 day MA, the normal expectation is that the index will move to the 20 day MA and test it as support or resistance. If the index breaks through the 20 day MA, the normal expectation is a move to or towards the appropriate 2 sigma Band. In a strong up trend, the index will tend to break sharp and fast towards the -2 Sigma Limit but will not spend much time there relative to the time spent at the upper 2 Sigma Limit. The opposite would be true in a down trend. MarketEdge User Guide Page 55 Buy and sell signals are not generally produced by the 2 Sigma Bands and their relation to market action. Rather they are used as confirmation of other technical indicators and as an estimate of the expected extent of a market move. In an up market the index under evaluation is contained by the +2 Sigma Upper Band acting as resistance and the 20 day MA acting as support. In a down market the opposite is true. The Index is contained between the -2 Sigma Lower Band and the 20 Day MA. In strong moves the index will move right along the 2 Sigma Band and may even go outside of the band indicating strength of the move in the price direction. One of the great features of the Bollinger Bands is in giving the near term normally expected index target of the + or - 2 Sigma Band when the 20 day MA is penetrated. Also when you deviate away from the 2 Sigma Bands then the 20 day MA becomes the next target. MarketEdge User Guide Page 56 Appendix A Do's and Don'ts 1. Keep regular backups of the name.WKB file on a floppy. 2. Do not erase data beyond column J or below row 259. 3. Do not press the space bar when you are in the EdIT mode. Use /RE to erase cells. 4. Use SET_DEFAULTS whenever data is changed (it is run automatically in DATA_ENTRY). 5. If you think a data set has been hurt, then exit without saving. The file will remain as it was originally and the work done at the current session will be lost. MarketEdge User Guide Page 57 Appendix B Bibliography Arnold, Curtis M. "TIMING THE MARKET" Chicago, Illinois Probus, Publishing, 1986 Frost, Alfred J. and Robert R. Prechter "ELLIOTT WAVE PRINCIPLE, KEY TO STOCK MARKET PROFITS" Gainesville, Georgia New Classics Library, Inc., Fifth Edition September 1985 Murphy, John J. "TECHNICAL ANALYSIS OF THE FUTURES MARKETS" New York, New York New York Institute of Finance, 1986 Ruff, Howard "MAKING MONEY" New York, New York Simon and Schuster, 1984 Zweig, Martin E. "WINNING ON WALL STREET" New York, New York Warner Books, 1986 Colby, Robert W. and Thomas A. Meyers "The Encyclopedia of Technical Market Indicators" Homewood, Illinois Dow Jones - Irwin, 1988 Wilder, J. Welles, Jr. "New Concepts in Technical Trading Systems" Greensboro, N.C. MarketEdge User Guide Page 58 Appendix C Check list Before making an investment decision you should have some kind of check list. The following is an example: 1. What is the long term, intermediate term and short term trend for the over all market? 2. Am I going with the trend or against the trend? 3. Is there any near term important tops or bottoms? (Support and resistance) 4. Are there any divergences showing up between indexes? 5. Does the over all market appear to be approaching a top or bottom? 6. What does Stochastics, RSI, and SASITOP indicate? 7. Have any definitive technical price patterns developed or look like they are developing? (i.e. head and shoulders, flags, wedges, multiple tops or bottoms) 8. Have any important retracement levels been approached? 9. Where is the Technical Index with respect to its trend lines? As you can see from the list there is no easy single answer. However, by following the general principles, using the software technical analysis and some common sense the odds will be substantially in your favor. MarketEdge User Guide Page 59 Appendix D PicPrint (For registered users) PicPrint is not technically supported by SASI Software Corp. The PicPrint program prints graphs (that you saved as .PIC files) on a printer or plotter. PicPrint includes a number of different options that let you control the way in which graphs are printed. For example, PicPrint lets you specify whether your graph will use colors, what character styles you will employ, how the output will be positioned on the page, and what type of printer (or plotter) you are using. In this chapter, we will discuss how to configure and use PicPrint. Note: PicPrint requires about 160kB of free memory to operate. Full page graphs that are printed at high resolution may require more memory. Starting