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Technically Speaking, April 2008

From the Editor

This is an interesting time for technicians and we try to present some examples of that in this month’s newsletter. The collapse of Bear Stearns took its chairman by surprise, according to the testimony he delivered to Congress. Could the charts have provided a clue to the stunning events that impacted that company? We reproduce two charts and ask for your input on that question. If you had an indicator that warned of the carnage in that stock, please let us know and we will publish the details in coming issues. A chart of housing prices is as bearish as the chart of Bear Stearns. We also have a chart of an index to track that market created by MTA Member Ken Winans. Can technical analysis be applied to this market? If so, perhaps an argument can be made that we are oversold. Again, we’d like to know of any analytical tools that you’ve applied in housing, or other nontraditional markets. We also have an interview with Dave Keller, a few other articles and some MTA business included in this

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What's Inside...

From the Executive Director

by Tom Silveri

MTA Membership: A few announcements that may interest you: Recently, the Nominating Committee of the Board submitted its Slate for Officers/Directors at-large for voting by the Membership at its...

David Keller, CMT

by Molly Schilling & David Keller, CMT

Molly Schilling (MS): Tell me something about your background and school and how you got into technical analysis. David Keller (DK): I went to Ohio State, and I actually studied music and psychology....

The Challenge for Technicians

by Michael Carr, CMT

Readers of Technically Speaking are doubtlessly aware of the stunning collapse of Bear Stearns (BSC). The question that naturally arises in such cases is whether or not technical analysis would have...

MTA Benefits: Mentorship

by Michael Carr, CMT

Experience is often thought of as the best teacher. As traders, many of us know that experience is often the most expensive teacher in the markets. In many careers, a mentor can share experience and...

Current Trends in the Foreign Exchange Markets

by Michael Carr, CMT & Scott Petruska

Scott Petruska, a Vice President in the International Department of Commerce Bank, NA, in Kansas City, spoke at a meeting of the MTA Denver Chapter on March 13. The MTA partnered with the local CFAI...

Charting Home Prices

by Michael Carr, CMT

The Winans International Real Estate Index (WIREI) measures U.S. new home prices from 1830. It was developed by Kenneth G. Winans, CMT, with the assistance of Justin Gularte, CMT. This allows for...

MTA and ASTA Collaboration Agreement

by Sameh Abou Arayes, CMT

It’s a pleasure writing here after signing the MTA/ASTA agreement. Actually, my pleasure is doubled, once as the ASTA (Arab Society of Technical Analysts) President and once as an MTA member. As...

News From the MTA Board of Directors

On March 27th, 2008, the Nominating Committee of the Board submitted its Slate for Officers/Directors at-large for voting by the Membership at its next Annual Meeting, scheduled for May 17, 2008. The...

A Book Review of: “Breakthroughs in Technical Analysis”

by Molly Schilling & David Keller, CMT

BREAKTHROUGHS IN TECHNICAL ANALYSIS: New Thinking from the World’s Top Minds Edited by David Keller 221 pages Published by Bloomberg Press, 2007 This new book is intriguing on many levels. It...

Would You Like to be Called Professor?

It’s hard to believe that MTA members have been involved on college campuses for the past 30 years. For perhaps 15-20 years we have been guest lecturers filling in at courses on investing with a...

From the Executive Director

From the Executive Director

MTA Membership:

A few announcements that may interest you:

  • Recently, the Nominating Committee of the Board submitted its Slate for Officers/Directors at-large for voting by the Membership at its next Annual Meeting, scheduled for May 17, 2008. In the coming weeks we will open the voting for this slate.

Please view the article on page 9 for full details on the slate and the electronic voting process.

  • A one-day MTA Symposium event will take place at the Bloomberg facility (59th and Lexington Ave) in New York City on May 16, 2008. During this one-day symposium, the MTA will, among other presentations, have a “Favorite Sectors and Best Ideas in 2008” panel (Moderated by Thomas Keene, with Louise Yamada and John Roque confirmed as panelists), celebrate and hear from this years Service and Charles Dow Awards recipients, discuss the current “State of the MTA” and have one or two keynote presentations from some

To view this content you must be an active member of the CMT Association.
Not a member? Join the CMT Association and unlock access to hundreds of hours of written and video technical analysis content, including the Journal of Technical Analysis and the Video Archives. Learn more about Membership here.

Contributor(s)

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David Keller, CMT

David Keller, CMT

Molly Schilling (MS): Tell me something about your background and school and how you got into technical analysis.

David Keller (DK): I went to Ohio State, and I actually studied music and psychology. My plan was to go on to study conducting at a conservatory. I ended up with the two degrees, and after six years of school, I was really burned out with music, and so I decided to do something else for awhile.

