STOCK MARKET TIMER
User and Reference Guide
Version 2.2, Mar. 20 1990
Stock Market Timer
COPYR. 1986-1990 Ron West
All rights reserved.
Ron West
Hidden Valley Software
2207 Lochwood Court
Richmond, VA 23233

Requirements:
An IBM PC/XT/AT or compatible with PC-DOS/MS-DOS versions
2.0 or higher should be used. While floppies are acceptable, a hard disk is recommended.
Copying and Distribution:
This version of the Stock Market Timer is intended to be distributed for evaluation purposes and therefore you are welcome and encouraged to distributed it provided that you make no charge beyond media and handling costs ($7 Max).
License Agreement:
If you think that the Stock Market Timer can assist you in your stock trading activities and would like to install the latest version plus auxiliary print programs, send your payment of $29.00 (plus $2.00 shipping) to:
Ron West
2207 Lochwood Court
Richmond, VA 23233
User support will enable the development of additional features and future versions of the Stock Market Timer. Also, by sending in your payment you will be a registered user, enabling you to receive both technical support, announcements of possible later releases, the latest version of the Stock Market Timer and several auxiliary programs. Please feel free to contribute your ideas regarding desired additional features to the product.
DISCLAIMER OF WARRANTY
THIS SOFTWARE AND MANUAL ARE SOLD "AS IS" AND WITHOUT WARRANTIES
AS TO PERFORMANCE OF MERCHANTABILITY OR ANY OTHER WARRANTIES
WHETHER EXPRESSED OR IMPLIED. BECAUSE OF THE VARIOUS HARDWARE
AND SOFTWARE ENVIRONMENTS INTO WHICH THIS PROGRAM MAY BE PUT, NO
WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE IS OFFERED.
GOOD DATA PROCESSING PROCEDURE DICTATES THAT ANY PROGRAM BE
THOROUGHLY TESTED WITH NON-CRITICAL DATA BEFORE RELYING ON IT.
THE USER MUST ASSUME THE ENTIRE RISK OF USING THE PROGRAMS. ANY
LIABILITY OF THE SELLER WILL BE LIMITED EXCLUSIVELY TO PRODUCT
REPLACEMENT OR REFUND OF PURCHASE PRICE.

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TABLE OF CONTENTS
Title Page
Requirements 2
License agreement 2
Background 4
Data sources 4
Stock selection 5
Getting started 5
Building your Data Base 6
Weekly stock analysis 7
Data Base correction 9
Data Base backup 9
Stock splits 10
Quick start Data Base 10
Change history 11
Weekly Stock Price form 12
Registration form 13
Comment form 14

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Background:
In the late 70's an article appeared in a forgotten APPLE magazine which discussed a computer program that was developed based upon ideas in a book by M. G. Zahorchak entitled "The Art of Low Risk Investing". At the time I was interested in the
Stock Market and was looking for some means of timing the purchase or selling of stocks. I located a copy of the book and after examining the program began writing my own market timing system to implement many of the ideas the author expressed. I began using early versions of the Stock Market Timer in 1983 and have continued to do so with all my investments. During this period I have been very satisfied with the results of the system.
Of course, since late 1982 we have been in a historic Bull market and I'm sure that played a roll in the performance of my stock portfolio. Be that aside, I have compared the Stock Market
Timer's Buy/Sell signals with many of the "Wall Street Gurus"
Buy/Sell signals and it is remarkable how similar the timing of the calls are. I have also bought stocks during a declining market in spite of the Systems recommendation and subsequently sold them at a loss. Needless to say, that was a very expensive lesson which I hope I will not make again.
The main idea of Mr. Zahorchak's was to help the individual investor to protect himself, from himself. That is, to give the investor a method of investing besides investing on hot tips or a stock that some Guru is touting that week. To that end, he presented guidelines to investing based on several moving averages that if followed, the investor could expect to at least approach future investments with some discipline in his trading activities and to limit buying when the risk to his capital was low.
Another principle noted by Mr. Zahorchak is that the market moves in emotional cycles. That people become overly enthusiastic and bid stocks to unmaintainable levels. Likewise, they become overly pessimistic and selling will drive prices down. These swings in emotions cause temporary price fluctuations in stocks which will eventually be corrected to more normal prices. These changes can occur even with no change in a company's outlook.

