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Technically Speaking, August 2014

LETTER FROM THE EDITOR

Technically Speaking includes an interview with a practicing technical analyst almost every month. This month, we feature Amber Hestla-Barnhart’s exchange with Cynthia A. Kase, CMT, MFTA. Cynthia’s interview is striking for several reasons. A standard question in each interview is “What advice would you have for someone starting in the business today?” The answers to this question are always interesting. This month, Cynthia provides a list of what every technician should consider as they strive for success. All readers, new and experienced analysts, should consider spending a few hours working through this list. Cynthia lists 13 short pieces of advice in her answer. Each one of them is important. Technical analysts, and any other professional, will need to “be realistic about the “cost” of meeting your goals. Be prepared to “pay the price.” The other twelve items on the list are equally succinct but could require hours of thought to understand. If you find these interviews and our other content to be valuable, or if you would like to be the subject of

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.

What's Inside...

THE REPEATING STORY OF ON BALANCE VOLUME

by George A. Schade, Jr., CMT

Editor’s note: This is a brief abstract of the 2013 Charles H. Dow Award winning paper. For readers who are not familiar with the indicator, On Balance Volume (OBV) is designed to measure whether...

HOW THE CHARLES H. DOW AWARD BEGAN

by George A. Schade, Jr., CMT

I was invited to write about the beginnings of the Charles H. Dow Award. This article looks back at the first five years of what is today a preeminent honor for market technicians. As the Associate...

INTERVIEW WITH CYNTHIA KASE, CMT, MFTA

by Cynthia A. Kase, CMT, MFTA & Amber Hestla-Barnhart

How would you describe your job? Well I wouldn’t really ask the question that way. I would ask, “What do you do professionally?” I don’t really think of myself as having a job, per se, as I...

BLOOMBERG BRIEF HIGHLIGHTS CHART PATTERNS IN STOCKS AND NATURAL GAS

In the July 24 issue of Bloomberg Brief Technical Strategies, Bloomberg’s analysts detailed developing chart patterns could have in two important markets. In Nasdaq Composite Index Showing...

A QUICK REVIEW OF THE VENN CIRCLE SACRED STOCK INDEX

by John Bougearel, CMT

Fundamental data can be charted and analyzed. The chart below illustrates this point. The price-to-earnings (P/E) ratios of the stocks in the Venn Circle Sacred Stock Index are shown. P/E ratios are...

GLOBAL MACRO TRADING BY GREG GLINER

by Michael Carr, CMT

What information does a trader really need? There are a number of ways to answer this question but most readers will find many of the answers to be inadequate. For some, the answer will be that a...

TRADING OPTIONS USING TECHNICAL ANALYSIS TO DESIGN WINNING TRADING TRADES BY GREG HARMON, CMT, CFA

by Michael Carr, CMT

The title of this book, Trading Options Using Technical Analysis to Design Winning Trading Trades, summarizes the book. This is a comprehensive look at what options are and how these trading...

MTA CHAPTER REPORT: CHARLESTON, SC

by Trent Derrick

Let me begin by saying if there are any readers out there who are considering starting a chapter in their area; do it! The MTA is greatly supportive of its members who are willing to put in the time...

CHART OF THE MONTH

On Balance Volume (OBV) is charted for ETFs tracking several major market indexes from around the world. These charts were created at Stockharts.com. SPDR S&P 500 ETF (NYSE: SPY)iShares Russell...

THE REPEATING STORY OF ON BALANCE VOLUME

THE REPEATING STORY OF ON BALANCE VOLUME

Editor’s note: This is a brief abstract of the 2013 Charles H. Dow Award winning paper.

For readers who are not familiar with the indicator, On Balance Volume (OBV) is designed to measure whether there is more buying or selling pressure in the market. It is a cumulative indicator, always adding the current day’s value to the previous value of the indicator. OBV is found by adding the total volume on days when the price closes higher and subtracting the total volume on down days. It can be calculated for major stock market indexes using the total volume for a stock exchange, for example charting the Dow Jones Industrial Average and calculating OBV with the total volume reported by the New York Stock Exchange. It can also be calculated for individual stocks using only the volume in that stock. Using a simplified example, we can consider a stock that closed up

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)

George A. Schade, Jr., CMT

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HOW THE CHARLES H. DOW AWARD BEGAN

HOW THE CHARLES H. DOW AWARD BEGAN

I was invited to write about the beginnings of the Charles H. Dow Award. This article looks back at the first five years of what is today a preeminent honor for market technicians. As the Associate Editor of the then Market Technicians Association Journal, I became involved in late 1993 in the dream that led to the Award.

The seminal idea was recognizing the best article on technical analysis that breaks new ground and /or best expounds the principles of technical analysis in the tradition of Charles H. Dow. The Award’s name was easy. Charles H. Dow (1851-1902) is considered to be the father of modern technical analysis.

The idea of an award was spawned in the Technical Analysis Group of Dow Jones Telerate, then a subsidiary of Dow Jones & Company. James Pilgrim of Dow Jones Telerate brought the idea to the MTA. Pilgrim saw an opportunity for personal and MTA

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)

George A. Schade, Jr., CMT

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INTERVIEW WITH CYNTHIA KASE, CMT, MFTA

INTERVIEW WITH CYNTHIA KASE, CMT, MFTA

How would you describe your job?

Well I wouldn’t really ask the question that way. I would ask, “What do you do professionally?”

