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Technically Speaking, July 2010

Letter from the Editor

Little has been written about Ichimoku Clouds, which were first used in the 1930s. They are visually compelling, yet little used in the world of technical analysis. In recent months, two books have been published exploring this topic. We have reviews of both in this month’s issue of Technically Speaking. Prior to the publication of these books, one of the most authoritative pieces on Ichimoku Kinko Hyo may be an article written by Véronique Lashinski, CMT, and published in the Journal of Technical Analysis (http://www.mta.org/eweb/dynamicpage.aspx?webcode=journal2008#section05). MTA members have always produced groundbreaking researching. Lashinski’s paper is just one example of the type of work that our members produce. In the newsletter this month, we offer another example of cutting edge technical analysis with David Waggoner’s article exploring the May Flash Crash. While regulators are still looking at what happened and how to prevent, Waggoner offers a practical insight into the crash. Finally, High Growth Stock Investor recently released a new version of their software. They did this almost at the same time we

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What's Inside...

Technical Analysis as a Forensic Tool in the Investigation of the Flash Crash

by David Waggoner, CMT

I am fascinated by the rapid decline and complete recovery that took place in less than 15 minutes exactly one month ago today on May 6, 2010 coined the “flash crash”. Even with the gloomy global...

Analyzing Markets with Ichimoku Clouds

by Manesh Patel, CMT, CFTe

The following example demonstrates how to apply this technique in real time, prepared by Manesh Patel, CTA. It was originally published at http://www.ichimokutrade.com/?p=727 on June 10,...

"Cloud Charts: Trading Success with the Ichimoku Technique" by David Linton

by David Linton, MFTA & Michael Carr, CMT

Japanese Candlesticks are well known, and widely used. This technique traces its origins back several hundred years, and became popular in the United States in the 1990s, based upon the work of Steve...

"Trading with Ichimoku Clouds: The Essential Guide to Ichimoku Kinko Hyo Technical Analysis" by Manesh Patel, CTA

by Manesh Patel, CMT, CFTe & Michael Carr, CMT

Manesh Patel uses his book to bring you next to him at his trading desk. He begins by describing what a trading system, and then describes the Ichimoku technique before walking through trades,...

High Growth stock Investor, Version 7

by David Steckler

In the June 2010 issue of Technically Speaking I reviewed Version 6 of High Growth Stock Investor (HGSI) software. Industry Monitors recently unveiled a major upgrade to the platform. Version 7 of...

Trade: A Platform Independent Language for Traders

by John Bollinger, CMT, CFA

In my presentation at the MTA symposium — kudos to Jeff Lay and Jeremy Berkovitz for a job really well done — I mentioned Trade and there was quite a lot of interest expressed in the...

Call for Nominations

As Chairman of the MTA Awards Committee, I solicit your nomination(s) for consideration in the two categories — MTA Annual Award and MTA Service Award. The Committee carefully evaluates...

MTA Announcements

MTA Office Announcement In observance of Independence Day (US), please note that Friday, July 2nd the MTA Office will be closing early around 2 PM EST. In addition, the MTA Office will also be closed...

Technical Analysis as a Forensic Tool in the Investigation of the Flash Crash

Technical Analysis as a Forensic Tool in the Investigation of the Flash Crash

I am fascinated by the rapid decline and complete recovery that took place in less than 15 minutes exactly one month ago today on May 6, 2010 coined the “flash crash”. Even with the gloomy global economic back drop since then, it has taken the S&P 500 a full month to close lower than the downward spike of that event which originally occurred in two to three minutes. In over ten years of studying the markets on a daily basis I have never seen anything like it. I have spent the last few weeks studying the flash crash for evidence that could lead to an explanation of how it happened.

I started my research after reading the Preliminary Findings Regarding the Events of May 6, 2010by the SECCFTC Joint Regulatory Committee. The report is 80 pages long with another 100 pages of appendices. The report includes excellent research and is chock

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)

David Waggoner, CMT

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Analyzing Markets with Ichimoku Clouds

Analyzing Markets with Ichimoku Clouds

The following example demonstrates how to apply this technique in real time, prepared by Manesh Patel, CTA. It was originally published at http://www.ichimokutrade.com/?p=727 on June 10, 2010.

Ichimoku Currency GBPCAD Forex Trade Setup: 6-10-10

GBPCAD consolidating and has a chance to break either way. The trend is bearish but can move into a pullback mode off the consolidation pattern. As a result, we are going to setup two trades. One a counter trend trade with very little risk and another for a continuation trend trade. 

Here is the counter trend trade setup. It is a bullish trade off the 30 minute timeframe. It keeps our risk very low. Notice, we are not trying to get huge profits because this is a pullback off the major trend.

Here is the continuation trend trade. We are going to

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)

Manesh Patel, CMT, CFTe

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"Cloud Charts: Trading Success with the Ichimoku Technique" by David Linton

Japanese Candlesticks are well known, and widely used. This technique traces its origins back several hundred years, and became popular in the United States in the 1990s, based upon the work of Steve Nison, CMT. Linton follows in the footsteps of Nison and is presenting Ichimoku Clouds based upon the original Japanese texts, which date back into the 1930s.

