From the Editor’s Desk
Last month’s newsletter included an article by William Sarubbi, MBA, CMT entitled, “First-ofthe-Month Bias Continued.” This short research piece updated some work originally done by Arthur Merrill, CMT. Shortly after that issue was sent to the publisher, Arthur Merrill passed away. We are fortunate that he left us with a lifetime of work to update, and due to the statistical rigor he applied to indicators, we should expect to find that his work is just as valid today as it was when he undertook his efforts.
In this month’s newsletter, we present some insight to the great life Arthur lived. Next month, we hope to be able to publish a very small amount of his original work. Arthur tested more ideas than most of us will have in our lifetimes. Robert Colby, CMT, is an authority on indicators, having written an extremely detailed book on the subject, The Encyclopedia of Technical Market Indicators. In that book, Arthur Merrill is cited 23 times in the index, more than twice as often as any other individual, and second only to Ned Davis Research, an entire company dedicated to market research.
We also have a summary of the recent brainstorming session in San Diego and a biography of Garfield Drew along with examples of several indicators and their applications to the stock market. We hope you enjoy this issue.
Cordially,
Mike Carr, CMT
Technically Speaking Editor
What's Inside...
What an Honour
by Jordan Kotick, CMTTalk about market timing. To be able to address you as President in my first column when the MTA and the CMT are literally on the dawn of a new professional era, well, it is indeed an honour. There...
Mission Accomplished
by John R. KirbyI hesitate to use that headline because of the obvious political overtones. But I cannot think of more appropriate words to describe what the MTA has done or a group that is more deserving of this...
Two Tributes to Arthur Merrill, CMT (1906-2005)
by Arthur Merrill, CMT & Robert Prechter, CMT & John R. McGinley, CMT & Barbara I. GompertsBob Prechter, CMT, summed up the life of this great man in a poignant memory: “Arthur Merrill, a pioneer of technical analysis, died on January 4, 2005 at the age of 98. I will always be grateful...
“Information Memo New York Stock Exchange, Inc. 20 Broad Street New York, NY 10005 Member Firm Regulation Number 05-9 January 31, 2005
SUBJECT: RULE 344 – RESEARCH ANALYST QUALIFICATION EXAMINATION (“SERIES 86/87”) FOR TECHNICAL RESEARCH ANALYSTS The New York Stock Exchange has submitted a rule filing with the Securities...
Garfield Albee Drew
by George A. Schade, Jr., CMT“Simplicity or singleness of approach is a greatly under-estimated factor of market success.” “Stocks don’t sell for what they are worth, but for what people think they are worth.” –...
Garfield Drew on Odd Lot Indicators
Drew disagreed with the popular misconception, highlighted by the media, that odd lot investors were “always wrong.” He advocated a deeper analysis: Odd-lot trading represents speculative...
The Rate of Change (ROC) Indicator
by Michael Carr, CMTThe Rate of Change (ROC) indicator calculates the difference between the current price and the price at some point in the past. The difference is usually expressed as a percentage. ROC is commonly...
Snowbound in San Diego with the MTA
by Barry M. Sine, CFA, CMTOver the weekend of January 21-23 the MTA hosted it first annual mid-winter retreat in warm and sunny San Diego, CA. Our timing was perfect as the worst blizzard of the century was pummeling the East...
Frequently Asked Questions (FAQ) of the Chartered Market Technician (CMTSM) Program
These Frequently Asked Questions include information about the CMT exams and program, as well as study advice for all levels, grading information, etc. Please let us know if there is a FAQ that you...
CMT Stats
As of January 31, 2005 there are 342 people who have received the CMT designation. Of this number, 47 have both the CFA and CMT designations. These numbers are not a misprint. There was an article...
Talk about market timing. To be able to address you as President in my first column when the MTA and the CMT are literally on the dawn of a new professional era, well, it is indeed an honour. There is much to be said about what lies in front of us and over the forthcoming months, all these conversations will be had. For now, I want to simply thank two people from our organization, without whom, this monumental announcement from the NYSE would simply not have come to fruition: Ralph Acampora and John Kirby. Without Ralph’s energy, vision, idea and heart, we would not have had this decision. Without the outstanding strategies, insight and organization from John Kirby, we would not have had this decision. If you think that the NYSE decision is good for technical analysts, good for the MTA, good for the CMT, please thank both of these
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Contributor(s)

