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Technically Speaking, June 2012

LETTER FROM THE EDITOR

The Market Technicians Association has always been at the forefront of technical analysis and in this issue we demonstrate some of the ways the organization is doing that. We provide summaries of a few of the presentations made at the Annual Symposium in May which included thought provoking and practical ideas. More summaries will be in next month’s issue. We also offer a review of a book by Paul Ciana, CMT. New Frontiers in Technical Analysis includes some original research from Paul and features the work of several other technicians, including some members. This book adds to the Body of Knowledge of technical analysis with the new techniques that are presented and for those without access to a Bloomberg terminal it delivers details on what the most commonly used features of that system are. Last month, while acknowledging those recognized by the Awards Committee, I inadvertently overstated the role that George Lane had in the development of the stochastics.  George Schade, Jr., CMT, provides corrected information in a Letter to the Editor

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What's Inside...

COMPLEX ADAPTIVE SYSTEMS BY PIERRE VAYSSE, PH.D.

by Michael Carr, CMT & Pierre Vaysse

This is a summary of Dr. Vaysse’s presentation made at the 2012 Annual Symposium on April 19th – 20th, 2012 in New York City. The complete presentation is available in the MTA Archives at...

TAM’S 100-YEAR MARKET THEORY BY KEVIN TUTTLE

by Kevin A. Tuttle & Michael Carr, CMT

This is a summary of Kevin Tuttle’s presentation made at the 2012 Annual Symposium on April 19th – 20th, 2012 in New York City. The complete presentation is available in the MTA Archives at...

WHAT CAN VOLATILITY DO FOR YOU? FEATURING CARSON DAHLBERG, CMT AND KIRK NORTHINGTON, CMT

by Carson Dahlberg, CMT & Kirk Northington, CMT & Michael Carr, CMT

This is a summary a presentation made at the 2012 Annual Symposium on April 19th – 20th, 2012 in New York City. The complete presentation is available in the MTA Archives at...

CORRECTION: LETTER TO THE EDITOR

Editor’s note: In last month’s issue, the article about George Lane contained an inaccuracy and we are indebted to George Schade, Jr., CMT, for providing a more accurate description of George...

MTAEF SPRING FUNDRAISER RAISES $20,000 WITH LUNCH AUCTION

by THE MTA EDUCATIONAL FOUNDATION

The MTA Educational Foundation (MTAEF) completed its spring 2012 “Take an Analyst to Lunch” fundraising event. The most recent auction was also referred to as, “Take an Expert to Lunch” and...

NEW FRONTIERS IN TECHNICAL ANALYSIS BY PAUL CIANA, CMT

by Paul Ciana, CMT & Michael Carr, CMT

As an Application Specialist at Bloomberg LP, Paul has access to information that many traders will find useful, and in New Frontiers in Technical Analysis he presents some of that data along with...

INTERVIEW WITH ERIC LEAKE

by Eric Leake & Amber Hestla-Barnhart

How would you describe your job? I’m a portfolio manager for two mutual funds and a hedge fund. What led you to look at futures markets instead of stocks or another tradable? Managing both global...

JPMORGAN TRADING LOSSES HIGHLIGHT RISK MANAGEMENT LESSONS FOR TECHNICAL ANALYSTS

by Michael Carr, CMT

By now, the story is well known. In early May, JPMorgan announced that some hedges designed to limit risk had not worked as planned and the bank was facing losses of at least $2 billion. The trades...

COMPLEX ADAPTIVE SYSTEMS BY PIERRE VAYSSE, PH.D.

COMPLEX ADAPTIVE SYSTEMS BY PIERRE VAYSSE, PH.D.

This is a summary of Dr. Vaysse’s presentation made at the 2012 Annual Symposium on April 19th – 20th, 2012 in New York City. The complete presentation is available in the MTA Archives at http://go.mta.org/320.

The presentation is subtitled “from mind to market” and the intent is to show that the mind and the market are related to each other and they both form complex adaptive systems. Dr. Vaysse meets that objective with his clear and idea-filled presentation.

To understand the idea of a complex adaptive system, Dr. Vaysse asked the audience members to consider the group in the room. Each individual is a singularity and if they all begin interacting with each other, the first product of those interactions will be noise. The noise is actually each individual expressing an articulate thought and a complex adaptive system can identify the output of those individual thoughts.

He has developed an “emotional rational behavior

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

Pierre Vaysse

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TAM’S 100-YEAR MARKET THEORY BY KEVIN TUTTLE

TAM’S 100-YEAR MARKET THEORY BY KEVIN TUTTLE

This is a summary of Kevin Tuttle’s presentation made at the 2012 Annual Symposium on April 19th – 20th, 2012 in New York City. The complete presentation is available in the MTA Archives at http://go.mta.org/317.

