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Technically Speaking, December 2013

LETTER FROM THE EDITOR

In this month’s newsletter, we are presenting a diverse group of articles to show the breadth of the work being done within the field of technical analysis. While each article offers a different viewpoint, all of the authors use a number of charts. This is an unchanging feature of technical analysis, even in a time when there is an increased ability to quantify data. Complex analysis can be clarified with a chart.  In this note, is an example of how Kirk Northington, CMT, and Carson Dahlberg, CMT, of Northington Dahlberg Research have developed a method to visualize risk and reward. They have converted the potential gains and losses on a trade to MACD-style histogram and found an effective way to visualize the data. Technical analysis is changing, but it also remaining true to its roots and using visual tools to explain complex analysis. If you would like to share your work in this area, please email us at editor@mta.org. Michael Carr

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What's Inside...

PUTTING THE NETFLIX MOVE INTO PERSPECTIVE

by Jon Boorman, CMT

Editor’s note: This article was originally published at: http://go.mta.org/3791 and is reprinted here with the permission of the author. “Netflix tumbles to levels not seen since…...

STILL A BULL, BUT LOOKING OVER OUR SHOULDER

by Olaf Sztaba & Ron Meisels

Editor’s note: This report was originally published by Phases & Cycles on November 21, 2013 and is reprinted here with permission. Our last Market Comment pointed to a market that “has plenty...

INTERVIEW WITH RON MEISELS, CMT

by Ron Meisels & Amber Hestla-Barnhart

What led you to look at the particular markets you specialize in? I began using technical analysis when my broker recommended a number of stocks based on their Fundamental Research and none worked...

WHAT IS ABSOLUTE RETURN?

by Robert F. Palmerton, Jr., CMT & Puneet Gupta

Editor’s note: This article was originally published at: http://go.mta.org/3793 and is reprinted here with the permission of the author. Relative versus Absolute Return? Conventional investment...

HOW TO PLOT FIBONACCI RETRACEMENTS FROM EXTREME PRICES TO SET SYNTHETIC 100% TARGET

by Cornelius Luca

Editor’s note: This article was originally published as a Charts Newsletter for Thomson Reuters Eikon in October 2013 and is reprinted here with the permission of the author. Plot Fibonacci...

APPS FOR TECHNICIANS

by Michael Carr, CMT

Apps are a rather recent development but they have become an essential part of life for many. There are apps for everything but few professionalquality apps that help technical analysts do their...

INTERVIEW WITH ROBERT SCHITTLER

by Robert Schittler & Mukul Pal

How would you describe your job and what led you to look at the particular markets you specialize in? I am the Chief Technical Analyst of Raiffeisen International. My bank is the investment-banking...

PUTTING THE NETFLIX MOVE INTO PERSPECTIVE

PUTTING THE NETFLIX MOVE INTO PERSPECTIVE

Editor’s note: This article was originally published at: http://go.mta.org/3791 and is reprinted here with the permission of the author.

“Netflix tumbles to levels not seen since… Thursday.”

That’s not a headline you’ll read anywhere but that’s one reality of what happened today. Let’s not sugar-coat it though, there’s no question that was one ugly session. I’m sure there have been fortunes made and lost today, and today’s session could become the stuff of legend and a test case for intraday traders everywhere.

But let’s just put it in perspective for a moment, because this is a classic example of how important time frames are, and how you view $NFLX today will likely be determined by your own particular time frame and methodology.

For people with longer time frames than mine, here’s the monthly chart of the last 5 years:

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Contributor(s)

Jon Boorman, CMT

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STILL A BULL, BUT LOOKING OVER OUR SHOULDER

STILL A BULL, BUT LOOKING OVER OUR SHOULDER

Editor’s note: This report was originally published by Phases & Cycles on November 21, 2013 and is reprinted here with permission.

Our last Market Comment pointed to a market that “has plenty of fuel”, but may need a rest. We also said “in bull markets, surprises occur to the upside”. Indeed, despite the growing need for a correction, the bull has turned its back on a rest period and decided to plough its way higher.

The U.S. indices, accompanied by a newcomer, the S&P/TSX Composite Index, are rallying once again to new bull market highs. All trend-lines are intact and the 50- and 200-day Moving Averages are resolutely following the indices higher. If you are a bull, it may seem “all clear now”. But is this correct?

Despite strong market performance, there is growing evidence that the market may come under some selling pressure. The latest sentiment data (courtesy of Investors Intelligence) paints

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Contributor(s)

Ron Meisels

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INTERVIEW WITH RON MEISELS, CMT

INTERVIEW WITH RON MEISELS, CMT

What led you to look at the particular markets you specialize in?

