Technically Speaking, February 2019

So far, this year has been dominated by the partial government shutdown. Does it affect the markets? Well, maybe indirectly. New issue IPOs are held up due to a lack of resources at the regulators. Tax refunds may be delayed, so investors might be a little cash tight. And most important of all, the shutdown and specter of a second downgrade of U.S. sovereign debt looms large. The deadline to raise or suspend the debt ceiling is just weeks away.

Volatility in stocks remains high, bitcoin seems to be fading from interest, and for the first time in a long while gold shows signs of life. Naturally, the flattish yield curve, Brexit, and slowing global growth made the pundits warn of gloom and doom. Don’t tell Mr. Dow and Ms. Nazzie (or their Brazilian cousin Bovie).

This month, the theme here centers on jobs. No, not jobs in the general economy, but jobs for technicians. We surveyed a group of technicians who took the plunge and went out on their own. After all, the number of direct, salaried jobs on the Street has dwindled – we’ve also got an article about a TA veteran who made that very point and told us what he did about it. The bottom line is that technical analysis is a very valuable skill to have, and where there’s a will, there’s a way to use it to make a living.

Next, Dan Russo, CMT, offers his views on risk management, which is a very important topic for all of us.

Of course, we’ve got news from around the association with chapter reports, CMT information, this month’s interview with George Schade, CMT and a review of the Mike Epstein Award presentation to Dave Lundgren, CMT, CFA by Julie Dahlquist, Ph.D., CMT.

– Michael Kahn, CMT

What's Inside...

President's Letter

Scott G. Richter, CMT, CFA, CHP

Symposium Time: Learn – Connect – Grow

The 2019 CMT Association Annual Symposium will take place April 4-5 in New...

What the Downfall of LTCM Taught Me About Risk Management

Dan Russo, CMT

This article was originally published on ChaikinAnalytics.com last November and is reprinted here with permission.

Let me share a cautionary...

Chicago Chapter Meeting Review

Jim Erdmier, CMT

2018 was a year of star-studded events for the Chicago CMT Association chapter, culminating on November 8^th with JC Parets,...

Hanging Your Own Shingle

Michael Kahn, CMT

Far from being a roofer, hanging a shingle means opening an office or business, especially in a profession....

A View of the TA Business from a Veteran

Michael Kahn, CMT

When asked what he thought about the career path for market technicians, industry veteran Rick Bensignor said, “I wouldn’t in...

Minnesota Chapter Meeting Review

Mahesh Johari, CFA

Fred Meissner, of the FRED Report, presented to our group on January 15, 2019. Fred has a 36-year career in...

George Schade, CMT Interview

George A. Schade, Jr., CMT

Please tell us what you do professionally. I am retired now from a 42-year career practicing law and serving as...

Mike Epstein Award

Julie Dahlquist, Ph.D., CMT

The Technical Analysis Educational Foundation awarded the 2018 Mike Epstein award to Dave Lundgren. Dave holds both the CMT and...

2019 CMT Curriculum Texts

Stanley Dash, CMT

The 2019 CMT Program texts are now available from Wiley at https://www.efficientlearning.com/cmt/.

This year, in addition to keeping the...

President's Letter

Symposium Time: Learn – Connect – Grow

The 2019 CMT Association Annual Symposium will take place April 4-5 in New York City. We will gather with 250-300 peers and thought leaders from around the world and discuss markets, share ideas about all things technical, and size up the industry.

Bill Kelleher, Tyler Wood, Alvin Kressler and the staff at the CMT Association have a fantastic program lined up with prominent practitioners from around the globe. This year’s event theme is Behavioral Finance. It’s a timely and important subject to understand. In fact, Richard Thayer received the Nobel Prize in Economic Sciences in 2017 for his work on Behavioral Finance; even academia recognizes the importance of this topic.

I’ve made my plans to attend and I’m excited about our premier event of the year! Please consider joining us – you’ll be glad you did.

Now, before you dismiss my message as some advertising blurb that I’m forced to say because I’m on the Board, please know, I mean what I say when I tell you that the time, effort, energy and overall costs are worth showing up at the symposium.

Why do I feel strongly about you attending?

This is a smaller, warmer, interactive conference, very different from an average industry convention.

