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

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

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