PicPrint To use PicPrint, you must store the graph you want to print using the /Graph Save command then exit to the DOS prompt. Once you are at the DOS prompt, enter the following command: PICPRT <Enter> At the top of the screen, you see a command menu. The PicPrint program contains the following options: Select Lets you choose the graph (.PIC) files you want to print. You can also preview on the screen what the printout of the graph will look like. Options Lets you choose from the available options such as color, font, picture size. Go starts printing the graphs you indicated at the graphics device you specified. Configure Sets the current paper position in the printer as the top of the page. Align Sets the current paper position in the printer as the top of the page. Page Advances the paper in the printer to the top of the next page. Quit Returns you to the DOS command prompt. MarketEdge User Guide Page 60 PicPrint displays the current configuration settings in the area of the screen that your text or worksheet usually occupies. Beneath the menu options, the screen lists the following information, uppercase and in either a different intensity than the rest of the text on the screen or in a different color (depending on what type of monitor you have): SELECTED GRAPHS MODES COLORS PICTURE DIRECTORY FONTS GRAPHICS DEVICE SIZE VIDEO DEVICE MANUAL PAGE SIZE If this is the first time you have started the PicPrint program, you can interpret the default settings in this manner. There are no graph files SELECTED for printing. Because the default color option isn't on, the grid will be printed in black, and each of the data ranges will be black. If your graph has a title, the first line will be printed in Font 1 (Roman Medium); any other text on your graph, such as the second line of the title, legends and axes titles will be printed in Font 2 (Italic Medium). The SIZE settings are measured in inches from the edge of the paper you are using. For example, the left margin is .75 inches from the left edge of the paper. The special mode settings (eject and page) are both set to No. In other words, PicPrint will not pause and will not eject a blank page of paper between each selected graph print job. The default picture directory is set to C:\SASI. This is where PicPrint will look for graph (.PIC) files. The default graphics printing devices is an Epson, low resolution, parallel printer. The default video device (the type of monitor you have) is an IBM CGA (Color Graphics Adapter). The default page size is the standard 8 by 11 inches. Changing the Configuration Settings Before you print a graph, you want to check that all the PicPrint configuration settings are correct. To change PicPrint's default configuration settings, choose Configure from the following menu options: Files Device Page Interface Video Save Reset Quit Files MarketEdge User Guide Page 61 The Configure Files command lets you indicate in which drive and directory PicPrint should search for your graph (.PIC) files. When you select Configure Files, you see the prompt: Enter where to search for picture files On the line beneath the prompt, you see the blinking cursor. The default drive and directory, or the last drive you specified will be displayed here. To change the drive and/or directory, type the appropriate path, then press Enter. You return to the Configure menu, and PicPrint displays the current directory. NOTE: When you enter a new picture directory, it will be active only for the current PicPrint session. If you want PicPrint to use the new picture directory as the default,you must issue the Configure Save command. Device The Configure Device command lets you select from different graphics devices (graphics printers and plotters). To select a device, you must first highlight the graphics device of your choice, then press the space bar to mark it. The keys you use to make your selection are listed to the right of the Configure Device screen. Select your graphics device from the list. (You can press the Home key to get to the first option in the list and End to see the last option in the list) Press the up- or down-arrow keys to move the highlighted menu pointer to the graphics device you want, then press the spacebar to mark your choice. You will see a # (pound sign) to the left of the marked choice. Press Enter to return to the Configure menu. If you want to change the current selection, move the menu pointer to another device option, and press the spacebar. You can