Overview
Insider TA™ by Stock Blocks Inc®
is a technical analysis program for Windows
Vista/XP/2000/NT computers. This page provides a brief overview on Insider
TA's analysis methods and interactive environment. It's interface
and method of data presentation is unique, and as such we hope it will
compliment your existing set of investment tools.
A good overview on Insider TA's concepts and functionality can also
be found in various program reviews (the
first one published in June 1996) by Technical Analysis of STOCKS & COMMODITIES magazine.
The latest of these reviews is in their November 1999 issue.
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Box Charting
Price Range and Volume reflects the box shape
Insider TA's charting technique utilizes a method we refer to
as Box Charting, where each trading period's high price, low price,
and volume define the plotting coordinates of a box. This technique is
more widely known as Equivolume Charting, an innovative idea originally
created by Richard W. Arms.
When plotted using this method, the resulting graph reveals a chain
of boxes with varying shapes. The shapes, which are quantified by the
boxes' height-to-width ratio, are viewed as significant forecasting signals.
Box Charting was never thoroughly utilized in the past, simply because
the vertical and horizontal graphing scales were always constrained to
a fixed viewing screen, typical of existing technical analysis programs. Insider
TA breaks this barrier, and thoroughly exploits the true concept
of box charting, by allowing the operator to flex the plotting scales
through its interactive viewport. The ability to pan, zoom,
stretch, and compress the box charts in real-time (that is, without the
need to pull down a menu for redefining new plotting parameters) is one
of Insider TA's more popular features.
We strongly believe in the concept of box charting, and feel it is the
only sensible way to analyze portfolio data. Once accustomed to
it, you may find it to be your preferred viewing environment. Other
volume-based indicators, like Insider TA's Box Analyzer and VA
Rank functions (discussed below), can then be used to search for
significant turning points.
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Box Analyzer (BA)
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 aid
in this task, and based on Richard Arm's Ease of Movement technique, Insider
TA has a Box Analyzer (BA) function which provides insight
on how the box shapes are trending. The output of this numerical-based
trend analysis is plotted in an independent BA Graph window. Insider
TA produces "buy" and "sell" tags that signals when the box shapes
begin to trend in a way that may indicate a reverse in price movement.
Vtel Corp (Daily: 12/13/94-1/12/96)
The above example illustrates how the BA Function can filter
the seemingly chaotic behavior of box shapes, and reveal trends that
could not have been detected otherwise. Two very well-placed BA buy/sell
tags have been calculated, all based exclusively on past behavior.
When using the BA Function, we look for an overall consistency
in the accuracy of multiple BA buy/sell pairs in a box chart. If they
are well placed, as shown above, then we have a better chance of accurate
hit rates for future buy and sell tags.
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Volume Analyzer (VA)
Insider TA's Volume Analyzer (VA) stems from the concept of On-Balance
Volume, or OBV. This is a simple accumulator function that
counts volume based on up and down days. Introduced by Joseph
Granville, OBV uses closing price for determining up/down
days. Insider TA's implementation modifies this concept... assuming
that the "closing" price is merely an instant in time, with no inherent
significance, the up/down volume accumulation is better calculated
by basing it on the price midpoint, or the average of the high and
low for the day.
The VA, like the OBV, assumes ALL volume on any given day was either
up or down, depending on the midpoint price move. A more precise approach
would involve detailed analysis on volume/price performance throughout
the day, commonly referred to as the Cumulative Volume Index, or CVI.
Unfortunately (or fortunately perhaps, for simplicity sake!), stock listings
only provide the high and low, so taking a simple average is our best
approach.
Simply put, the Volume Analyzer function is a rough measure of
the demand for a stock. We quantify the plotted VA Line by calculating
the "Up Volume to Down Volume" ratio, or UV/DV. As in the VA calculation,
this is based on price midpoint and not the closing price. UV/DV ratios
greater than 1 signify an inclining VA Line; less than 1 signify a declining
VA Line. One of our primary tenets is to buy (long) a stock only if the
VA line is on an incline (UV/DV > 1.0).
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VA Rank Function
Insider TA extends the VA concept with an additional function
that measures the relationship between a stock's price and its corresponding
VA level. Large gaps between the Price line and VA line are given high "ranks",
and may signal possible "buy" points. Small gaps are given lower "ranks",
and may signal possible "sell" points. The VA
Rank Function plots these rank values in a separate graph. Observe
the data for DSP Technology (ticker DSPT) in the following graph...