Jordan Kotick, CMT
Bio Coming
I hesitate to use that headline because of the obvious political overtones. But I cannot think of more appropriate words to describe what the MTA has done or a group that is more deserving of this victory. By now you probably know that the NYSE has filed a rule interpretation with the SEC that recognizes CMT 1 and CMT 2 as an alternative to the Series 86 examination required for all financial analysts employed by member firms. Without this exemption, many of you would have had to take an exam that was entirely irrelevant to the practice of your profession. However, the significance of this recognition of the CMT and the MTA by the NYSE is far broader than that. The text of the initial memo from NYSE is reprinted below. But the more important words were in the 28 page document filed with the SEC. It said in part… “Exchange staff
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 R. Kirby
Bio
Bob Prechter, CMT, summed up the life of this great man in a poignant memory: “Arthur Merrill, a pioneer of technical analysis, died on January 4, 2005 at the age of 98. I will always be grateful to Arthur for hosting my wife and me in the basement of his home for numerous hours in 1978 and 1979 while we photographed over 300 hand-prepared illustrations for our books, Elliott Wave Principle and R.N. Elliott’s Masterworks. Arthur developed the photos in his darkroom, saving us the money we didn’t have to spend on book production. He also gave me invaluable advice about the virtues of owning one’s specialty books rather than going through an established publisher, to better insure a long-term success. Arthur’s wife Elsie was always impeccably cordial. Arthur authored many small books, which he published on his own press. He investigated seasonal patterns and the Wave Principle and wrote Filtered
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)

Arthur Merrill, CMT
Bio

Robert Prechter, CMT
Robert Prechter is CEO of Elliott Wave International, an independent market analysis firm. He is also Founder of Socionomics Institute. Robert has written 20 books on finance, beginning with Elliott Wave Principle in 1978, which predicted a 1920s-style stock market...

John R. McGinley, CMT
John R. McGinley, CMT is Editor of TECHNICAL TRENDS, the Indicator Accuracy Service. For more information, please contact John at jmcgoo@post.harvard.edu or

Barbara I. Gomperts
Barbara Gomperts was the long-time production coordinator for Technically Speaking, among other marketing and publication-related functions, working out of Marblehead,
SUBJECT: RULE 344 – RESEARCH ANALYST QUALIFICATION EXAMINATION (“SERIES 86/87”) FOR TECHNICAL RESEARCH ANALYSTS The New York Stock Exchange has submitted a rule filing with the Securities and Exchange Commission to provide for an alternative qualification standard for Part I (Series 86) of the Research Analyst Qualification Examination for analysts that prepare technical research reports. This alternative is similar to the CFA exemption approved by the SEC (see NYSE Information Memo 04-16, dated April 1, 2004). The exemption would permit research analysts who have passed Levels I and II of the Chartered Market Technician (“CMT”) Program and who only prepare technical research reports, to obtain an exemption from the Series 86 examination. Similar to the CFA exemption, an analyst granted an exemption from the Series 86 examination will be qualified as a Research Analyst only after passing Part II (Series 87) of the Research Analyst Qualification Examination and the prerequisite examination
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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.
“Simplicity or singleness of approach is a greatly under-estimated factor of market success.” “Stocks don’t sell for what they are worth, but for what people think they are worth.” – Garfield Drew As demonstrated in the pithy wisdom quoted above, Garfield Drew was a man of remarkable insight. He has been identified as “the man chiefly responsible for [the] popularization, refinement and interpretation, the Christopher Columbus of the Odd Lot Theory.” To Time magazine he was the “Small Investor’s Boswell.” (Editor’s note: a “Boswell” is a constant companion and observer, referring to the 18th century English author James Boswell.) Drew attended Harvard College and began his professional life as a bond statistician during 1929, at the very beginning of the challenging investment environment created by the Great Depression. The year 1935 was one of the ten years Martin Fridson wrote of in It Was a Very Good Year, as the DJIA rose 47.66% and
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
George A. Schade, Jr., who holds a Chartered Market Technician (CMT) designation, has written extensively about the people and innovations that have advanced the field of technical analysis within financial markets. A member of the CMT Association since 1987, he has written...
Drew disagreed with the popular misconception, highlighted by the media, that odd lot investors were “always wrong.” He advocated a deeper analysis: Odd-lot trading represents speculative activity, as it is carried out by small investors. Odd-lot investors don’t initiate trends. They join a rising or a declining trend after the trend has started and has become well-established. The balance of odd-lot buying and selling should be maintained. A ratio of Sales/Purchases is the best representation of the balance. Odd-lot indexes have an excellent record in pointing the climactic bottoms, but not as good in pointing the tops. It is not the levels of odd-lot buying and selling that count, but rather the trend of sentiment indicated by the balance of odd-lot trading that is important. Pay attention to sudden and significant changes in the levels of odd-lot buying and selling, as a change in trend may be occur. Odd-lot indexes are not perfect indicators.
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.
The Rate of Change (ROC) indicator calculates the difference between the current price and the price at some point in the past. The difference is usually expressed as a percentage. ROC is commonly displayed as an oscillator. As prices increase, ROC rises; as prices fall, ROC declines. ROC may be calculated over any timeframe and using data from any time period. According to Steven B. Achelis in Technical Analysis from A to Z, the most popular time periods are the 12- and 25-day ROC for short to intermediate-term trading. He states that these time periods were popularized by Gerald Appel and Fred Hitschler in their book, Stock Market Trading Systems. Achelis further notes that the 12-day ROC tends to be very cyclical and finds it useful to anticipate price changes based upon the leading nature of this indicator. At Financial Trend Forecaster (www.fintrend.com), Editor Tim McMahon applies ROC to the NASDAQ and
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
Mike Carr, who holds a Chartered Market Technician (CMT) designation, is a full-time trader and contributing editor for Banyan Hill Publishing, a leading investment newsletter service. He is an instructor at the New York Institute of Finance and a contributor to various...
Over the weekend of January 21-23 the MTA hosted it first annual mid-winter retreat in warm and sunny San Diego, CA. Our timing was perfect as the worst blizzard of the century was pummeling the East Coast with over a foot of snow. The retreat was attended by about 50 individuals who gathered for round table sessions and keynote presentations by two leading technicians. The keynote lunch sessions were presented by John Bollinger and Richard Russell, perfectly underscoring how both the “art” and “science” camps of our field have made major contributions to our craft. Attendees represented a mix of traders, sellside analysts, consultants and portfolio managers. Topics ranged from the presidential cycle, to DeMark to Elliott. In his keynote speech, John Bollinger paid tribute to the decades of contributions by the late Art Merrill. John explained how Mr. Merrill was a major contributor to our field, despite the fact that
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)

