On the Campus
This month, instead of A Letter from the Executive Director and from the Editor, we have decided to provide you with an update from the MTA Educational Foundation.9 Days in Taipei - a Very Different Teaching Experience
Baruch College has a very successful International Executive MBA program with operations in China, Hong Kong, Singapore, Taiwan, Israel, and France. Over the years the program has enriched the lives of the students whose careers have benefited by the knowledge from the course work, the prestige of a U.S. degree, and the networking amongst other alumni. After being on an informal waiting list for a number of yeas, I was invited to teach Technical Analysis in Taiwan during the recent April holiday break here in the U.S. Courses run consecutively and Technical Analysis is an elective at Baruch, so I had to wait until a class of finance students completed all their core curriculum before I got this opportunity. I accepted the assignment, arranged vacation time at the office and quickly booked an 18 hour flight that would take me over the North Pole to Hong KongTo 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.
What's Inside...
Top Ideas and Sectors for 2008, a Market Forecast Panel Presentation by John Roque, Louise Yamada, CMT, and Larry Berman, CTA, CFA, CMT
by Michael Carr, CMT & John Roque & Louise Yamada, CMT & Larry M. Berman, CMT, CTA, CFAAt the MTA One-Day Symposium on May 16, 2008, three technicians discussed their best trading ideas for the rest of the year. Roque began by displaying a chart of the CRB Index relative to the S&P...
Bear Stearns (BSC): The Signals Were Clear
You can’t open a financial media outlet without seeing a story on Bear Stearns [BSC]. One of the most recent stories I have seen about the stock, other than the fact JP Morgan could increase its...
Bear Stearns: Other Approaches to Identify the Sell
Relative strength was used by two technicians to identify the deteriorating conditions of BSC. Kristin Hetzer, CMT, CIMA, CFP, submitted the chart of BSC relative to the S&P 500 index (Figure 1)....
Using Style Index Momentum to Generate Alpha
by William DeShurko, CFPThe recipients of the 2008 Charles H. Dow Award are Assistant Professor Samuel L. Tibbs, Professor Stanley G. Eakins, and Mr. William DeShurko, CFP, for their paper entitled “Using Style Index...
Inferring Trading Systems From Probability Distribution Functions Summary
by John EhlersEditor’s note: This is a summary of the paper which was recognized as a runner-up in the Dow Award competition. The complete paper may be downloaded from the MTA web site. There are two crucial...
At the MTA One-Day Symposium on May 16, 2008, three technicians discussed their best trading ideas for the rest of the year.
Roque began by displaying a chart of the CRB Index relative to the S&P 500. In his opinion, this chart illustrates that we are not in a commodities bubble and commodities can move much higher off the 2001 bottom in that relationship.
Roque also presented a series of innovative charts showing the weighting of several sectors within the S&P 500. Stocks in the financial sector represented 23% of the market cap of the S&P when they peaked in late 2006. They currently represent 17% of the index, and have historically, on average, made up 13% of the index. His conclusion is that they still have room to go lower. As an additional bearish factor weighing down this sector, Roque pointed out that some of the large financial stocks are making
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...

John Roque
John Roque is Managing Director at Wolfe Research, LLC. Prior to Wolfe Research, John spent seven years on the buy-side at Soros Fund Management and Key Square Capital Management. Prior to 2012, he worked for 20 years as a leading macro analyst on the sell-side at WJB...

Louise Yamada, CMT
Louise Yamada is the Managing Director of Louise Yamada Technical Research Advisors (LYA), which she founded in 2005. Previously, she was Managing Director and Head of Technical Research for Smith Barney (Citigroup), and while there, was a perennial leader in the Institutional...