DSP Technology (Daily: 7/16/93 - 11/30/94)
The resulting peaks and valleys observed in the VA Rank function reflect
possible "buy" and "sell" points. By positioning the two horizontal lines
(shown above as "BUY @ 91%" and "SELL @ 51%" in the VA RANK FUNCTION
window) so that they pierce the major peaks and valleys in the VA Rank
Function, we arrive at some pretty accurate buy/sell tags.
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Consolidation Mapping
Box charting's visual presentation of data causes a person to mentally
combine ideas, data, and information in a totally unexpected way. The
symmetry that arises when plotting along a volume scale offers a means
to examine and evaluate information not attainable by other charting
methods. Consolidation markers help to map these symmetrical regions.
When viewed in a box chart, consolidation periods are marked by a horizontal
band of boxes within a fairly constant price range. Boxes in these areas
will generally be fat in shape, reflecting larger volume because the
buyers and sellers are executing their trades with little resistance.
In some cases, after all interested parties have fulfilled their desires
(of either acquiring or ridding their shares), volume tends to diminish.
This point in consolidation may signal an impending move, but wait further
until you see which direction.
When boxes begin to diverge from a consolidation period, increased trading
activity (sometimes more of a frenzy) stimulated by the forces of fear and greed begins
to drive a stock price to new levels. Based on Arms' theory, this is
where consolidation mapping comes into play: Relying on the assumption
that all traders who bought shares during the consolidation period are
now selling (either to take profits, or diminish losses), we can deduce
that the sum of all shares involved in the consolidation period will
approximately equal the sum of shares involved in the price move.
Since box charting is plotted on a volume scale, it follows that the
horizontal distance of the consolidation period will approximately equal
the distance of the move. Observe the following example of Federal Express.
Here, we defined a consolidation period from 5/5/95 to 7/24/95 (Box #380).
Insider TA mapped out an equidistant range from 7/24/95, and successfully
placed a marker at the end of the price advance (11/6/95). Had we performed
this analysis shortly after 7/24/95, we would have had a significant
indicator on when to sell Federal Express.
Federal Express (Daily: 10/4/94 - 1/12/96)
Note that consolidation mapping cannot predict how high or low a stock
will advance. Instead, it can be an effective tool in timing the duration
of a stock's move. Insider TA allows you to insert up to three
consolidation periods (actually 30, because you can define up to 10 views)
in your viewport. By drawing out what you believe is the consolidation
period, Insider TA will show an equally distanced period to its
immediate right, in effect "mapping" out how far the projected price
advance should progress.
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Candlestick Charting
Candlestick charting is supported by Insider TA, provided your
stock data includes Open and Close price
on top of the minimum requirements of High, Low,
and Volume. Candlestick plotting is not a volume-oriented
method of analysis, but some prefer it's graphical presentation over
box charting, so we have included this option.
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Candlevolume Charting
Insider TA can generate box charts with candlestick-styled characteristics. The
result is known as Candlevolume charting, and is quite popular
for those who want the best of both worlds. In this mode, a traditional
candlestick chart is drawn with each candle's width reflecting the volume
for that day. This feature is toggled on/off by pressing Control
V on the keyboard.
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Point & Figure Charting
Ok, so Point & Figure charting isn't a volume-oriented analysis
technique. But it's uniqueness and popularity in the technical
analysis community has made it a good addition for Insider TA's toolbox.
Refer to the handling of Point & Figure in
Insider TA.
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Data Compatibility
Regarding ASCII file loading (by both the Standard and Pro
Versions), Insider TA was designed to handle data whose
components (Date, High, Low, Volume, etc.) can exist in any order.
In this way, the program can load files originating from numerous sources
and data formats. Please refer to our page on ASCII
File Concepts for more information.
Recommended Reading
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Future Versions
As with any dedicated software, Insider TA is continuously evolving.
We pay particular attention to pleasing our current customers. Upon returning
the Insider TA User Registration Card, you will have an
inside opportunity to obtain any future versions at very attractive prices.
Our current users will never be left in the dark with an obsolete version. Insider
TA's Version 6.1 Internet Update
Facility ensures you'll always have the latest-and-greatest software
builds (in the event any bug fixes or minor enhancements are implemented).
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Variations
Insider TA is available in two levels: Standard and Professional.
For a side-by-side comparison and current prices, please refer to this
page.
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