One final point, Mr. Zahorchak notes that the technique of moving averages are not designed to anticipate exact market tops or bottoms but will show market changes as soon as possible and that pretty much is what has occurred.
Data sources:
The data the Stock Market Timer uses is quite simple and readily available. Market direction is determined from three sources; (1) The weekly closing DJIA, (2) The weekly number of
Advancing and Declining stocks on the NY Stock Exchange, and
(3) The S&P500 weekly closing figures. Individual stocks are selected by the system user and are thus unique to the individual. Buy/Sell recommendations for these stocks are
Page 4 determined from weekly closing price movements collected from a local or national newspaper in conjunction with the system generated Market direction indicators. All of the recommendations are based on 5, 15, and 40 week moving averages for indices and prices.
Stock Selection:
Several thoughts are offered on stock selection. Select volatile stocks, ideally with 100 percent changes in price in a year. Stocks with these swings can easily be seen using a chart book readily available in your local library. An alternative is to select stocks with a high (ie., >100) "Beta" which is a risk measure. This information is available in publications such as
"ValueLine". Pick only stocks you would want to own. This system works only with the limited number of stocks you have included from the thousands available in the market. Don't buy new issues. Its been pointed out that most new issues collapse during the first Bear market and frequently never recover.
Select only actively traded stocks. If obtaining prices is difficult, its tough to track a stock. Select stocks from as many different industry groups as you can and try to avoid selecting too many from a single industry. Doing this will hopefully insure that whichever industry group will lead a coming
Bull market, you will have some stock representation in it.
Finally, select stocks from an industry group that have "good" fundamentals. This information is also available in publications such as "ValueLine" and "Standard and Poor's" stock reports.
Reports are grouped by industry and show the stocks most attractive in the group.
Getting Started:
Obtaining the weekly closing prices for the stocks you will follow is initially a rather tedious task that will take some time to compile and enter into the Stock Market Timer. (There is a Quick Start procedure that uses a prebuilt Data Base composed

of 5 predefined stocks for those who would like a very quick overview of the Stock Market Timer. See below for the procedure for setting it up). I suggest preparing a single page form for each stock that you will follow plus a form for the DJIA of 30 stocks, the S&P 500 stocks, and weekly N.Y.S.E. advance/decline figures. An example is included in the Appendix that you can modify with appropriate dates and have the necessary copies reproduced at your local copy center.
With your forms in hand, again visit your local library and using Barron's Weekly Magazine, The Wall Street Journal (Mondays issue for Fridays closing prices), or your local newspapers financial section with Fridays closing prices, begin the task of building a 41 week history of prices. Because of the amount of time this will require you may want to begin with only a small number of stocks (maybe 30?) that you will track and add to it as time permits. The Stock Market Timer allows for the addition of stocks at any time as well as the correction of all data entered.
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In any case, enter the Stock's name, Line of business,
Earnings for the last 12 months, and the closing stock prices for the last 41 weeks onto your forms. All Prices are entered with only two decimal places and fraction conversion as follows;
1/8 = .13, 1/4 = .25, 3/8 = .38, 1/2 = .50, 5/8 = .63, 3/4 = .75,
7/8 = .88.
The Advance/Decline data requires that only 16 weeks of data are entered on the data entry form and you must compute these by subtracting the number of declining stocks on the NYSE from the number of advancing stocks for the week and adding the result to the preceding week's results. This requires that you begin by calculating Week 16 or the oldest Advance/Decline data first and working your way up to the current week's Advance/Decline data on your data entry form. Also, to prevent the calculation from resulting in a negative number, you should add 10,000 to Week
16's calculation as a "seed".
Building your Data Base:
Once you have collected your historical data on data entry forms you are ready to enter it into a file called MARKET.DAT.
One comment before you begin entering data-- All price data must be entered into the program beginning with the most recent price first, and ending with the oldest data being entered last.
From DOS enter SMTMENU to bring up the main menu. Select the "Edit" function from the main menu which will bring up the
Edit Menu. Select the "Add" function to begin adding your data to your data base. The first item entered into your data base must be the Advance-Decline data (Record #1). This is important