Barry M. Sine, CFA, CMT
Barry M. Sine, who holds a Chartered Market Technician (CMT) designation, is the Managing Director of Equity Research at Dawson James Securities. He previously served in the same role at Drexel Hamilton, LLC, in the firm's Research Division. Barry was formerly Director of...
These Frequently Asked Questions include information about the CMT exams and program, as well as study advice for all levels, grading information, etc. Please let us know if there is a FAQ that you wish to see answered, as we will update this report from time to time. Q. What is the length of the exams? Level 1 – 2 hours Level 2 – 4 hours Level 3 – 4 hours Q. What is the format of the exams? Level 1 – 120 multiple choice questions Level 2 – 150 multiple choice questions Level 3 – essay – the entire exam is worth 240 points and candidates are allowed 240 minutes, so candidates should pace their progress so that they do not spend too much time on minor questions and so that they do allow time for more time consuming questions. Q. What is required of the candidate in the exams? Level 1 – Primarily definitions, this exam is designed
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.
As of January 31, 2005 there are 342 people who have received the CMT designation. Of this number, 47 have both the CFA and CMT designations. These numbers are not a misprint. There was an article written a few months ago that said there were 350 people who had both CMT and CFA, but it was obviously incorrect. TO ALL CFAs – please make sure you are in the count of those who have received CFA and CMT designations. Check your record in the MTA database to see if your CFA is there. If not, send an email to cmt@mta.org asking to have it added to your name. The Accreditation Committee reports the following passing rates for the November 2004 CMT exams: CMT Level 1 76% CMT Level 2 61% CMT Level 3 33% Congratulations to the following who were granted the CMT designation since the last report in the January/February 2004 issue of Technically Speaking: Amir Arif Richard
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.
New Educational Content This Month
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May 24, 2023
The Four P’s of Investing
Presenter(s): David Lundgren, CMT, CFA
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May 17, 2023
Using Technical Analysis to Develop Options Trade Ideas
Presenter(s): Greg Harmon, CMT
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April 28, 2023
Using Market Timing to Enhance Returns
Presenter(s): Tom DeMark, Larry Williams