The first part of the book is a review of basic technical analysis concepts, approximately one hundred pages that offer an overview of some of the most important concepts. These summaries are found in many books, and I always find them valuable and think they make good reading for CMT candidates. Linton’s review goes a little beyond the ordinary and includes short discussions on important and advanced ideas like correlation and spread charts. He also explains how to add a moving average to a point-and-figure

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)

David Linton, MFTA

Michael Carr, CMT

Michael Carr, CMT

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"Trading with Ichimoku Clouds: The Essential Guide to Ichimoku Kinko Hyo Technical Analysis" by Manesh Patel, CTA

Manesh Patel uses his book to bring you next to him at his trading desk. He begins by describing what a trading system, and then describes the Ichimoku technique before walking through trades, step-by-step. The result is well-written book that offers insight into how to create a checklist for any trading technique and a detailed guide on using Clouds to trade.

A trading plan is actually a simple set of rules to guide you through the markets. Patel identifies four general areas:

  • What instruments will be traded and when?
  • Entry rules
  • Money management
  • Trade Post Analysis

Each topic requires a great deal of thought, and he presents a process designed to take the trader to a decisive action plan. His last step, Trade Post Analysis, is rarely mentioned in the many books and articles written about trading. Patel emphasizes, :…post analysis of the trades has to be maintained to

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)

Manesh Patel, CMT, CFTe

Michael Carr, CMT

Michael Carr, CMT

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High Growth stock Investor, Version 7

High Growth stock Investor, Version 7

In the June 2010 issue of Technically Speaking I reviewed Version 6 of High Growth Stock Investor (HGSI) software. Industry Monitors recently unveiled a major upgrade to the platform. Version 7 of HGSI implements a new system software architecture enabling High Growth Stock Investor to evolve into an Application Trading Platform.

HGSI offers a collection of seamlessly interactive tools designed to simplify the process of selecting candidate stocks to buy and sell. HGSI simplifies the process of finding the “What, Which, When, Why, and So What” that feed your decision-making efforts. Its goal is to create an intelligent user faster.

HGSI is an end-of-day application that screens the universe of stocks to find those most likely to outperform the market. Data is provided by Quotes Plus (QP2). The user can utilize either a top-down or bottom-up approach.

The top-down approach is one which moves from Markets to Sectors to Industry Groups to Stocks

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)

David Steckler

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Trade: A Platform Independent Language for Traders

Trade: A Platform Independent Language for Traders

In my presentation at the MTA symposium — kudos to Jeff Lay and Jeremy Berkovitz for a job really well done — I mentioned Trade and there was quite a lot of interest expressed in the project. Trade is a functional language. At its lowest level it is object oriented and recursive. At higher levels it is much like English or any other natural language, which means that the end user need not be aware of the details. For example, they could say something like:

Low level:
spy = close(spy)
and(spy > average(spy, 10, exp), spy[-1] < average(spy, 10, exp)) * buy(spy, 100, market)

Somewhat higher level:
spy = close(spy)
if

spy > average(spy, 10, exp) and spy[-1] < average(spy, 10, exp)

then

buy(spy, 100, market)

end if

Or, in some thing closer to natural language:

Close = close of spy
If close is greater than average(close,10, exp) and close[-1] is less than average(close,10,

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 Bollinger

John Bollinger, CMT, CFA

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Call for Nominations

Call for Nominations

As Chairman of the MTA Awards Committee, I solicit your nomination(s) for consideration in the two categories — MTA Annual Award and MTA Service Award.

The Committee carefully evaluates nominee’s credentials, reputation and contributions to market analysis (whether the analyst is living or deceased) in choosing its recommendations to the MTA Board of Directors.

It’s important that your nomination(s) include all the information that should be considered by the Committee.

Please address your submissions to: BBands@BollingerBands.com

Thank you in advance for your participation.

Respectfully,
John Bollinger, CFA, CMT

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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MTA Announcements

MTA Announcements

MTA Office Announcement

In observance of Independence Day (US), please note that Friday, July 2nd the MTA Office will be closing early around 2 PM EST. In addition, the MTA Office will also be closed Monday, July 5th. Of course the website will still be accessible for CMT and event registration

MTA Regional Seminars/Meetings – Agendas Available!

The MTA is pleased to announce that the agendas for all four events listed below are now
available.

    • August 9th – United Kingdom Initial Event (London)
    • August 10th – Netherlands Initial Event (Amsterdam)
    • September 18th – US West Coast Regional Seminar (San Francisco, CA)
    • October 1st – US Mid-West Regional Seminar (Columbus, OH)

Registration is now open. Sign up early! For more information on these events, including
agendas, speakers, and registration instructions, please click here.

MTA Educational Web Series – Next Upcoming Webcast!

Registration is now open for the presentation “Planes, Trains &

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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New Educational Content This Month

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