Messages: What Members Are Asking On-Line

Trailing Stop Alerts

I found the review of portfolio management software in the May/June 2003 issue of Computerized Investing very useful. Several programs have price alerts, but none seem to have a trailing stop alert, which is critical to my investment strategy. I have searched the Internet, and the only program I can find that has such an alert is Fund Manager by Beiley Software. Please include this program in your next review of portfolio management programs.

—M.R.
via E-mail

CI Editors respond: A stop alert will highlight when a stock has dropped to a certain level. For example, you may wish to be alerted if any stocks you own have dropped by 10% from their purchase price. For a $100 stock, a price of $90 or below would trigger the alert.

A trailing stop alert moves up with the stock price. If our $100 stock then increased to $105, the stop alert would move up by five dollars to $95. The stock would only now need to decline to $95 to trigger the alert, not $90.

Traders like to use stops to limit their downside loss to the amount specified with the stop. Trailing stops go further by attempting to preserve some profits if the stock price moves up before weakening. Setting appropriate stops is a bit of an art. You need to make the stop close enough to the current stock price to preserve your profits, but not so close that a minor market move down will lead you to close out your position, only to see the stock turn around and continue its upward movement.

Thank you for bringing Fund Manager to our attention as an option for trailing stop alerts.

Advance/Decline Line

Do you know of a Web site that regularly plots a cumulative advance/decline line?

—C. J.
via E-mail

Advance/Decline Line CLICK ON IMAGE TO SEE FULL SIZE.

CI Editors respond: The March/April 2003 issue of Computerized Investing featured a comparison of Web-based technical analysis programs. BigCharts and Profit Financial Systems are the only two services reviewed in the comparison that plot the advance/decline line. BigCharts is a free service, while users would need to pay for a bronze level subscription at Profit Financial Systems to gain access to the advance/decline line.

The advance/decline is a measure of market breadth that plots the running total of advancing stocks minus declining stocks (Figure 1). The indicator is designed to measure the strength of the stock market or a sector or industry. The basic underlying assumption is that if there are more advancing issues than declining issues, the market is strong or has good breadth.

AAII’s Sentiment Survey

Could you please explain the methodology of your sentiment survey? Are the responses strictly from the Internet? And strictly from subscribers answering the surveys?

—M.G.
via E-mail

CI Editors respond: The AAII Sentiment Survey was begun in 1987. From 1987 through 1999, we mailed a survey to a random sample of our members asking if they were bullish, neutral, or bearish on the market outlook over the next six months. Any responses received through the mail over the course of a calendar week were tallied for the sentiment survey that week.

Since 2000, we have been asking our members to participate in an on-line survey that poses the same question. Responses recorded from Thursday through the following Wednesday are tallied for the sentiment survey that week. Only members of AAII are allowed to participate in the survey, and participants are limited to one response per week. We send out a weekly E-mail to AAII members asking them to participate in the survey.

The survey has been much more volatile and responsive since we have switched from a mail survey to a Web survey and can be strongly influenced by recent market moves or major news (such as a Federal Reserve action).

To participate in the Sentiment Survey, visit the Investor Surveys area of AAII.com, found under Research tab drop-down menu in the top navigation.