have only one graphics device selected at any time. NOTE: When you mark a new graphics device, it will be active only for the current PicPrint session. If you want PicPrint to use the new graphics device selection as the default, you must issue the Configure Save command. Page The Configure Page command lets you change the length and width of your paper. The page length and width is measure in inches; the default length is 11 inches and the default width is 8 inches. When you select the Configure Page command, you see the following options: Length Width Quit MarketEdge User Guide Page 62 To change the page length, select Configure Page Length, you will see the following prompt: Enter page length in inches Beneath the prompt, you will see the blinking cursor following the decimal value of the default page length setting. Type the value you want, and press Enter. The new page length will be active for the current PicPrint session. Select Configure Save to update the PicPrint configuration file. To change the page width, select Configure Page Width, you will see the following prompt: Enter page width in inches Beneath the prompt, you will see the blinking cursor following the decimal value of the default page width setting. Type the value you want, and press Enter. The new page width will be active for the current PicPrint session. Interface The Configure Interface option tells PicPrint where to sent the PIC file; the following choices are available. 1 The first parallel port (LPT1). 2 The first serial port (COM1). 3 The second parallel port (LPT2). 4 The second serial port (COM2). 5 A disk file (SPOOL.FIL). If you have a parallel printer attached to the first parallel device port (LPT1), choose option 1. If you have a serial printer attached to the first serial port (COM1), choose option 2. If you have a parallel printer attached to the second parallel device port (LPT2), choose option 3. If you have a serial printer attached to the second serial port (COM2), choose option 4. Choose option 5 when you want PicPrint to create a disk file, called SPOOL.FIL, to be used with a print spooler. NOTE: Use DOS COPY /B (binary) command when you are ready to print SPOOL.FIL. MarketEdge User Guide Page 63 If you choose either of the serial port options (2 or 4), you will have to select from 9 baud rates. A baud rate is the speed, (measure in characters per second) at which the serial device will transmit characters. The following choices are available: 1 110 baud 2 150 baud 3 300 baud 4 600 baud 5 1200 baud 6 2300 baud 7 4800 baud 8 9600 baud 9 19200 baud If you are unsure of the optimum baud rate for your printer (or plotter), refer to your printer (or plotter) manual. Video The video device is the type of monitor you have. PicPrint needs to know what type of video device you are using so you can display (or preview) on your screen what the printout of your graph will look like. To preview a graph, you choose Select from PicPrint's Main Menu, and highlight a graph of your choice, then press the F-10 (Graph) key. You will see a picture of your graph, with the fonts (and colors, if your monitor allows them) you selected with the Options command. Press Esc to return to the Select menu. NOTE: The preview of your graph will not look exactly like the printout. This is because the screen image and the printed image have different proportions. Your graphic images will be printed correctly. The Configure Video command lets you choose from four video display adapter options: Monochrome CGA VGA/EGA Hercules If you do not know what type of monitor adapter your computer uses, read your computer's hardware manual. Select Monochrome if your computer has no graphic display capability. Select CGA if your computer has an IBM Color Graphics Adapter (or compatible). Select VGA/EGA if your computer has an IBM Enhanced Graphics Adapter or an IBM Video Graphics Array adapter (or compatible). Select Hercules if your computer has a Hercules monochrome adapter card. MarketEdge User Guide Page 64 Save When you select Configure Save, PicPrint stores all the current settings on disk. The next time you start the program, these are the default settings. Reset The Configure Reset command lets you reset all the settings you have changed in the current PicPrint session back to the most recently saved settings. When you select Reset, PicPrint gives you the opportunity to cancel the command if you want. Select Yes to reset the current values of the last stored configuration