Larry M. Berman, CMT, CTA, CFA
Larry M. Berman appears weekly on BNN's Berman's Call where he blends fundamentals with expert technical analysis to help Bloomberg viewers uncover opportunities in the marketplace. He is a Co-Founder of ETF Capital Management and The Independent Investor Institute -- an...
You can’t open a financial media outlet without seeing a story on Bear Stearns [BSC]. One of the most recent stories I have seen about the stock, other than the fact JP Morgan could increase its bid to $10 a share, is the SEC is probing into sell transactions on BSC and if someone had inside information. It makes me think back to the days of late 2001 when Imclone [IMCL] imploded on a bad FDA report, and sold off sharply from the 60’s to an eventual low in the single digits. It was the sale of IMCL on reported insider information and subsequent lying to the Fed’s that landed Martha Stewart in jail. The infamous scribble note to sell “at $60” and what precipitated that note will go down in history. Of course had Martha Stewart just been looking at the Point & Figure chart of IMCL the reason
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.
Relative strength was used by two technicians to identify the deteriorating conditions of BSC. Kristin Hetzer, CMT, CIMA, CFP, submitted the chart of BSC relative to the S&P 500 index (Figure 1). She noted that “the decline in relative strength and sell signals could have been used along with the price chart strongly suggesting exit from this stock.” Her annotations can be seen on the chart. Kristin is the Principal at Royal Palms Capital LLC.
Robert Peirce, principal and co-founder of Cookson, Peirce & Co., Inc., noted that “on a weekly basis, the high was 01/12/07 at 169.67. Under our current rules, we would have sold three weeks later at 164.56 when the Alpha rank reached 21. Had we held the stock under the old rules, we would still have
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 recipients of the 2008 Charles H. Dow Award are Assistant Professor Samuel L. Tibbs, Professor Stanley G. Eakins, and Mr. William DeShurko, CFP, for their paper entitled “Using Style Index Momentum to Generate Alpha.” Dr. Tibbs summarized the results of their research at the MTA Symposium on May 16, 2008.
We have all heard that “past performance is no guarantee of future results,” but recent work provides some support otherwise. Specifically, this research demonstrates that Russell style indexes exhibit significant momentum, particularly after medium term relative out- and underperformance.
Prior research provides evidence of style momentum at the firm level, but the construction of such portfolios can be costly. Therefore, we measure style momentum at the index level, which can easily be represented by exchanged traded funds, thereby providing a low expense, diversified method to exploit such momentum.
We are motivated to test the existence of style index momentum due to the
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)

William DeShurko, CFP
Mr. William DeShurko, CFP is the President of 401 Advisor, LLC, a Registered Investment Advisor. He has an Economics degree from the University of Rochester and has been in the financial services industry since 1987. He is the author of the book, The Naked Truth about Your Money...
Editor’s note: This is a summary of the paper which was recognized as a runner-up in the Dow Award competition. The complete paper may be downloaded from the MTA web site.
There are two crucial factors when trading with oscillators. Firstly, the Probability Density Function (PDF) of the detrended data depends heavily on the way the detrended data is computed. Secondly, one must anticipate the turning point of the detrended data because if one waits for confirmation with these relatively fast indicators most of the move is over before trade entry or exit can be made. Taken together, these two factors can infer the best trading system to be employed.
Detrending using RSI techniques typically results in the data having a Gaussian-like PDF. Therefore, one can use the traditional 20% and 80% levels as entry points – with the added trick that one sells short when the RSI crosses above the upper
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 Ehlers
John Ehlers is Chief Scientist and President of MESA Software, Inc. He is a technical analyst and Electrical Engineer, with a BSEE and MSEE from the University of Missouri, who completed his doctoral work at The George Washington University, specializing in Fields & Waves...
New Educational Content This Month
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December 10, 2020
Using Pattern Recognition in Contraction and Expansion Phases
Presenter(s): Leslie Jouflas, CMT
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December 2, 2020
Identifying Opportunities and Managing Risk with the Tactical Composite Trend Model
Presenter(s): Dean Christians, CMT
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November 25, 2020
Optimizing Inefficiencies in Technical Analysis
Presenter(s): Jake Wujastyk