You’ll hear from industry leaders. More importantly, you’ll likely get to meet them and talk directly with them if you’re motivated to do so.

You will advance your learning of TA, markets, and our organization. We’ll cover a broad landscape of topic categories, from Behavioral Finance and Artificial Intelligence/Machine Learning, to the current state of the markets, and new tools/methods that may help your investing/career.

You can engage and chat with members of the CMT Association Board and staff. If you want to make your voice heard by the Board, this is the chance to meet up face to face! Learn about our growth plans. Get involved with our governance and future direction.

Lastly, you’ll make some enduring friendships. I’ve been lucky to have become very good friends with many of the top technicians and market analysts in our business because we met several times at the annual Symposium and spent some quality time together (at the gala dinner, the reception, or just between speaker sessions).

Make an investment in your learning and your career by attending. You’ll be glad you did!

Also, please look me up if I can help you navigate the event, or if you’d like an introduction to one of our members or staff. I’ll be glad to help you.

Contributor(s)

Scott G. Richter, CMT, CFA, CHP

Scott Richter, CMT, CFA, CHP is a senior portfolio manager for Westfield, which manages over $4B in AUM. He is the lead portfolio manager for alternative assets and is also responsible for investments in the energy and utility sectors. He was formerly...

What the Downfall of LTCM Taught Me About Risk Management

This article was originally published on ChaikinAnalytics.com last November and is reprinted here with permission.

Let me share a cautionary tale about risk management.

I will never forget the story of the hedge fund, Long Term Capital Management. I was a senior in college and very interested in a career on Wall Street. One of my teammates from the hockey team, a year older than I, had just started working at LTCM that summer. This was an amazing opportunity for him. The firm employed Nobel Prize winners and was run by arguably one of the most successful bond traders on the street.

After a few years of success, LTCM was the envy of Wall Street. Investors were clamoring to have the fund take their money, and college grads with an eye toward the Street sent resumes to LTCM in the hopes of landing a position, any position. But then, the unthinkable happened and the fund began to lose money – and, given their leverage, ultimately shut down in spectacular fashion. The story has been well documented so I am not going to rehash it here. If you are interested in the full story, I highly suggest reading “When Genius Failed,” by Roger Lowenstein. I actually read it more than once.

It turns out that this experience was a great opportunity for my friend, just not in the way that you (or he) would think. If he were paying close attention, he would have seen that in order to have success and longevity in investing, you have to manage the risk. It always struck me as odd that these titans of Wall Street and Nobel Prize winners did not have a risk management system in place that would prevent them from imploding.

Every Monday, we host a call for our clients where I give my current views on the equity market, as well as other asset classes whose price movements have an impact on U.S. equities. Following my overview, we take on a topic which we think is important to the process of selecting and investing in equities. These topics range in scope from volatility, to earnings season rundowns, to the use of our proprietary trading signals.

What then follows is an open question and answer session where clients ask about specific stocks that they are considering (usually for purchase). However, I was recently asked about my process for managing risk and if there is a predetermined price at which I admit that the trade is not working and pull the plug. The short answer is YES!

I am happy to report that what followed was easily one of the liveliest sessions that we had since I began hosting the call in March. Our 60-minute call lasted for over two hours. I walked through how I manage risk, both for individual trades (ATR stops), as well as for strategic portfolio construction.

Why Risk Management is One of the Biggest Benefits of Having Technical Analysis as Part of the Investment Process

Let’s start with portfolio construction. As the S&P 500 was making new highs in September, I highlighted key levels, which if broken should prompt investors to consider changing their investment strategy. As the market began to roll over, I identified 2,873 as an important level and when it was broken, I began to adopt a view of “being bullish but with caution.” When pressed on what this meant, I pointed out that if investors were going to buy stocks, they should consider names with lower betas. As the market continued to fall, this view became more solidified. When the 200-day moving average was broken and began to turn lower, my conviction in this stance grew stronger.

My rationale for this view was rooted in technical analysis. The breaking of key support levels and the downturn in the 200-day moving average told me that something had changed in the dynamic of the market. While I wish I had a crystal ball and could say for sure that the market was either going to snap back quickly or plunge further, this magical ball does not exist (at least I have never seen it). Given the change in the market, I wanted to help clients position in the best possible way for them to participate on the upside (should the market move higher) but also have a measure of protection (should the market continue to fall as it has). The stocks with lower betas should, in theory, participate on the upside but not to the same degree and if weakness continued, these stocks would decline less than the market and certainly less than the higher beta names that had driven the rally.