That’s when my wife and I moved out here and I joined Bloomberg. I started in an entry-level position, but there was no one at Bloomberg to spearhead technical analysis. So a couple of us seized the opportunity and started to study it. We talked to everyone we could to learn and after a while, I ended up being the one to move into a full time position. I found it to be a good match because

To view this content you must be an active member of the CMT Association.
Not a member? Join the CMT Association and unlock access to hundreds of hours of written and video technical analysis content, including the Journal of Technical Analysis and the Video Archives. Learn more about Membership here.

Contributor(s)

Molly Schilling

David Keller, CMT

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The Challenge for Technicians

The Challenge for Technicians

Readers of Technically Speaking are doubtlessly aware of the stunning collapse of Bear Stearns (BSC). The question that naturally arises in such cases is whether or not technical analysis would have gotten you out of the stock. A classic post mortem of Enron done by Dorsey Wright and Associates (http://www.dorseywright.com/internal/index_enron_int.htm) clearly showed that Enron should have been sold early in its collapse. From the perspective of an individual investor, the case against BSC is no less compelling.

The weekly chart is shown in Figure 1. Some may see a head-and-shoulders top with the head forming at the beginning of 2007. The break below 140, followed by a small throwback, was clearly bearish. That run-up was not confirmed by momentum indicators, RSI in this chart. A larger topping pattern, perhaps a rounding top, and support were broken at 100 in late 2007. The price was decisively below its 50-week moving average by

To view this content you must be an active member of the CMT Association.
Not a member? Join the CMT Association and unlock access to hundreds of hours of written and video technical analysis content, including the Journal of Technical Analysis and the Video Archives. Learn more about Membership here.

Contributor(s)

Michael Carr, CMT

Michael Carr, CMT

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MTA Benefits: Mentorship

MTA Benefits: Mentorship

Experience is often thought of as the best teacher. As traders, many of us know that experience is often the most expensive teacher in the markets. In many careers, a mentor can share experience and lessen the pain of the learning process.  Technical analysis is no different in that respect.

Mentoring is usually an unstructured relationship that allows less experienced people in a field to benefit from the wisdom of those who have gone before them. With a mix of experienced and inexperienced members, the MTA offers a lot of opportunity for mentorship. This is a benefit that comes with all memberships, but is largely being overlooked and is undoubtedly under utilized.

On a personal level, I have benefitted greatly from the mentoring of more experienced members.  Although I thought I had a grasp of the English language, after joining the MTA I learned that my writing skills needed a great deal

To view this content you must be an active member of the CMT Association.
Not a member? Join the CMT Association and unlock access to hundreds of hours of written and video technical analysis content, including the Journal of Technical Analysis and the Video Archives. Learn more about Membership here.

Contributor(s)

Michael Carr, CMT

Michael Carr, CMT

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Current Trends in the Foreign Exchange Markets

Current Trends in the Foreign Exchange Markets

Scott Petruska, a Vice President in the International Department of Commerce Bank, NA, in Kansas City, spoke at a meeting of the MTA Denver Chapter on March 13. The MTA partnered with the local CFAI Society to sponsor the meeting. Attendance totaled about thirty, with slightly more CFA participants attending.

Recognizing the diversity of his audience, Scott began with an overview of the foreign exchange markets. Having been involved with these markets for more than 30 years, he is an expert and was able to explain the concepts in an easy-to-understand manner. Foreign exchange, Forex or simply FX, are all terms used to describe the trading of the world’s many currencies. With nearly 180 countries, there are virtually an unlimited number of possible pairs for trading. The Forex market is the largest market in the world, with trades amounting to trillions of dollars every day, dwarfing the size of global stock

To view this content you must be an active member of the CMT Association.
Not a member? Join the CMT Association and unlock access to hundreds of hours of written and video technical analysis content, including the Journal of Technical Analysis and the Video Archives. Learn more about Membership here.

Contributor(s)

Michael Carr, CMT

Michael Carr, CMT

Scott Petruska

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Charting Home Prices

Charting Home Prices

The Winans International Real Estate Index (WIREI) measures U.S. new home prices from 1830. It was developed by Kenneth G. Winans, CMT, with the assistance of Justin Gularte, CMT. This allows for comprehensive long-term analysis of the current market environment and to place current trends into historical context.

Winans found that, historically, new home prices have been the most accurate and consistently tracked real estate dataset. According to the National Bureau of Economic Research there have been five significant studies done on new home prices since 1830:

  • Census Bureau’s New Home Median and Average Monthly Prices (1963 to present)
  • Bureau Labor & Statistics’ New Single Family Housing Studies (1937 – 1962)
  • Long Studies (1869 – 1936)
  • Gottlieb Studies (1837 – 1868)
  • Riggleman Studies (1830 – 1836)

Unlike most real estate indexes, the WIREI incorporates volume. In order to accomplish long-term “apples to apples” evaluations between the WIREI and major stock & bond indices, it’s important to have

To view this content you must be an active member of the CMT Association.
Not a member? Join the CMT Association and unlock access to hundreds of hours of written and video technical analysis content, including the Journal of Technical Analysis and the Video Archives. Learn more about Membership here.