because only 16 weeks of data is required for the first entry.
Again, data will be entered from your data entry forms beginning with the most current week. The System will advise you that this is Record #1 and you should note the record number in the proper place on your form. The system then prompts you for the Stock's
Name. Respond with "Advance/Decline" and hit "Enter". Next it will ask for Line of Business. Respond with "10000 + (Prev Weeks
Advance - Declines)" or whatever you want. Just don't enter commas into any field for any record. Next it will prompt you for Earnings to which you can respond with 0 and hit "Enter".
Finally, it will ask for Purchase Price to which you can also respond with a 0. It will then prompt you for the weekly "Prices" to which you will respond with the weekly Advance/Decline data from your data entry form.
After you have entered 16 weeks of Advance/Decline data the system will exit to the Edit Menu. Again select the "Add" function and the system will again advise you of the Record
Number for this Stock. Note the Record Number on your form
(Record #2) and the System will prompt you for the Stock's Name.
The procedure is same for this entry as for Record #1 except you respond to the Name prompt with "DJ 30 Industrials", and you respond to Line of Business prompt with "Dow Jones 30 Industrial
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Index" or whatever strikes your fancy. However, this time and for all remaining entries the system will require 41 price entries.
After you have entered 41 weeks of DJ30 data, the system will again exit to the Edit Menu. Select the "Add" function, note the Record number (Record #3), and enter S&P500 data for 41 weeks. Finally, you are ready to enter your first stock entry.
The procedure is exactly the same as the previous records. Note the Record number, enter the Stock's Name, enter the Line of
Business, enter the Earnings for the last 12 months(if not known, enter 0), enter the Purchase Price if you own the stock, otherwise enter 0, and then begin entering the Closing Prices for the last 41 weeks beginning with the oldest data. After you enter your stock information the system will return to the Edit
Menu. Repeat this for your remaining stocks. After entering your last stock, exit back to the Main Menu as this completes the Data
Base building. Place the forms in a 3 ring binder in Record
Number sequence for ease of use each week. While this may sound very time consuming, its not. It takes about 1.5 hours per week to gather and enter the data on about 175 stocks.
Weekly Stock Analysis:
Weekly, obtain the Friday's Closing Price for the stocks you follow and have entered into your Data Base, plus Advance-
Decline, DJ30 Industrials, and S&P500 data. Enter this data onto the appropriate form for the week and after collecting the data

for all your stocks you are ready to Analyze the Market for the week. If you miss a closing price for a stock simply repeat the closing price for the previous week, note the stock and when the price becomes available correct the price using the "Edit" function which is discussed below.
Begin by entering SMTMENU from the DOS prompt which will bring up the Main Menu and then select the Analysis function.
The program will first ask if you would like to backup Market.Dat before beginning. It is a good idea to do this if you have enough space on your disk. It only takes a moment and if you have a power failure or really mess up your data base you can easily restore from the backup (The backup is called Market.Bak).
If you have Graphics capability and are displaying in 80 character format, the program will ask if you would like to display a price graph with each stock. A graph is useful not only in seeing both the weekly and 5 week averages but you can spot bad data you have entered and correct it.
After those housekeeping chores are completed you are ready to begin the weekly stock analysis. The first Record up will be the Advance/Decline record. The system will display identifying information and ask you for the number of Advancing stocks for the week and then the number of Declining stocks. The second record will then be brought in and the closing value for the DJ30
Index will be requested. This will be repeated for the third record, the S&P500 Index, and then Overall Market Information will be displayed. The system waits for you to digest that
Page 7 information and after you signal the system to proceed, by hitting any key, it begins asking you for the closing prices for each of the Stocks in your Data Base and responds with Stock
Advisory Information for each Stock as well as a price graph. If a stock which you own declines by 10% or more from either the highest price obtained in the last 40 weeks or declines 10% or more from the price you paid, a sell recommendation is generated.
This should either prevent losing a large part of your stock's gain in the first case or will allow you to cut your losses in the latter.
If you should enter an erroneous closing price for a stock, note the Record number for the stock and go ahead and complete the data entry for your remaining stocks and then select the Edit function and "Verify" the stock and reenter the correct price.
The deletion of a stock is done by replacement of the existing stock. That is, by selecting the Edit function and
"Changing" all fields with entries from the new stock. You will probably find that you will be doing this from time-to-time as new ideas present themselves.