In my daily notes to clients, I was focused on names in the Health Care, Utilities, and Consumer Staples sectors for long ideas. I get it, it’s not as much fun to own AEP rather than AMZN or DAR over DE but as far as I am concerned, the fun comes from beating the market. And yes, this could mean that your stocks go down less than the benchmark. And yes, changing the structure of your portfolio as the dynamics of the market change is a form of risk management.

Another form of risk management is at the individual stock level. I tell our clients that they should know where they will get out of trade that is moving against them before they get in. This is counter-intuitive to everything that we have been taught about success. Star athletes envision great outcomes before they take the field. We are told to be positive, to not think about what can go wrong. But in investing it is extremely important to think about what could go wrong. It is equally, if not more, important to preserve your capital as it is to grow it.

Whenever I suggest a stock as a bullish idea, I always include a price below the entry point where the trade should be reevaluated. This is the “stop.” This is the price where the market is telling you that you are wrong. This is the price where you can sell the position and reevaluate it with a clear head. It is rooted in technical analysis. You can always get back in if your process tells you that that is the best option at the time.

You are almost always going to be able to find a reason to stay in the trade once you have the position. You are likely going to search for the one datapoint that “proves” that you, not the market, are correct in sticking with the trade. You may even be enticed to add to your position just as the team at LTCM did. This speaks to our biases which need a full article of their own.

From Wikipedia:

One LTCM partner commented that because there was a clear temporary reason to explain the widening of arbitrage spreads, at the time it gave them more conviction that these trades would eventually return to fair value (as they did, but not without widening much further first).

This is why the combination of fundamental and technical analysis is such a powerful tool for investors. Price (i.e. technicals) is a discounting mechanism and is likely to move before the fundamentals change.

We all have different goals and reasons for investing, so I am not saying that you should use the exact same methods of risk management that I advocate in my notes to clients. But you should have a method. You should have a strategy that takes you out of a losing trade when it is clear that the odds don’t favor a rebound.

Contributor(s)

Dan Russo, CMT

Dan Russo, CMT is a portfolio manager and director of research at Potomac Fund Management. Prior to joining Potomac in March 2021, he was the Chief Market Strategist at Chaikin Analytics. Dan was an institutional sales professional for more than a decade at...

Chicago Chapter Meeting Review

2018 was a year of star-studded events for the Chicago CMT Association chapter, culminating on November 8^th with JC Parets, CMT, of All Star Charts. Also presenting at the meeting was Tom Bruni, who is a technical analyst at All Star Charts. As per usual with meetings featuring JC, the house was full with 47 members and guests. Seats were in shorter supply than liquidity in the Greek bond market.

Convening in the original conference room at the Chicago Board of Trade, JC and Tom covered a wide array of markets. Weakness in regional banks and strength in palladium were two take-aways and the trends in those markets continued in the following weeks.

The Chicago Chapter was fortunate last year to feature presentations by Jim Bianco, CMT, Katie Stockton, CMT, Steven Quimby, Richard Ross, CMT, Stanley Dash, CMT, Robert Pardo, Andrew Thrasher, CMT, Gina Martin Adams, CMT and Stan Harley.

We also started a Book Club in 2018, and we read and discussed “Reminiscences of a Stock Operator” by Edwin Lefevre, “A History of the United States in Five Crashes” by Scott Nations, “The Hour Between Dog and Wolf” by John Coates, and “Market Mind Games” by Denise Shull.

Chicago Chapter Meeting JC Parets

JC Parets, CMT speaking at the Chicago Chapter Meeting

Contributor(s)

Jim Erdmier, CMT

Jim Erdmier, who holds a Chartered Market Technician (CMT) designation, has been trading privately and institutionally for 10 years in equities, FX, and futures. He is pursuing a degree in Finance and Computer Science at DePaul University. Jim is Co-Chair of the...

Hanging Your Own Shingle

Far from being a roofer, hanging a shingle means opening an office or business, especially in a profession. In the first half of the 1800s, lawyers and later doctors and businesses, used shingles for signboards to advertise that they were open for business.

