Charles V. Bilello, CMT and Michael A. Gayed, CFA, Honored as 2014 Dow Award Winners

The Market Technicians Association is pleased to announce the winners of the 2014 Charles H. Dow Award as Charles V. Bilello, CMT and Michael A. Gayed, CFAfor their submission, "An Intermarket Approach to Beta Rotation: The Strategy, Signal, and Power of Utilities."

The 2014 submissions represented a diverse and competitive array of research. The CMT Association is proud to recognize an outstanding paper that Demonstrates the Value of Technical Analysis to Active Asset Management.

Abstract: It is often said by proponents of the Efficient Market Hypothesis that no strategy can consistently outperform a simple buy and hold investment in broad stock averages over time. However, using a strategy based on the principles of intermarket analysis, we find that this assertion is not entirely accurate. The Utilities sector has many unique characteristics relative to other sectors of the broader stock market, including its higher yield, lower beta, and relative insensitivity to cyclical behavior. Our analysis suggests that rolling outperformance in the sector is not only exploitable, but also provides important signals about market volatility, seasonality, and extreme market movement. We explore historical price behavior and create a simple buy and rotate strategy that is continuously exposed to equities, positioning into either the broad market or the Utilities sector based on lead-lag dynamics. Absolute performance and risk-adjusted returns for this beta rotation approach significantly outperform a buy and hold strategy of the market and of the Utilities sector throughout multiple market cycles.

The full version of their paper can be found by visiting