As you enter the weekly closing prices for your stocks any new Buy/Sell signals generated by the program are accompanied by a "beep" to bring it to your attention.
The reason yearly earnings data is captured, is to present
Price/Earnings ratios for the stocks which you have chosen to follow, and you may be reluctant to buy a recommended stock when the P/E Ratio is very high or you may become "nervous" retaining ownership of a stock which has had a nice run up in price and is now experiencing a high P/E. But that's your decision. There is no substitute for your own good judgement and I cannot over stress the need to study all available financial information you can get your hands on. You'll find a gold mine of financial information at your public library and it will not only provide you with new possibilities and interesting stocks but you can evaluate other's ideas about the direction of the market and economy.
One other comment about market averages to aware of, and that is what is called "whip-sawing". This will happen when a
Stock or Market is moving in a very narrow price range for an extended period of time. The Market will make a slight move out of the narrow range and cause a "Buy/Sell" signal and the next week move back into the narrow range again and shortly thereafter cause the opposite "Buy/Sell" signal to be issued. Of course, I try to spot this and remain on the sidelines. Sometimes a good indicator of this is when the 5, 15, and 40 Weekly Averages are very close together and the current price jumps enough to cause a
Buy/Sell. So be on guard against the "Whip-Saw".
It is very important that the data be collected weekly and entered into the Stock Market Timer on a regular weekly basis to be of any use. Further, it is recommended that Quarterly you visit your local library and update your Earnings information for
Page 8 each of the Stocks you have selected. A handy source for
Earnings information is the Standard & Poor's "Stock Guide" which is issued monthly and is widely available. Programs are provided upon Registration that will print forms for ease in gathering
Earnings information.
Data Base Correction:
From time to time you may want to add another stock to your
Data Base. Simply collect the 41 week history for the stock as you did when you created the Market Data Base originally and select the Edit function from the Main Menu and then the Add function from the Edit Menu. A good source of information is alternate weeks of "Barrons" which shows the weekly price changes for most all stocks. This also minimizes your newspaper handling.

If you make an error in entering the weekly price of a stock, from the Edit Menu select the Verify function and reenter the incorrect Closing Price when it is displayed. The system will ask you for the Record Number for the Stock to be changed, so it is important that the Record Number was noted as you Added the Stock to your Data Base. However, if you would rather use the stock's name, "Change" or "Verify" will prompt you for the name. Key enough characters to make the name search unique. Be aware also that the search is "case sensitive". That is, a stock with the name of "Pepsico" is not the same as "PepsiCo" or
"PEPSICO".
If you want to change more than a few Prices for a stock select the Change function from the Edit Menu. This function will allow you to change any data field in a stock record. With this function the system will ask if you want to change the
Stock's Name, Line of Business, Earnings, or Purchase Price. It will then ask if you want to change ALL the prices. If you reply yes, then you will have to reenter the last 41 weeks of Prices again.
Data Base backup:
If you are using a Hard Disk on your system I hope you are regularly backing up your files. Its been frequently said that there are two kinds of Hard Disk users, those that have had a hard disk failure and those that are going to. Its very, very true. So do yourself a favor, and back up your files. If you don't have a tape streaming device, I recommend that you copy
MARKET.DAT to a floppy before doing your weekly Stock Analysis.
This can be done as follows;
COPY C:MARKET.DAT A:MARKET.DAT
Of course, you may have to modify the statement to accommodate the path name of a sub-directory if you are using one. You may also want to name the Market data on the floppy as the date of the update, for example "12-06-88.DAT" as an aid to
Page 9 jogging your memory in case you need to restore the data.
Stock Splits:
If your stock has a split, respond at the appropriate prompt with "split". The program will then request that a divisor be entered. To determine the divisor on a stock split take the number of new shares divided by the number of old shares and that will be the divisor.
If a split is then divide by