I began using technical analysis when my broker recommended a number of stocks based on their Fundamental Research and none worked out. He subsequently sent me a report with a chart and since I am visually oriented I was immediately attracted. This was 43 years ago and I am still making money.

Do you look at any fundamental or economic inputs to develop your opinions?

The stock market is a leading indicator to the economy and therefore this input has a low priority for me. As to fundamentals, I must know the sector and business of the stock we recommend since different sectors behave well at certain points in the cycle. For example, we are just entering into a period when the energy sector and its stocks should outperform. Aside of this, my opinion is strictly based on technical and behavioral

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Contributor(s)

Ron Meisels

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WHAT IS ABSOLUTE RETURN?

WHAT IS ABSOLUTE RETURN?

Editor’s note: This article was originally published at: http://go.mta.org/3793 and is reprinted here with the permission of the author.

Relative versus Absolute Return? Conventional investment strategies and managers seek to beat a pre-defined benchmark or basket of market indices across one or more asset classes and hence they measure themselves relative to this benchmark or index. This is true of most mutual funds and financial advisors and planners. Thus, if the benchmark, say the S&P 500 index is down 39% as it was in 2008, the manager or strategy is considered successful if it “beat” the market, even if they generated a 35% loss that year. A relative return manager, hence, has a built in excuse for not performing well with your investment, i.e. the markets were at fault.

Absolute Return Strategies: In contrast to relative return strategies, an Absolute Return strategy seeks to generate a positive return over a predefined period

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Contributor(s)

Robert F. Palmerton, Jr., CMT

Puneet Gupta

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HOW TO PLOT FIBONACCI RETRACEMENTS FROM EXTREME PRICES TO SET SYNTHETIC 100% TARGET

HOW TO PLOT FIBONACCI RETRACEMENTS FROM EXTREME PRICES TO SET SYNTHETIC 100% TARGET

Editor’s note: This article was originally published as a Charts Newsletter for Thomson Reuters Eikon in October 2013 and is reprinted here with the permission of the author.

Plot Fibonacci Retracements from Extreme Prices to Set Synthetic 100% Target – Equity Index

Fibonacci ratios are essential for analyzing the health of trends by gauging both corrections and projections in all asset classes. They apply well to all asset classes, whether equities, commodities, FX, or fixed income.

When used in a disciplined manner, Fibonacci ratios can enhance your trading and analytical skills. In this article I am analyzing the use of the Fibonacci Retracements tool to generate future targets.

Typically, traders use Fibonacci retracements from the lowest low to the highest high of a specific range of a time series to gauge the magnitude of retracements. Let’s turn this around and set some targets for ongoing trends instead.

The conditions for this method are:

  1. the formation of

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Contributor(s)

Cornelius Luca

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APPS FOR TECHNICIANS

APPS FOR TECHNICIANS

Apps are a rather recent development but they have become an essential part of life for many. There are apps for everything but few professionalquality apps that help technical analysts do their jobs. Three useful apps for technicians are listed below.

Some apps focus on the current market. One of those is Bollinger Bands ®, a free app that provides current market quotes and charts plotted in candlestick, Bollinger Bar, traditional bar, or line chart format. Several dozen indicators, including the Bollinger Band suite of indicators with Percent b (%b) and BandWidth, moving averages, and volume weighted MACD, can be added to the charts.

Voice command can be used to modify the chart display, date

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Contributor(s)

Michael Carr, CMT

Michael Carr, CMT

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INTERVIEW WITH ROBERT SCHITTLER

INTERVIEW WITH ROBERT SCHITTLER

How would you describe your job and what led you to look at the particular markets you specialize in?

I am the Chief Technical Analyst of Raiffeisen International. My bank is the investment-banking spearhead of a locally well settled consumer bank, with a focus on Central & Eastern Europe and some offices in Asia, the U.S. and U.K. My team deals with most asset classes, cross-rates, bonds, stock- and commodity-markets worldwide.

We take a global view before going asset specific. Our work is based on my basic principles of charting together with both macro and micro economic analysis, an understanding of derivatives including ETFs and CFDs, and portfolio-management. I have published a 1,200-page overview with the title “Das Große Buch der Börse” (The Big Book of Exchange). Our understanding of technical analysis and knowing how to work with charts improves the quality and transparency of our research.

Which technical indicators do you rely

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Contributor(s)

Robert Schittler

Mukul Pal

New Educational Content This Month

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