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Technically Speaking, January 2007

From the Editor’s Desk

We start the New Year with a new look for Technically Speaking. Tim Licitra has been working hard to make this newsletter more visually appealing, and in the coming months he’ll continue to lead this effort. If you have any suggestions, don’t hesitate to contact him. As you’ll read throughout this issue, the MTA is trying to actively engage all its members in the business of the Association. This theme is found in articles by Charlie Kirkpatrick, CMT about the MTA Educational Foundation, the letter from Executive Director Tom Silveri, and the short note from our newly appointed Volunteer Czar, Fred Meissner. CMT. I hope you’ll consider contacting Fred and getting more involved – we need your help. Although we include a lot of MTA news, this month’s issue also presents some practical investment research and a brief article on trading psychology. Larry Connors from TradingMarkets.com recently completed some research on the best trading days of the month, and we are able to reprint that. This work could form the basis of a futures trading strategy or can

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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.

What's Inside...

From the Executive’s Desk

by Tom Silveri

Happy New Year to everyone! 2007 will be an exciting year for the MTA, and the Headquarter staff is looking forward to continuing to serve our Members and Affiliates with new and exciting...

Market Technicians Association Educational Foundation

by Charles D. Kirkpatrick

Summary The Market Technicians Association Educational Foundation formed as a nonprofit corporation in 1993. Its purpose is to encourage academia and university students into the study and acceptance...

Meet the MTA Staff

Jeanne Farrelly has been with the Market Technicians Association (MTA) since August 2004. She is the Web Presence Manager overseeing the functionality of the internal and external website. The...

The Fox, the Hedgehog, and the Economist

by Andre Ratkai, CFA

In a now famous 1953 essay on Russian author Leo Tolstoy, Isaiah Berlin resurrected the idea of dividing the world into people who were more like foxes, and those who thought like hedgehogs....

“Evidence-Based Technical Analysis” By David Aronson, CMT

by Michael Carr, CMT & David Aronson, CMT

In this thought-provoking work, David Aronson, CMT tests more than 6,400 technical analysis rules and finds that none of them offer statistically significant returns when applied to trading the...

When Do Money Managers Like to Buy Stocks? Here’s the Answer...

by Laurence Connors

Do money managers pile into the stocks at the end of the month in anticipation of 401k and savings money coming in? Well it looks like they do…big time! In 1999, Kevin Haggerty wrote about this...

Market Technicians Association Technical Analysis Internship Program 2007 Applications Now Being Accepted

Currently, we are accepting applications for the next MTA Internship Program – tentatively scheduled for early 2007. The course of study will include Stocks, Bonds, Futures and Options; and...

Internship Testimonial

by Larry M. Berman, CMT, CTA, CFA

Early in my career, I heard about the MTA’s internship program. I thought it could be the perfect launching point to my development as a professional technical analyst–as it turned out, it...

Volunteering for the MTA

by Fred Meissner, CMT

The new Executive Director of the MTA, and the Board, have asked me to become a “Volunteer Czar” for the membership, which would entail assisting Members and Affiliates who wish to volunteer to...

From the Executive’s Desk

From the Executive’s Desk

Happy New Year to everyone! 2007 will be an exciting year for the MTA, and the Headquarter staff is looking forward to continuing to serve our Members and Affiliates with new and exciting improvements to service throughout this upcoming year.

Starting in January 2007, you will see an announcement each and every month in this Newsletter as to additions we will be making to our library. We are committed to staying current for you with new books/reference material which we will highlight on the “What’s Hot” list of reading material. Check each month on our website (library section) where we will highlight recent library additions.

In addition, we are re-introducing our Internship Program under the guidance of Fred G. Schutzman, CMT and Gregory F. Homayoon. We believe this program has huge benefits in Networking/Learning for professionals just starting out. Some, like our Board Member, Larry M. Berman, CTA, CFA, CMT, were interns

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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Market Technicians Association Educational Foundation

Market Technicians Association Educational Foundation

Summary

The Market Technicians Association Educational Foundation formed as a nonprofit corporation in 1993. Its purpose is to encourage academia and university students into the study and acceptance of technical analysis. It is funded by private donations and is operated by a Board of Directors, partially from the MTA Board and partially from professors who teach and are familiar with technical analysis.

Concept

The growth and acceptance of modern finance theory began in the 1960’s. It excluded technical analysis as unworthy of study or use. Indeed, Burton Malkiel (of A Random Walk Down Wall Street Fame) said that it “shared a pedestal with alchemy.” The theory of efficient markets and random prices precluded the usefulness of charts or any study of price behavior (as well as fundamental information), and as a result technical was not taught in any university finance department. That opinion is changing, however, as the efficient market hypotheses and belief

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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.

Contributor(s)

Charles D. Kirkpatrick

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Meet the MTA Staff

Meet the MTA Staff

Jeanne Farrelly has been with the Market Technicians Association (MTA) since August 2004. She is the Web Presence Manager overseeing the functionality of the internal and external website. The internal website is a web based Association Management Software system which in includes modules where membership services such as customer relations, membership, committees, events, inventory, accounting, advertising, e-marketing, and certification are managed. Also included in the AMS package is the content management system module where the MTA’s external website (www.mta.org) is created and administered. The MTA is currently engaged in redesigning it’s website to improve information retrieval and personal user management. We encourage membership comments and suggestions on how to improve your user experience.