Contributor(s)

Michael Carr, CMT

Michael Carr, CMT

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MTA and ASTA Collaboration Agreement

MTA and ASTA Collaboration Agreement

It’s a pleasure writing here after signing the MTA/ASTA agreement. Actually, my pleasure is doubled, once as the ASTA (Arab Society of Technical Analysts) President and once as an MTA member.

As you know, a collaboration agreement has been signed between the ASTA and the MTA, effective April 1. According to this agreement, members of the MTA in the Middle East will be members of the ASTA as well, with access to all support privileges provided by the ASTA to its members.

The ASTA is a not- for- profit professional organization for technical analysis professionals in the Middle East, headquartered in Cairo, Egypt. Our main goal is to promote technical analysis and to help exchange experiences between technical analysis professionals in the region.

Our activities include technical analysis education, and organizing technical analysis conferences, seminars and meetings. According to the agreement, we will also be promoting the CMT program in the Middle East,

To view this content you must be an active member of the CMT Association.
Not a member? Join the CMT Association and unlock access to hundreds of hours of written and video technical analysis content, including the Journal of Technical Analysis and the Video Archives. Learn more about Membership here.

Contributor(s)

Sameh Abou Arayes, CMT

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News From the MTA Board of Directors

News From the MTA Board of Directors

On March 27th, 2008, the Nominating
Committee of the Board submitted its Slate for
Officers/Directors at-large for voting by the Membership at its next Annual Meeting, scheduled for May 17, 2008.

The recommended Slate, approved by the Board for submittal to the Membership, was as follows:

President: Larry Berman, CTA, CFA, CMT

Vice President: David Keller, CMT

Treasurer: Craig Fullen, CMT

Secretary: Tim Snavely, CFA, CMT

At-Large Directors:

    • Kristin Hetzer, CMT, CIMA, CFP
    • Doaa Fahmy, CMT
    • MacNeil Curry CFA, CMT

Within the next few weeks, Tim Snavely, MTA Board Secretary, will be distributing the Annual meeting Notice/Agenda and new Electronic proxy voting forms for Member voting. All MTA Members, Honorary Members, and Emeritus Members will receive a link, via email, to submit their vote electronically. A link will also be posted on the MTA website as an alternative for you.

We thank the Nominating Committee for their fi ne

To view this content you must be an active member of the CMT Association.
Not a member? Join the CMT Association and unlock access to hundreds of hours of written and video technical analysis content, including the Journal of Technical Analysis and the Video Archives. Learn more about Membership here.

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A Book Review of: “Breakthroughs in Technical Analysis”

A Book Review of: “Breakthroughs in Technical Analysis”

BREAKTHROUGHS IN TECHNICAL ANALYSIS: New Thinking from the World’s Top Minds
Edited by David Keller
221 pages
Published by Bloomberg Press, 2007

This new book is intriguing on many levels. It serves as a kind of primer for ten fascinating technicians from all across the world, giving a broad sense of the cultural range of applications and creative thinking available to technical analysts today. Each chapter is written by one of the ten “super minds,” and each is concise, informative, and in every case aiming at elaborating the philosophy and character of the technique – the tricky ideas – and uncovering the essence of the theory along with demonstrations of how it works.

The overall feeling is that you are visiting, even having coffee with, one supermind after another. You have the benefit of his/her careful explanation of the model and how it works, but

To view this content you must be an active member of the CMT Association.
Not a member? Join the CMT Association and unlock access to hundreds of hours of written and video technical analysis content, including the Journal of Technical Analysis and the Video Archives. Learn more about Membership here.

Contributor(s)

Molly Schilling

David Keller, CMT

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Would You Like to be Called Professor?

Would You Like to be Called Professor?

It’s hard to believe that MTA members have been involved on college campuses for the past 30 years. For perhaps 15-20 years we have been guest lecturers filling in at courses on investing with a one to three hour presentations on technical analysis. More recently we have a number of for-credit courses on the undergraduate and graduate levels in colleges in several states around the country. Also interest is quietly growing overseas in select executive MBA programs. As professors “discover” our tools and test them to their own standards and publish their results, we have gained credibility.

Many schools have built “trading rooms” or “interactive labs” to prepare their students for the world of finance and global trading and investing. These rooms with their banks of Reuters and Bloomberg terminals have increased our audience. Students who have grown up in the past 20-25 years have been exposed to one of the

To view this content you must be an active member of the CMT Association.
Not a member? Join the CMT Association and unlock access to hundreds of hours of written and video technical analysis content, including the Journal of Technical Analysis and the Video Archives. Learn more about Membership here.

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New Educational Content This Month

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