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Forbes Online review of Insider TA, dated 12-MAY-1998

The following article from can be seen in it's original form by clicking here.

Stephen S. Johnson
5/12/1998 @ 12:00AM

Black boxes

Two sites with good technical analysis screens and charting capabilities are IQ Net and Insider TA. Also, a number of reputable economists have set up their own web sites offering investment advice and tools. For example, Stanford’s William Sharpe and Joseph Grunfest are in the process of launching “Financial Engines,” an investment advice service on the Internet.

IQ Net Investment Research offers web-based technical tools and also allows download of its IQ Suite trading software for a monthly subscription charge of $24.95.

Through the IQ Net site, investors can track individual stocks or indexes, using measures common to technical analysis like stochastics, volume and momentum–free of charge. Unlike Market Edge, IQ Net provides excellent charts, which can be created using a variety of time intervals from five minutes up to one month. It also offers a search function or “Scan” where data such as P/Es, EPS and trade volume range, and even criteria like “today’s close is higher than the ten-day moving average” can be input to search out individual stocks to consider. Bull and bear calls are color coded to keep it simple for neophytes.

Like all of these web-based “black box” sites, IQ Net uses a proprietary intelligence algorithm to solve problems, which it calls IQ Zone. The model was tested in the bear market of 1968 to 1982 and the bull market that has been running since 1982.

The IQ Suite trading software offers all that the site does, but also has a total of 20 trading indicators and if your PC has the capability, audio and visual intra-day alerts are offered to notify you of price moves in your selected stocks.

Insider TA offers technical analysis software, but no interactive data via its site. ITA uses a method of charting called Box Charting: Each trading period’s high, low and volume data define coordinates of a “box.” The chart that this data creates has a wide variation in box sizes, where the height-to-width ratios are viewed as forecasting signals. The vertical bar is the price–high or low–and the horizontal bar is the period, with length changes depending on the volume flow.

The model employs fewer indicators than most, believing that the majority of investors only get confused with too many choices. ITA instead focuses on “volume-oriented” principles it believes drive the stock market. It uses the midpoint price move to determine whether volume on any day was up or down. So, rather than performing a detailed analysis of a stock’s volume and price movement throughout a given day, ITA just takes the daily average, which it believes shows the true demand for a stock.

Bull and bear calls are color coded to keep it simple for neophytes.

According to ITA, “Box Charting relies on our cognitive ability to pick out trends in box shapes. This often becomes difficult, primarily due to the sometimes erratic fluctuations a stock may travel on a day-to-day basis.” To get around this, ITA creates Buy and Sell “tags,” which signal when the boxes’ shapes begin to trend in a new way that may indicate a reversal in price movement.

Two indicators ITA has developed are the VA (volume analyzer) Rank and Consolidated Mapping functions. VA Rank measures the relationship between a stock’s price and volume level. For example, a large gap between the price and volume lines signals a possible Buy. Conversely, small gaps signal a Sell.

The consolidation mapping feature shows when the boxes on a chart diverge. It then assumes that all previous buyers of the stock during a consolidation period are now selling and that the sum of all of the shares involved in the consolidation will be about the same number as those in the price move. As the chart is plotted on a volume scale, the horizontal distance will equal the vertical distance, indicated a signal to sell. This feature allows an investor to time the duration of a stock’s move.

Sound complicated? It is more so than straight technical analysis. ITA [] one more tool to help you make an investment decision. And the more information you have, the better your chances will be of betting correctly.

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