For many of us, working in the investment arena often means finding a job in a big Wall Street firm or joining a national chain of investment advisors or stock brokers. You go to the office, work some magic with Excel and Word, maybe clear something through compliance to post on Twitter, and every two weeks a paycheck appears in your bank account.

It was a great gig…for a while. Now, with the employment landscape in our field changing constantly, if not shrinking outright, these jobs are getting harder to find. Sure, you can “apply your skills” as an insurance salesman working solely on commission but that’s not nearly as fun as advising clients to short Bitcoin in early 2018.

Increasingly, the entrepreneurial spirit flows through many of us. Why not put the results of labor in our own pockets instead of working for “the man.” But, as any good technician knows, big rewards often come with big risks.

For many of us, however, the decision to go out on our own is made for us. Layoffs, bankruptcies and mergers forced us to find something else to do for a living. Of course, we want to stay in the field we’ve studied for so long but no longer can you leave your job at Bank A and simply run over to Bank B. They’re laying employees off, too.

Now what? Short of driving for Uber, the only real choice is starting your own company. Put yourself out there to sell your services on your own. And yes, hang a proverbial shingle outside your (home) office to tell the world.

We’re not going to get into the how’s of starting a business here. You can find all the resources you want online. Rather, we want to look at the why’s of doing it. And even that may be a moot point if you have no other way to make a living in your chosen field. Fortunately, in an online world, you can be a tiny little company presenting a great big face to potential customers. There actually is an app for that.

I polled a small group of technicians who took the plunge and set up their own shops. Here are their answers, some more loquacious than others. The overwhelming feeling was that it was the best move they ever made.

JC Parents, All Star Charts

What business are you in (relating to technical analysis)?

Technical analysis research and commentary

What were you doing before you decided to go out on your own?

Managing a Hedge Fund

What made you choose the business you decided to open?

Unserved market

How has it worked out vs. expectations?

It has exceeded all expectations in terms of reception, growth and global reach. Personally, it has been incredibly rewarding and an educational journey.

If you had to, would you do it over again? Why?

I would have done it earlier because I did not realize the amount of appetite for a top/down global technical approach to market.

What advice do you have for members thinking of going out on their own?

It is a lot more difficult that one can imagine. It has less to do with the skills and experience and more to do with awareness for your product. Creating awareness for what you’re doing and building that audience is the hardest part. I had already done that for 6 years before making the move

David Settle, Market Scholars

What business are you in (relating to technical analysis)?

Technical analysis education and commentary website

What were you doing before you decided to go out on your own?

Before going on my own, I was basically doing the same work but for another company.

What made you choose the business you decided to open?

TD Ameritrade decided to close their premium education offering and instead offer a free, licensed content, the timing was perfect to offer an alternative to clients who are still willing to pay a premium for application-based education.

How has it worked out vs. expectations?

The end result so far, only a year into it, has been outstanding. My workload has increased as I now deal with website, marketing and other business concerns. But, the compensation has been far greater and I was able to fully unlock what I perceived to be my personal value. I now have the time and flexibility to help out coaching high school basketball and can make decisions without having to run them through committees to gain approval.

If you had to, would you do it over again? Why?

YES! It’s given me the ability to make my own decisions and completely unlock my personal value in the marketplace.

What advice do you have for members thinking of going out on their own?

Get help. On the legal end and the tax/financial end. I used a Small Business Resource Center in my local area and it helped out tremendously. Plus, get to know digital marketing. It’s a great way to get your name out there without having to spend a lot of money. It does take a lot of time and effort and it can be a slow grind but once the organic following grows, the ROI is much better.

David Keller, Sierra Alpha Research

What business are you in (relating to technical analysis)?

I run an independent research shop helping active investors to manage risk through market awareness.

What were you doing before you decided to go out on your own?

I ran an institutional technical research department at Fidelity.

What made you choose the business you decided to open?

I always worked for larger firms so was very intrigued by the entrepreneurial challenge. The work/life flexibility was compelling for me, also the opportunity to start something completely new. I also felt I could take advantage of disruption in financial research to find some underserved niches.

How has it worked out vs. expectations?