I don’t really think of myself as having a job, per se, as I have owned and operated my own business, Kase and Company, Inc., since 1992. The company has two foci. One is providing hedging and trading advisory services and software solutions to the corporate and institutional energy sector. In that context we publish two weekly newsletters, one on WTI and Brent, and another on natural gas, NG. In addition we have energy sector hedging services that include quarterly risk management studies and software products delivered via web. One is called the Kase HedgeModel and the other Kase ezHedge. So, I direct, review and edit the forecasts involved with these services, and I still do the hedging recommendation write ups myself. Dean Rogers who’s an MTA member manages

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)

Cynthia A. Kase, CMT, MFTA

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BLOOMBERG BRIEF HIGHLIGHTS CHART PATTERNS IN STOCKS AND NATURAL GAS

BLOOMBERG BRIEF HIGHLIGHTS CHART PATTERNS IN STOCKS AND NATURAL GAS

In the July 24 issue of Bloomberg Brief Technical Strategies, Bloomberg’s analysts detailed developing chart patterns could have in two important markets.

In Nasdaq Composite Index Showing Larger-Than-Normal Bearish Divergence, Paul Ciana, CMT wrote:

“Fewer components within the Nasdaq Composite are participating as the index advances to new highs, a possible signal of a larger-than-normal correction. The index is also showing a lack of participation when compared to the prior two-year trend.

[Below] is a two-year daily chart with three simple moving average periods of 50-, 100- and 200-days. Below that is the Cumulative Advance Decline Line (ADL) for the index’s constituents. Arrows pinpoint recent times when new price highs were not confirmed by the ADL. Two small divergences occurred in March and July 2013. They produced small corrections in line with the small signal.”

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A QUICK REVIEW OF THE VENN CIRCLE SACRED STOCK INDEX

A QUICK REVIEW OF THE VENN CIRCLE SACRED STOCK INDEX

Fundamental data can be charted and analyzed. The chart below illustrates this point. The price-to-earnings (P/E) ratios of the stocks in the Venn Circle Sacred Stock Index are shown. P/E ratios are calculated using forward earnings for fiscal year (FY) 2015 for each company. The multiples for each of the 13 stocks co-exist in the US Stock Market Venn Circles.

The average forward price-to-earnings (P/E) ratio, as of July 30 2014, is approximately 16.

Federal Reserve Chair Janet Yellen considers the valuations of biotech stocks to be stretched (see her July 15, 2014 testimony to Congress). Perhaps so, but for four biotech stocks in the Venn Circles, the average forward

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)

John Bougearel, CMT

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GLOBAL MACRO TRADING BY GREG GLINER

GLOBAL MACRO TRADING BY GREG GLINER

What information does a trader really need? There are a number of ways to answer this question but most readers will find many of the answers to be inadequate. For some, the answer will be that a trader just needs a chart and a current quote. For others, the answer will involve various indicators or wave counts. The truth is that in the modern markets, it often takes more than a chart and a current price quote to succeed. In the past few decades, a number of new stock and derivative markets have been developed around the world and a number of older markets have become increasingly important. At the same time, all of these markets have become increasingly connected to each other. The pace of trading activity in these markets has also become increasingly fast. For example, a GDP report from India can now affect U.S. stocks but just

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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TRADING OPTIONS USING TECHNICAL ANALYSIS TO DESIGN WINNING TRADING TRADES BY GREG HARMON, CMT, CFA

TRADING OPTIONS USING TECHNICAL ANALYSIS TO DESIGN WINNING TRADING TRADES BY GREG HARMON, CMT, CFA

The title of this book, Trading Options Using Technical Analysis to Design Winning Trading Trades, summarizes the book. This is a comprehensive look at what options are and how these trading instruments can be traded. This is a unique work because it provides basic knowledge about the subject along with detailed strategies that can be applied in the markets.

Trading Options includes a general overview of technical analysis, options and options strategies. These sections are all comprehensive and useful. The book also includes sections on how to design a trade and how to develop and implement a trading plan based on that design.

Options trading is a topic that is widely written about but it is usually addressed in general terms. Greg goes beyond that model of writing and provides specific examples of

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 CHAPTER REPORT: CHARLESTON, SC

MTA CHAPTER REPORT: CHARLESTON, SC

Let me begin by saying if there are any readers out there who are considering starting a chapter in their area; do it! The MTA is greatly supportive of its members who are willing to put in the time and effort to start their own chapter.

To start, I’d like to give a bit of background on our chapter in Charleston, South Carolina. Back in the summer of 2013 myself, along with Marc Johnson, and Bryant Clayton, began designs on bringing the practice of technical analysis to the Charleston area. In our collective experience, we felt that we had not encountered very many technical practitioners in our area, and felt that we had an opportunity to change that. Together, with the support of the MTA, we formed the Charleston chapter and began hosting meetings in November 2013. Our meetings usually begin with a brief presentation about various technical analysis topics (Ichimoku

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)

Trent Derrick

Trent Derrick

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CHART OF THE MONTH

CHART OF THE MONTH

On Balance Volume (OBV) is charted for ETFs tracking several major market indexes from around the world. These charts were created at Stockharts.com.

SPDR S&P 500 ETF (NYSE: SPY)iShares Russell 2000 (NYSE: IWM)iShares United Kingdom (NYSE: EWU)

New Educational Content This Month

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