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Technically Speaking, June 2009

Letter from the Editor

Technicians have long been at the forefront of technology, and the MTA staff is demonstrating that our organization is on the leading edge of adding value to our membership through technology. At the May Symposium Tom Silveri highlighted several initiatives, such as making this newsletter electronic, that have already benefited members. The Educational Web Series has been very successful, arguably the most successful recent initiative. He also unveiled new efforts that are underway. This demonstrates that the MTA is a growing organization. With growth come challenges that the leadership has stepped up and admirably met. And, with growth also comes opportunity. This is our chance to stand up and meet the needs of the organization. All members have an opportunity to volunteer in support of the MTA. Less than forty years ago, the MTA consisted of a few dozen members, all living and working near New York. Now we have members in every state and more than 1,100 members from outside the United States. The electronic delivery of services shows how easy

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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...

State of the MTA

In his annual address to the membership at the MTA Symposium, Executive Director Tom Silveri highlighted the growth and strength of our organization. Now in its 36th year, the MTA has grown to 3,000...

Anticipate to Participate

by Darrell Jobman

Everyone knows that global economies are in a recession – maybe even a depression, if you listen to some analysts who can find plenty of evidence in economic statistics released almost every...

His Returns are No Laughing Matter: Gil Morales

by Gil Morales & Ajay G. Jani, CMT

On April 21st, I had the opportunity to meet with Gil Morales. How a former cartoonist for the Stanford University newspaper became a protégé of William O’Neil (of CAN SLIM fame) and developed...

Anthony Tabell – MTA Annual Award Winner 2009

Alan Shaw introduced Tony by noting that he was very surprised to have the honor of introducing this year’s Annual Award winner at the MTA Symposium. Tony Tabell was such a great technician and...

Capturing the Twists and Turns in Fast-Moving Bond Futures

by Darrell Jobman

It has been a couple of months since we have written about interest rates, certainly one of the fastest moving markets in the last few months. In that intervening period . . . Treasury bond and note...

The Dow Award

by Kevin J. Lapham, CMT

Kevin J. Lapham, CMT, of Ned Davis Research, Inc. (www.ndr.com), was recognized at the MTA Symposium for receiving the 2009 Charles H. Dow Award. Kevin’s paper, “Using IPOs to Identify Sector...

TraderPlanet.com

by Michael Carr, CMT

Social networking web sites such as MySpace and Facebook have become very popular in recent years. It seems difficult to make money if you spend your day on these types of sites, but...

Ripple Effect Looms Large in FX Markets

by Louis B. Mendelsohn

Foreign currency traders worldwide need to understand that today’s financial markets are globally intertwined and should not be examined in isolation from one another. Even novice traders know that...

The Ivy Portfolio: How to Invest Like the Top Endowments and Avoid Bear Markets by Mebane T. Faber, CAIA, CMT, and Eric W. Richardson, JD

by Mebane Faber, CMT, CAIA & Eric W. Richardson & Michael Carr, CMT

University endowment funds have delivered extraordinary investment results in the decades leading up to the 2008 bear market. The Yale University endowment returned 16.62% a year from 1985 to 2008,...

MTA Announcements

CMT Exam Registration – All Levels Open! Registration for the Fall 2009 CMT Examination is now open for all levels! The Fall 2009 testing window will be October 22nd – October 31st. It is...

State of the MTA

State of the MTA

In his annual address to the membership at the MTA Symposium, Executive Director Tom Silveri highlighted the growth and strength of our organization. Now in its 36th year, the MTA has grown to 3,000 market analysts and related professionals in 61 countries. Technicians wondering if membership growth trends will serve as an indicator of stock market activity can begin their research in India, the Middle East, and China, the areas where the MTA is seeing the strongest trends.