I’ve had a blast building up my firm even though it’s not always been the easiest path. Nothing more satisfying than building something from scratch and seeing it start to work. Biggest challenge is prioritizing work and travel vs. personal and family obligations. I no longer have a boss to blame things on!

If you had to, would you do it over again? Why?

Absolutely. I was nervous when I launched and it took me a while to get set up and start securing clients. Lots of uncertainty. Looking back now, I don’t know how I could have decided any differently- it’s been a fantastic ride and I’m just getting started.

What advice do you have for members thinking of going out on their own?

Meet people that have launched businesses in other industries, especially online businesses. So much to learn from others! It’s easy to get caught up in the details, so make sure you take time to step back and develop a long-term vision. Use UpWork for consultants- programmers, assistants, etc. Most importantly: take the plunge! “Do one thing every day that scares you.”

Ed Carlson, Seattle Technical Advisors

What business are you in (relating to technical analysis)?

Independent advisory, newsletter, and research

What were you doing before you decided to go out on your own?

Financial Advisor (Morgan Stanley)

What made you choose the business you decided to open?

I brought unique (Lindsay) analysis to the market and was able to take advantage of changes in the brokerage business brought on by the internet

How has it worked out vs. expectations?

I was very busy in the early years and enjoyed writing books and articles. However, its been a bit tougher to remain motivated over the last three years. I stopped marketing efforts, which caused business to slow.

If you had to, would you do it over again? Why?

Sure, it was very fulfilling

What advice do you have for members thinking of going out on their own?

Plan on doing a lot of marketing – maybe more marketing than actual research. You constantly need something new to attract attention.

Chris Kimble, Kimble Charting Solutions

What business are you in (relating to technical analysis)?

Chart based research, newsletter and website

What were you doing before you decided to go out on your own?

I started a financial planning practice in February of 1980 and sold the practice 26-years later to start my current company

What made you choose the business you decided to open?

Always fascinated with technical analysis I converted most of my book of business over to the Rydex fund family (due to them having short funds, ETF’s weren’t in play at the time). Other financial planners saw the results from my work and suggested that I create a new pattern analysis business.

How has it worked out vs. expectations?

For the first 3-years after selling the business I shared pattern analysis and trade ideas on my new blog. My goal was to build a following and show people that we had something that would work. After 3-years of working for free, I started selling my research. We have been blessed ever since in many ways as we have been able to help people all over the world and I love what I do. I am now in my 39th year in the business and I love it now more than ever!

If you had to, would you do it over again? Why?

I would do it all over again if given the chance. The opportunities to help people have never been greater and the tools to do so are beyond my expectations.

What advice do you have for members thinking of going out on their own?

I don’t know that I did it correctly in the beginning (working for free for three-years to build a base). I would do the same again, which means one needs to have some money available to them pay bills until starting to charge for your services. Can one start charging for research sooner? For sure. I would just be prepared that it can take a while to get decent cashflow coming in.

Contributor(s)

Michael Kahn, CMT

Michael Kahn, who holds a Chartered Market Technician (CMT) designation, is a seasoned financial services strategist, analyst, columnist, educator and speaker. Michael has been working with charts and technical analysis since 1986. He is the author of three books on technical analysis...

A View of the TA Business from a Veteran

When asked what he thought about the career path for market technicians, industry veteran Rick Bensignor said, “I wouldn’t in a million years recommend anyone try to make a living simply doing technical analysis. There is simply no market for it.”

This statement is not as dire as it looks and let’s state up front that Rick believes 100% in technical analysis. He simply acknowledged that the business has drastically changed since he read his first chart over 40 years ago.

This does not seem to be the type of article you expect to read in the CMT Association newsletter. But it is an important one. Let’s quickly shift to why.

In numerous interviews over the years, Bensignor usually offers one sharp insight, “Technical analysis is a skill, not a career.” What that means is that it is a tool people can use to do their primary jobs better.

TA improves one’s ability, but in and of itself it is not a profession, as evidenced by the number of Wall Street jobs that disappeared over the past few decades. The number of people employed with a salary just to do technical analysis has plummeted. He looked back on the “golden age” of the 1970s when Merrill Lynch had 17 technical analysts under Bob Farrell.

Technicians are often part of the first round during layoffs and only a handful of full-time salaried TA jobs still exist on the Street today. And the Internet does not help since there is so much “analysis” (quotes intended) available for free.