settings; select No to cancel the command and return to the Configure menu. Quit Choose the Quit option from the Configure menu to return to the Picprint Main Menu. PRINTING GRAPHS All the other PicPrint options, excluding Configure, deal with printing graphs. You need to Select the graph(s) you want to print, and choose new options (if any) that you want to print with, including colors, fonts, size, and positioning of the graph. Select Choose the Select option to mark which graph (.PIC) files in the current picture directory you want to print. You can select one or more files. When you choose the Select option, you will see a menu listing all the .PIC files in the current picture directory. If you do not see any files listed, check that you specified the correct directory and drive with the Configure Files Pictures command. Or possibly, you didn't store your graph in the directory you intended. The Select command lets you choose from a menu listing all the PIC files in the current default directory. The keys you use to make your selection are listed at the right of the Select screen. To select a file, you must first highlight the file of your choice, then mark it and press Enter. If you want to print more than one graph in this PicPrint session, mark the graphs in the order you want them printed, then press Enter. When you return to the Main Menu, you will see each graph you selected in the order you marked them. MarketEdge User Guide Page 65 Press the arrow keys to move the highlighted menu pointer to the file you want, then press the spacebar to mark your choice. You will see a # (pound sign) to the left of the marked choice. If you want to "de-select" a file selection, move the menu pointer to that file name and press the spacebar so that the # (pound sign) disappears. Press Enter when you have marked all the graphs you intend to print, PicPrint returns you to the Main Menu. Once you press Enter, you will see the selected file names listed in the PicPrint display in the order you marked them. You can also "preview" a graph on the screen to see how it will look when its printed. To preview a graph, press the F10 (Graph) key when the menu pointer is highlighting a graph in the Select menu. It is not necessary to mark a graph to preview it. Options The Options command lets you indicate what characteristics you want your graph to be printed with. The following Options are available: Color Font Size Pause Eject Quit Color When you select Option Color, you are assigning color to different ranges you have specified in your graph. You will only be allowed to change colors if you have selected a graphics device (with PicPrint's Configure Device command) that supports multiple colors. Font Options Font lets you select the primary (1) and alternate (2) fonts that you want for the text portions of your graph. The first line of the graph's title will be printed in the primary font, and any other text (such as legends, axes titles, and so on) will be printed in the secondary font. MarketEdge User Guide Page 66 The following fonts are available for the primary and secondary Fonts: Gothic Bold Roman Medium (Small) Italic Bold Sans Serif Light Italic Medium Sans Serif Medium Italic Medium (Small) Script Light Medieval Bold Script Medium Roman Bold Teutonic Bold Roman Medium You select a font in the same manner as you select a file (Select File) or a device (Configure Device). Press the highlighted menu pointer to select the font you want, the press the spacebar to mark your choice. You will see a # (pound sign) to the left of the marked choice. If you want to "de-select" a font selection, move the menu pointer to that file name and press the spacebar so that the # (pound sign) disappears. Press Enter after you mark your choice, PicPrint returns you to the Configure menu. Once you press Enter, you will see the selected fonts listed in the PicPrint display. Size The Size option lets you specify how you want the graph positioned on the paper. When you select Size, you see the following menu options: Full Half Manual Quit Selecting the Full option prints the graph full size, taking up an entire 8-1/2 x 11 inch page. When you select Option Size Full, PicPrint automatically rotates your graph 90 degrees so that your graph fills the page. When you select the Half option, the printed graph occupies only one half of the 8-1/2 x 11-inch page. When you select Manual, you have the following menu choices: Left Top Width Height Rotation Quit MarketEdge User