2 for 1 2
3 for 1 3
4 for 1 4
5 for 1 5
3 for 2 1.5
4 for 3 1.33
5 for 4 1.25
5 for 2 2.5
1 for 2 0.5
1 for 3 0.33
1 for 4 0.25
1 for 5 0.20
Quick start Data Base:
If you do not want to spend the time collecting historical stock data because you simply want to quickly "sample the flavor" of the Stock Market Timer, then the Quick Start Data Base is for you.
First copy QUICK.DAT to MARKET.DAT then begin by entering
SMTMENU from the DOS prompt which will bring up the Main Menu and then select the Analysis function. The first Record up will ask you for the number of Advancing stocks for the week, Enter 1820.
Then you will be asked for the number of Declining, Enter 215.
(A great week!). The second Record will be brought in and the closing value for the DJ30 Industrial Index will be requested,
Enter 2194.29. Next, the S&P500 record will be read in and the weeks closing figure will be requested, Enter 280.67. At this time the Overall Market information will be displayed and the system waits for you to hit a key to continue. The first Stock will be displayed asking you for the weekly closing price, enter
33.50. The Stock's Advisory Information is then displayed and the second Stock will be displayed requesting the weekly closing price, enter 29.75. Repeat this for the third Stock, entering
23.38; the fourth Stock, entering 67.75; and finally for the fifth and last Stock, enter 47.63. And there you have it.
If you have done this and decide to build your own Market
Data Base, then delete MARKET.DAT and follow the earlier instructions for getting started. And oh yes, don't forget to register.
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Stock Market Timer change history:
Version 1.X Apple II+ and Apple IIe sytems
Version 2.0 IBM PC/XT/AT Original release (Jan 10, 1989)
Version 2.1 Price graphs and Backup options added (Mar12,1989)
Version 2.2 Corrections to programs (Mar 20, 1990)

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Weekly Stock Prices
StockName___________________________________________RecNo________

Exchange_____________ Symbol_____________ Beta____________
Line of Business_________________________________________________
=================================================================
1/8 ______________ 6/10 ______________ 11/11 _____________
1/15 ______________ 6/17 ______________ 11/18 _____________
1/22 ______________ 6/24 ______________ 11/25 _____________
1/29 ______________ 7/1 ______________ 12/2 _____________
2/5 ______________ 7/8 ______________ 12/9 _____________
2/12 ______________ 7/15 ______________ 12/16 _____________
2/19 ______________ 7/22 ______________ 12/23 _____________
2/26 ______________ 7/29 ______________ 12/30 _____________
3/4 ______________ 8/5 ______________ 1/6 _____________
3/11 ______________ 8/12 ______________ 1/13 _____________
3/18 ______________ 8/19 ______________ 1/20 _____________
3/25 ______________ 8/26 ______________ 1/27 _____________
4/1 ______________ 9/2 ______________ 2/3 _____________
4/8 ______________ 9/9 ______________ 2/10 _____________
4/15 ______________ 9/16 ______________ 2/17 _____________
4/22 ______________ 9/23 ______________ 2/24 _____________
4/29 ______________ 9/30 ______________ 3/3 _____________
5/6 ______________ 10/7 ______________ 3/10 _____________
5/13 ______________ 10/14 ______________ 3/17 _____________
5/20 ______________ 10/21 ______________ 3/24 _____________
5/27 ______________ 10/28 ______________ 3/31 _____________
6/3 ______________ 11/4 ______________ 4/7 _____________
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Registration Form
Please register me as a user of the Stock Market
Timer. I understand I will receive the latest
version of SMT as well as other programs of interest.
NAME_________________________________________ DATE_____________
STREET__________________________________________________________
CITY_________________________________ STATE________ ZIP_________
TELEPHONE_______________________STOCK MARKET TIMER VER._________
Format desired: 5.25____ 3.5____
Registration fee $ 29.00
Postage & Handling 2.00
COD or not US/Canada (8.00) _______
Total Due _______
To: Ron West
2207 Lochwood Court
Richmond, VA 23233
or call 804-740-0918
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COMMENT FORM
Your comments about the Stock Market Timer Software are welcome.
Please take the time to fill out this form or write/call us with your comments and/or suggestions for improvements.
NAME________________________________________
ADDRESS_____________________________________
CITY__________________________________ STATE__________ZIP________
Phone Work___________________________ Home_______________________
STOCK MARKET TIMER Version Number________________________________
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Mail to: Ron West
2207 Lochwood Ct.
Richmond VA 23233

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