The little secret on the Street – which really is not a secret, at all – is that the goal of any sell-side research department is to get investment banking business. It is not to pick winners for investors. And since most Directors of Research have never been schooled in technical analysis – if not outright told by their college professors that it’s voodoo – they usually have no predisposition for having that role in their department.

Research departments are just a cost for the sell-side. The buy-side is a little more amenable to TA because they are interested in picking the right investments, but it is still a cost that drags on their returns.

Be a trader, an economist, a salesperson, or a fundamental analyst and use TA to make better-timed decisions and better market calls. For example, a sales trader who can read charts can also better filter the research he/she gets from the firm’s fundamental research analysts before presenting ideas to clients. This way, you increase the odds of investment success and build a better client relationship.

Even with all the shake-outs on the Street and the obstacles they created in his own career, Bensignor still loves strategizing and trading markets and doing the work he does for his institutional clients.

Rick is well-known as the former Morgan Stanley Chief Market Strategist. He was also the Head of Cross-Asset Trading Strategy at Wells Fargo Securities; Chief of Behavioral Market Strategy at Dahlman Rose & Co.; and Head of Futures, Commodities, and Technical Analysis sales and product development at Bloomberg, where he published the book, “New Thinking in Technical Analysis: Trading Models from the Masters.”

He hung out his own shingle in 2008 when he created a niche for himself as the founder and CEO of The Bensignor Group, a financial markets behavior consulting and corporate training firm. It sounds glamorous, but it is a bit more challenging than you think. For starters, without the backing of a large firm, you must become a jack-of-all-trades. You have to be your own network administrator, sales department, IT officer, back office department and, not least of which, the research department.

Rick thinks a technical analysis education can certainly help people in their careers. Study the masters and get a CMT if you deem it appropriate, but remember that in his view, TA is a skill – not a career to pursue. Use it to be better at whatever else you do in the investment world.

Contributor(s)

Michael Kahn, CMT

Minnesota Chapter Meeting Review

Fred Meissner, of the FRED Report, presented to our group on January 15, 2019. Fred has a 36-year career in investment finance spanning a variety of roles. His talk was about Advances/Declines and related indicators; he told us that the NYSE Composite is a better representation of the economy and marketplace than the narrower S&P 500 index.

As for specific technical tools, Fred talked about how the McClellan oscillator showed a bullish divergence early in 2018. However, a similar recent divergence has thus far shown to be a false signal. He also highlighted a recent very high reading of the Zweig Breadth Thrust indicator – in the past high readings have often been followed by retests of recent lows.

In the current environment, most sector A/D lines are making lower highs, but a few sectors show some positive relative A/D performance: Utilities, Foods & Staples, Household & Personal Product sectors. His current market view is that the stock market is mostly out of the woods, but investors should remain prepared for up to 20% declines in individual stocks. His book recommendation was the out-of-print “Stock Market Logic” by Norman Fosback. Fred also suggested the work of Larry Williams and Ian Notley, both of whom have his great respect.

Contributor(s)

Mahesh Johari, CFA

Mahesh Johari is an independent investor based in the Minneapolis area. He holds degress in mathematics and economics from the University of Illinois and the University of Arizona.

George Schade, CMT Interview

Please tell us what you do professionally. I am retired now from a 42-year career practicing law and serving as a trial court judicial officer. My involvement in technical analysis has chiefly revolved around the Market Technicians Association (CMT Association) in whose activities I was involved almost from the first day of my first MTA conference in 1987. In my first 20 years of membership, I served on every committee of the MTA. My legal background allowed me to serve in many ways and events. Today, I focus on the history of technical analysis and its preservation.

How did you get there? I graduated from law school in 1971. After serving in the military, I moved to Arizona, where I resided all my adult life.

My interest in financial markets began as a private investor when, in the spirit of helping my community, I bought shares in new local companies. In order to make better investment decisions, I chose technical over fundamental analysis because everyone seemed to be studying fundamentals. Technical analysis is also more concordant with my education and faculties of reasoning and objective understanding.

I attended national investment conferences and joined the MTA. As I learned more about technicals and met and worked with some of the people who significantly advanced this field, I gravitated to the study of the historical foundations of technical analysis. Although my career was in the practice of law, I became familiar with the financial industry as a securities and futures arbitrator and involvement in related litigation.