Guide Page 67 The Left setting specifies the size of the left margin in inches. The Top setting specifies the number of inches for the top margin. The Width option indicates how wide the printed graph will be; Height indicates how many inches the vertical length of the graph will be. You can change the Width and Height settings to be bigger than the width and height of the page for multiple- page graphs. Rotation adjusts the rotation of the graph on the page in a counter-clockwise direction. For example, if you have Rotation set to .000, your graph will be printed with its x-axis parallel to the width of the page. If you have 90 degrees of Rotation, the x-axis will run along the height of the paper (where the y-axis usually is), perpendicular to the page width. Pause When you select the Pause options, PicPrint tells the printer to pause after printing each graph, or each page of a multiple-page print job. Eject When you select the Eject option, PicPrint tells the printer to eject a blank page after printing each individual graph, or between printing each page of a multiple-page graph. Note: If you are printing to a high resolution printer (like a laser printer set to 300 dpi), PicPrint may not be able to complete the rendering of the graph in one pass. When this happens, PicPrint will print parts of your graph across many pages. To print a high resolution graph on one page, set Eject to No. Quit When you select Quit from the Options menu, PicPrint returns to the Main Menu. Go Select Go when you have set all the configuration settings correctly, and you have selected the graph (.PIC) files that you want to print in the PicPrint session. Depending on your computer and the type of printer you are using, your graphs should start printing in just a few seconds. As PicPrint generates a graph and sends it to your printer or plotter, you will see a message similar to the following: Generating Picture B:\LINEGRAF.PIC When all the graphs have been printed, PicPrint returns to the Main Menu. MarketEdge User Guide Page 68 Align The Align option lets you tell your graphics device where to set the top of the page (sometimes called the top of the form). When you select Align, PicPrint tells your printer that it's currently at the top of the page. Page The Page options tells your printer to advance the paper to the top of the next page (you can define the top of the page with the Align option). Quit Select the Quit option when you are ready to end the current PicPrint session. When you specify Quit, PicPrint lets you choose No, and return to the Main menu, or Yes to exit to PicPrint and return to the DOS system prompt. MarketEdge User Guide Page 69 INDEX 100 day moving average, 23 20 day moving average, 23, 26 ALT_M menu, 19 ALT_S, 22 DATA_ENTRY, 19 EDIT, 22 FILE_SAVE, 20 Magnify, 22 QUIT, 22 SET_DEFAULTS, 20 VIEW_GRAPHS, 21 ALT_S menu, 22 ALT_M, 26 BOL_BANDS, 25 CONVERT, 25 RSI_SENS, 23 STOCHASTICS, 22 TIME(RSI), 25 VIEW_GRAPHS, 25 Backups, 12, 22, 27, 35 BEAR trend, 23 BULL trend, 23 Cell Addresses, 35 cell addresses, 27 Configuration, 13 CONVERT, 37 Copy, 28 data required, 16 DATA ENTRY, 32 Data Entry, 33 Data Required, 19, 32 DATA_ENTRY, 16 Dates, 20, 33 DEFAULT SETTINGS, 20 DOC4 Error, 34 EDIT, 15, 18, 27 Editing Data, 19 Escape key, 18 F10 key, 29 F4, 18 F7, 18 File Comb(Combine), 28 File Combine, 36 MarketEdge User Guide Page 70 File Dir, 28 File Erase, 28 File Get, 28, 36 File List, 28 File Save, 28 Graph, 29 Graphs Description, 21 Magnifying, 22 Saving, 38 NAME, 21 Saving, 21 USE, 21 Viewing, 16 HELP, 18 F1 Key, 18 F1 key, 30 HELP menu, 30 Hercules Display, 13 MSHERC, 13 Installation, 12 MES1.WKB, 34 Move, 28 name.OVR, 34 Paths and Directories, 35 Print Printer, 28 Quick Start, 16 Quit, 29 Range Erase, 27 Range Format, 27 READY, 18 READY mode, 27, 36 Registration, 7 resistance, 26 RSI, 24 Entry Signal, 24 Exit Signal, 24 NO-MANS land, 24 RSI time, 22 RUN.EXE, 34 Running MarketEdge, 15 Saving and Printing Graphs, 38 Saving Files, 37 secondary menu, 22 SET_DEFAULTS, 16, 19 MarketEdge User Guide Page 71 Stochastics, 23 %E, 23 ENTRY, 23 EXIT signal, 23 NO-MANS LAND, 23 support, 26 System, 29 System Configuration, 13 System Requirements, 12 Technical Index, 32 TECHNICAL SUPPORT, 8 Trend Lines, 23 USER MENUS, 18 UTILITY, 18 UTILITY menu, 15, 18, 27 Video, 15, 29 MSHERC, 13 SETDISP, 13 VIEW_GRAPHS, 16, 29 Volume Data, 33 WA, 36 WARRANTY, 7 work area, 22 WA, 19, 27 Worksheet Global Default, 27 Worksheet Global Format, 27 Worksheet Status, 27