Tom reviewed four assessment criteria that he and the staff and Board of Directors use to assess the health of the MTA:

  1. Are we growing, and is the leadership mindful of the implications of growth? Membership has been growing about 10 percent a year in the recent past. Even in the recent bear market, 9 percent growth has been maintained.
    The strongest growth has been from outside the US. The international growth rate has

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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Anticipate to Participate

Anticipate to Participate

Everyone knows that global economies are in a recession – maybe even a depression, if you listen to some analysts who can find plenty of evidence in economic statistics released almost every day.

What happens when we get flooded with a continuous batch of bad news is that we expect more of the same and don’t pay attention to clues that the situation might be shifting away from what everyone believes. Suddenly, before you know it, a market has sneaked away from the gate while you weren’t watching closely, and you miss a potential good trade.

Such is the case with Retail HOLDRs (RTH), an exchange-traded fund that includes Wal-Mart, Home Depot, Target, Kohl’s and a number of other retailers. The business news is full of reports about how low-price discounter Wal-Mart has done well during this recession, but who would expect shares of other retailers to do much of anything when

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)

Darrell Jobman

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His Returns are No Laughing Matter: Gil Morales

His Returns are No Laughing Matter: Gil Morales

On April 21st, I had the opportunity to meet with Gil Morales. How a former cartoonist for the Stanford University newspaper became a protégé of William O’Neil (of CAN SLIM fame) and developed into one of the greatest stock traders of his generation is a tale of perseverance, discipline, and a bit of luck. 

Morales grew up into what he calls a “working class, self-employed, entrepreneurial environment.” Morales’ father operated a scaffold contracting company. His uncles and Grandfather were in a variety of self-owned and operated business including a liquor store and a mannequin manufacturer. Morales grew up in the gang-infested area of East Los Angeles, and his family eventually had to move to Whittier to shield Morales from the gangs. However, the gangs eventually moved into Whittier as well. Growing up, Morales always knew that he wanted to be self-employed but he didn’t know where the opportunity would lie.

His first

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)

Ajay G. Jani, CMT

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Anthony Tabell – MTA Annual Award Winner 2009

Anthony Tabell – MTA Annual Award Winner 2009

Alan Shaw introduced Tony by noting that he was very surprised to have the honor of introducing this year’s Annual Award winner at the MTA Symposium. Tony Tabell was such a great technician and contributed so much to the field of technical
analysis that Alan had assumed Tony had been recognized years before.

In fact, this was actually Tony’s second opportunity to accept the Annual Award. The first time was when he accepted on behalf of his late father, Edmund Tabell. One could easily argue that technical analysis is in Tony’s genes. In addition to his father, his family tree includes the great technician Richard Wyckoff, who was his uncle. Tony enjoyed a long and very successful on Wall Street. He was an early proponent of computerizing technical analysis, and at one point had the largest minicomputer dedicated to this endeavor. His database was

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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Capturing the Twists and Turns in Fast-Moving Bond Futures

Capturing the Twists and Turns in Fast-Moving Bond Futures

It has been a couple of months since we have written about interest rates, certainly one of the fastest moving markets in the last few months. In that intervening period . . .

  • Treasury bond and note futures completed a meteoric rise to record levels with their biggest monthly ranges this century in November and December.
  • Interest rate futures then tumbled from the peak in January with the biggest monthly range to the downside this century.
  • The Federal Reserve dropped the Fed funds rate to 0-0.25 percent, leaving little room to use interest rates to attempt to shake the economic recession.
  • The Treasury has announced plans for huge bond auctions in February with more to come to finance the various bailout and economic stimulus programs.
  • Buyers bought bonds paying virtually no interest just for security reasons in the past, but how long can the government continue to attract buyers for its paper without a better

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)

Darrell Jobman

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The Dow Award

The Dow Award

Kevin J. Lapham, CMT, of Ned Davis Research, Inc. (www.ndr.com), was recognized at the MTA Symposium for receiving the 2009 Charles H. Dow Award. Kevin’s paper, “Using IPOs to Identify Sector Opportunities,” presents a way to use initial public offerings (IPOs) to improve on measures of broad market sentiment by providing a more detailed view of sentiment at the sector level. Using IPOs with other indicators or models can achieve a better perspective of sentiment and supply and demand forces that may influence market sectors.