Who was an early mentor in your career? In the technical analysis field, Bob Prechter, John Bollinger, Gregg Morris, Michael Carr and the late Paul Desmond, have been important personal influences. These highly intelligent individuals have made invaluable contributions to the field and the association. It has been my pleasure to have worked with each of them.

What book/author was most influential in helping you understand TA? If I must select a single book, it would be John Murphy’s 1986 Technical Analysis of the Futures Markets. When this book was published, it was the most complete review of the field, articulately written, and well organized. I fondly remember first meeting John and discussing his book with him.

What do you like to do when you are not looking at markets? For the past 26 years, I have researched and written about the people who have made seminal contributions to technical analysis and the history of technical indicators. This work began with expanding the biography of Ralph Nelson Elliott and covered the work of Edson B. Gould, Jr., the development of the negative/positive volume index, three-steps-and-a-stumble rule, stochastics, advance-decline, and on-balance volume indicators. I am in the process of publishing an extended biography of Richard W. Schabacker. The purpose of this research and writing is to preserve the history of technical analysis.

Because of a strong interest in preserving the history and archival past of the field, for over two decades, I have worked to enhance the library of the Technical Analysis Educational Foundation. For the past year, I have chaired the foundation’s Library Committee. John Bollinger and I worked on what is to date the largest collection of historical materials donated to the foundation.

In 2017, I received the association’s Service Award, and in 2013, the Charles H. Dow Award for research on the history of the on-balance volume indicator.

What brought you to the CMT Association? I joined the MTA in January 1987, because I wanted to learn about technical analysis. Shortly thereafter, I was asked to be involved with the MTA Journal that later became the Journal of Technical Analysis. That work led to serving on every committee of the association, which continues to this day. Since 1993, I have been involved with the drafting, adoption, and implementation of a code of ethics. I am also a current member of the Ethics and Standards Committee.

What it the most useful benefit of membership for you? I count many useful benefits. I have had numerous opportunities to work with others in advancing the association, improve my interpersonal skills, see an organization move through dynamic phases, and meet outstanding individuals. Over 32 years, I have dealt with some highly intelligent, impressive, and devoted people and have met many of the people who have made technical analysis what it is today.

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 about...

Mike Epstein Award

The Technical Analysis Educational Foundation awarded the 2018 Mike Epstein award to Dave Lundgren. Dave holds both the CMT and CFA designations and serves on the Board of Directors of the CMT Association. In addition, he serves on the CMT Association audit committee, and chairs the organization’s advocacy committee, which works to increase investor awareness of the many advantages of incorporating technical analysis into the investment management process.

Not only has Dave been an advocate for technical analysis within the practitioner community, he has been a strong promoter of the teaching of technical analysis at the university level. He currently serves on the adjunct faculty at the Brandeis University International Business School, where he teaches a course on technical analysis. Through his position at Brandeis, Dave introduces primarily graduate students to the history and principles of technical analysis, as well as familiarizes them with the current practice of the field. Students explore how to use technical analysis to enter speculative positions, to set protective stops, and to time their exits.

Dave built his course on the foundation laid out by Charles Kirkpatrick, CMT, when he taught at Brandeis. He has also had the opportunity to work alongside Carol Osler, Ph.D., Program Director for the Lember Masters in International Economics and Finance, who has been a long-time supporter of technical analysis. Dr. Osler has a special interest in the use of technical analysis in the currency markets and authored “Head and Shoulders: Not Just a Flaky Pattern,” a classic paper supporting the use of technical analysis while working at the Federal Reserve Bank of New York.

Many of the students in Dave’s classes are international students. As he inspires these young people to explore technical analysis, they are then able to take their knowledge into their workplaces around the world. In 2016, Dave won the Brandeis IBS Excellence in Teaching Award. This award is presented each spring at Brandeis to individuals who have demonstrated passion, commitment, and outstanding contributions to the business school. How great it is for students to be exposed to field of technical analysis by such a gifted and inspiring teacher!