Jeanne also manages all webcast events such as the New York Region monthly meetings, MTA Seminars and special events, 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.

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The Fox, the Hedgehog, and the Economist

The Fox, the Hedgehog, and the Economist

In a now famous 1953 essay on Russian author Leo Tolstoy, Isaiah Berlin resurrected the idea of dividing the world into people who were more like foxes, and those who thought like hedgehogs. Originally found in Greek poetry, the hedgehog “concept” essentially said that the wily fox knows many things; the lowly hedgehog “knows one big thing.” Scholars have differed about the correct interpretation of these dark words, which may mean no more than that the fox, for all his cunning, is defeated by the hedgehog’s one defense.

Meet Your New Investment Analyst

Berlin expanded on this concept to figuratively include the world of writers (his main topic) and maybe humans in general. There exists a great chasm, he wrote “between those, on one side, who relate everything to a single central

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)

Andre Ratkai, CFA

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“Evidence-Based Technical Analysis” By David Aronson, CMT

“Evidence-Based Technical Analysis” By David Aronson, CMT

In this thought-provoking work, David Aronson, CMT tests more than 6,400 technical analysis rules and finds that none of them offer statistically significant returns when applied to trading the S&P 500. This result, presented at the end of his work, is not disappointing to dedicated students of technical analysis who draw from the book not a new trading technique but instead take away a new, and more effective, approach to system development and trading. Those seeking the single best indicator or day trading pattern will be disappointed after reading Evidence-Based Technical Analysis, just as they will be disappointed in their trading until they advance beyond seeking the Holy Grail of Trading.

Most books and articles about technical analysis focus on applying a specific technique in pursuit of success in the markets. This one

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

David Aronson, CMT

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When Do Money Managers Like to Buy Stocks? Here’s the Answer...

When Do Money Managers Like to Buy Stocks? Here’s the Answer...

Do money managers pile into the stocks at the end of the month in anticipation of 401k and savings money coming in? Well it looks like they do…big time!

In 1999, Kevin Haggerty wrote about this phenomenon on the TradingMarkets site. Kevin had just retired as the head of trading for Fidelity Capital Markets, and he discussed the “end-of-the-month” phenomena. Up until that time, I had not heard about it nor had seen anyone else write about this.

Since Kevin first mentioned it, I and others have observed it time after time, especially when a stock was rising (meaning above its 200-day moving average).

Recently we decided to look further into this. We decided to see if we could quantify and potentially profit from the behavior. The findings were a bit eye-opening, and I’ll share them with you today.

We looked at over seven million trades going back to January 1995*. We then broke

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)

Larry Connors

Laurence Connors

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Market Technicians Association Technical Analysis Internship Program 2007 Applications Now Being Accepted

Market Technicians Association Technical Analysis Internship Program 2007 Applications Now Being Accepted

Currently, we are accepting applications for the next MTA Internship Program – tentatively scheduled for early 2007. The course of study will include Stocks, Bonds, Futures and Options; and will cover Traditional Charting, Point & Figure, Intermarket Analysis, Elliott Wave, Candlesticks and more. Tours of the NYSE (Stocks) and NYBOT (Commodities) will finalize this 2-week program.

The Internship Program is open to all MTA Members and Affiliates in good standing, who meet the following requirements.

  1. Have passed Level One (1) of the Chartered Market Technician (CMT) Exam or can demonstrate the equivalent knowledge.
  2. Must spend 2 weeks visiting or commuting to their internship at their own expense.
  3. Intend to pursue technical analysis as a vocation.
  4. Agree to write a brief report for the MTA Board of Directors and a short article for the MTA Newsletter regarding their experiences.

Applicants will provide a resume and short cover letter explaining why they should be selected. The application deadline

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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Internship Testimonial

Internship Testimonial

Early in my career, I heard about the MTA’s internship program. I thought it could be the perfect launching point to my development as a professional technical analyst–as it turned out, it was one of the best forecasts I have ever made. I was initially promised a job at PaineWebber working with Jeffrey S. Weiss, CMT. Jeff is clearly one of the more colorful technical analysts on the Street and I was very excited about the opportunity. I recall the story like it was yesterday. I had taken leave from my job as a part-time junior technical analyst and full-time financial systems analyst. The part-time role was never really my job at the time, though I spent every free moment I had with the company’s Chief Technician, Keith Edwards. Keith is another colorful technician who was never afraid to tell the Chief Economist exactly what he thought at the morning

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)

Larry M. Berman, CMT, CTA, CFA

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Volunteering for the MTA

Volunteering for the MTA

The new Executive Director of the MTA, and the Board, have asked me to become a “Volunteer Czar” for the membership, which would entail assisting Members and Affiliates who wish to volunteer to serve the Association.

I think this is a great idea and to put this in perspective I will give a little history. I have been involved in the MTA, in one way or another, since 1986, but really became involved in 1989 with the formation of the Atlanta Chapter of the MTA. My first committee was the Admissions Committee where I served with current Board Member Julia E. Bussie, CMT. I continued to serve as Regions Chair for several years, and my last job with the association was as President. Overall, my experience in working with the MTA has been one of the high points of my career, a big help to me professionally, and the contacts I

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)

Fred Meissner, CMT

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New Educational Content This Month

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