The abstract of the paper provides only a glimpse of the unique nature of this research:

The number of initial public offerings (IPOs) is a well-known, long-term stock market indicator. With the popularity of sector investing and the increased use of exchange traded funds, it would be advantageous to employ a new IPO-based indicator to assess sector health, improving upon available technical market measures. This

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)

Kevin J. Lapham, CMT

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TraderPlanet.com

TraderPlanet.com

Social networking web sites such as MySpace and Facebook have become very popular in recent years. It seems difficult to make money if you spend your day on these types of sites, but www.TraderPlanet.com combines the social networking concept with the idea that traders like to do things that can be profitable.

Hundreds of contributors, pros and novices, post market ideas to TraderPlanet.com and many offer detailed and timely market analysis. Some of the contributors are MTA members with long and successful track records. Many are easily recognizable names. And this is probably the first thing that visitors to TraderPlanet.com realize: They can make money simply by reading the posts., It is rare to find sites like this where the majority of the information is useful, so TraderPlanet immediately earns a bookmark in my web browser. TraderPlanet also has a classy look and large audience. For the technician looking to succeed

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

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Ripple Effect Looms Large in FX Markets

Ripple Effect Looms Large in FX Markets

Foreign currency traders worldwide need to understand that today’s financial markets are globally intertwined and should not be examined in isolation from one another.

Even novice traders know that a development affecting one market or financial sector is likely to spill over and have repercussions in other markets, because no market, particularly the forex market (which is at the center of global commerce), functions in isolation today.

But a serious disconnect still prevails between the reality of how the markets interact and the historical emphasis of technical analysis to look internally at one market at a time. Technical analysis, in this regard, has failed to keep pace with the globalization of financial markets and the emergence of the global financial system.

Changes that began in the 1980s with the proliferation of personal computers and global telecommunications—which accelerated in the 1990s with the growth of the Internet and gained momentum in this decade with

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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The Ivy Portfolio: How to Invest Like the Top Endowments and Avoid Bear Markets by Mebane T. Faber, CAIA, CMT, and Eric W. Richardson, JD

The Ivy Portfolio: How to Invest Like the Top Endowments and Avoid Bear Markets by Mebane T. Faber, CAIA, CMT, and Eric W. Richardson, JD

University endowment funds have delivered extraordinary investment results in the decades leading up to the 2008 bear market. The Yale University endowment returned 16.62% a year from 1985 to 2008, significantly outpacing the S&P 500 which delivered an annualized gain of 11.98% over that same timeframe. Harvard University grew its endowment by more than 15% a year over that span. (The book points out that endowment fiscal years end on June 30th, so the steep losses incurred in the second half of 2008 are not represented in these returns.)

Faber and Richardson use these returns as the basis of an in-depth study of how endowments are managed and how individual investors can duplicate this investment style. They begin by identifying several characteristics of endowments:

  1. They are tax exempt allowing them to make investment decisions free from

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)

Mebane Faber, CMT, CAIA

Eric W. Richardson

Michael Carr, CMT

Michael Carr, CMT

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MTA Announcements

MTA Announcements

CMT Exam Registration – All Levels Open!

Registration for the Fall 2009 CMT Examination is now open for all levels! The Fall 2009 testing window will be October 22nd – October 31st. It is our experience that those who wait until the end of registration to sign up, encounter difficulty securing their desired time, date and location, as this is available on a first come first serve basis. Sign up today to ensure your preferred time, date and location! Contact Marie Penza, 646-652-3300, for information on the CMT Program and/or to schedule your exam. For detailed instructions on how you can register online, please click here.

CMT Recommended Reading – Changes Now Posted!

Please note that there have been some minor changes made to the recommended reading lists. To view the reading lists, please click here.

Looking to purchase the books on the CMT Exam recommended reading list?

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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