Currently, Dave is a portfolio manager, Vice President, and Director of Technical Research at Wellington Management. As a technical analyst, he monitors global equities and equity indices, as well as fixed income, currency, and commodity markets. In addition to reviewing traditional technical indicators, including oscillators, moving averages, money flows, sentiment gauges, and volatility, Dave personally developed a quantitative technical research process based on trend, momentum, and relative strength. Prior to joining Wellington Management in 2007, Dave owned and operated Breakaway Research, Inc., an independent research firm which he launched in 2004.

Dave has worked with the Technical Analysis Educational Foundation for a number of years, promoting the teaching of technical analysis at universities across the United States. The Technical Analysis Educational Foundation, Inc., established in 1993 as a non-profit organization known as the Market Technicians Association Educational Foundation, was renamed in 2018. The vision of the foundation is “to see college students learning technical analysis as an integral part of their finance education.” The twofold mission of the foundation is (1) to promote the education of undergraduate and graduate students in the field of technical analysis and (2) to support university faculty in learning technical analysis, developing curriculum that includes technical analysis, and conducting academic research

Dave was award the Mike Esptein Award at the Technical Analysis Education Foundation Annual Fall Fundraiser, which was held at the Yale Club in New York City. The event featured a panel discussion that included noted analysts David Keller, CMT, JC O’Hara, CMT, CAIA, and Julie Dahlquist, Ph.D., CMT, in addition to Dave Lundgren, himself. Abigail Doolittle, from Bloomberg TV, was the moderator. At Bloomberg, she reports on trading in stocks, bonds, commodities and currencies with an emphasis on charts and technical analysis .

In 2009, the Technical Analysis Educational Foundation established an annual award in memory of our late colleague Mike Epstein. Mike served the profession as CMT Association president, touching the lives of many technical analysts. Toward the end of his career, Mike was an adjunct professor at MIT, teaching technical analysis, arranging seminars, and touching the lives of many students. Each year, the Technical Analysis Educational Foundation presents the Mike Epstein award to the person who best exemplifies Mike’s goals for long-term sponsorship of technical analysis in academia and in practice!

Dave Lundgren (left) is pictured with Cody Tafel (right) and the TAEF’s Epstein Award

Contributor(s)

Julie Dahlquist, Ph.D., CMT

Julie Dahlquist, Ph.D., CMT is Professor of Professional Practice in the Finance Department at Texas Christian University (TCU). Previously, she served on the faculty in the business schools at University of Texas at San Antonio and at St. Mary’s University. Her teaching...

2019 CMT Curriculum Texts

The 2019 CMT Program texts are now available from Wiley at https://www.efficientlearning.com/cmt/.

This year, in addition to keeping the content robust and consistent with the goals of the CMT Program, special attention was given to the learning structure and reading flow of the texts, particularly Levels I and II. This should make the study process smoother and better support candidates in persevering through each level.

Here’s a summary of the changes for 2019:

In the texts for all three levels, the Learning Objective Statements (LOS) that appear at the beginning of each chapter have been rewritten to serve as a better guide to the critical points in the chapter. (The LOS are available in pdf on the Association website: Level I LOS, Level II LOS, Level III LOS.)

As noted in the front of each text:

A list of Learning Objectives appears at the beginning of each chapter. These are intended as a guide to the most important concepts discussed in the chapter. An effective study method is to read the Learning Objectives as an introduction to a chapter before beginning study of the chapter. After completing the chapter, review the Learning Objectives again and write a few sentences that demonstrate competence on that topic.

Candidates should also be aware that the specific points mentioned in the Learning Objectives are prime material for the exams, but there may also be questions drawn from any part of the text.

In the Level I and II texts, new chapters have been added and some older chapters have been removed. In some cases this represents better coverage of the same information; in other cases there is expanded coverage of a topic. You will find new chapters on markets, cycles, statistics and sentiment in both Levels I and II.

Also in the Level I and II texts, the chapters have been sequenced and regrouped into new sections to provide a better learning flow. (The chapters and sections in the Level III text have not been changed.) All sections have new introductions written to make for a more engaging reading experience. Finally, an index has been added to each of the texts.

Contributor(s)

Stanley Dash, CMT

Stanley Dash is the CMT Program Director at the CMT Association, a global credentialing body. In this role, Mr. Dash works with subject matter experts, candidates, and the Association’s members to maintain and improve the curriculum, the test experience, and the value...