When Kevin began working on Wall Street as a broker, he developed a love of technical analysis from a mentor who had a quote from Justice Oliver Wendell Holmes on his desk, ““When I want to understand what is happening today and try to decide what will happen tomorrow; I look back because a page of history is worth a volume of logic.” This quote is in some ways a summary of what charts can tell an intelligent trader.

Before turning to the charts in his presentation, Kevin offered a quote from Benjamin Graham, one of the founders of fundamental analysis. In The Intelligent Investor, Graham said ““It is only through the relentless management of Risk based

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 A. Tuttle

Michael Carr, CMT

Michael Carr, CMT

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WHAT CAN VOLATILITY DO FOR YOU? FEATURING CARSON DAHLBERG, CMT AND KIRK NORTHINGTON, CMT

WHAT CAN VOLATILITY DO FOR YOU? FEATURING CARSON DAHLBERG, CMT AND KIRK NORTHINGTON, CMT

This is a summary a presentation made at the 2012 Annual Symposium on April 19th – 20th, 2012 in New York City. The complete presentation is available in the MTA Archives at http://go.mta.org/318.

This presentation builds on previous work done by the presenters, which includes a presentation called, “Creating and Applying Volatility-Based Technical Analysis” which was offered as part of the MTA’s Educational Web Series. The archive of this webcast can be seen by visiting: http://go.mta.org/189.

Carson began by noting that money is made at the extremes and then began to explain how that idea can be applied to trading. In their work, Carson and Kirk begin with the basic tools of technical analysis and try to take these tools to the next level. They use volatility to make these concepts adaptive to market conditions, fractal in time and useful in any market. They apply a quantitative approach to add statistical validity

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)

Carson Dahlberg, CMT

Carson Dahlberg, CMT

Kirk Northington, CMT

Michael Carr, CMT

Michael Carr, CMT

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CORRECTION: LETTER TO THE EDITOR

CORRECTION: LETTER TO THE EDITOR

Editor’s note: In last month’s issue, the article about George Lane contained an inaccuracy and we are indebted to George Schade, Jr., CMT, for providing a more accurate description of George Lane’s role in the development of the stochastics indicator.

May 7, 2012

Dear Editor:

I am glad Technically Speaking provided two links to the background of the stochastic oscillator and the late George Lane (MTA Recognizes Six With Awards). I hope the statement that Lane “developed” the stochastic oscillator does not confuse others into believing that Lane invented or originated the oscillator.

George Lane was not the sole originator of the stochastic oscillator. This assertion has been made for many years by those familiar with the story. Among them is trader Larry Williams who has written that Lane “did not invent Stochastic” (Long-Term Secrets to Short-Term Trading). Author John Murphy accepted this point in 1999, when he replaced the word “invented” with “popularized”

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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MTAEF SPRING FUNDRAISER RAISES $20,000 WITH LUNCH AUCTION

MTAEF SPRING FUNDRAISER RAISES $20,000 WITH LUNCH AUCTION

The MTA Educational Foundation (MTAEF) completed its spring 2012 “Take an Analyst to Lunch” fundraising event. The most recent auction was also referred to as, “Take an Expert to Lunch” and “Take a Trader to Lunch”, reflecting the broad participation by industry giants.

The May auction ran for ten days on EBAY® and included over twenty participants, some of whom graciously continue to support the event time and again. Notable highlights for the event include the following:

  • Dan Zanger for the second time running topped the bidding at $3,500
  • Nearly $20,000 was raised for the MTAEF

With a top bid of $3,300 last October and a matching bid in May of last year, Mr. Zanger’s participation has raised over $10,000 for the Foundation.

Matching bids received for widely followed analyst and international investor Jim Rogers contributed to the outstanding results in this year’s auction. Matching bids were also

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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NEW FRONTIERS IN TECHNICAL ANALYSIS BY PAUL CIANA, CMT

NEW FRONTIERS IN TECHNICAL ANALYSIS BY PAUL CIANA, CMT

As an Application Specialist at Bloomberg LP, Paul has access to information that many traders will find useful, and in New Frontiers in Technical Analysis he presents some of that data along with ideas and some specific techniques that seem to have never been disclosed before.

The first chapter begins with a definition of technical analysis, which is simply:

Technical analysis is the extraction of information from market data into objective visualizations through the use of mathematics with an emphasis on investor behavior and supply and demand to explain the current and anticipate the future path of the financial markets.

A precise definition of technical analysis has been the subject of much debate. To those familiar with those debates, it may be surprising how Paul has offered an eloquent solution that requires only 41 words. That definition includes five attributes that any scholar or

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)

Paul Ciana, CMT

Michael Carr, CMT

Michael Carr, CMT

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INTERVIEW WITH ERIC LEAKE

INTERVIEW WITH ERIC LEAKE

How would you describe your job?

I’m a portfolio manager for two mutual funds and a hedge fund.

What led you to look at futures markets instead of stocks or another tradable?

Managing both global long-short equity and long-short high yield bond strategies, we monitor a variety of markets and asset classes, including both cash and futures indexes.

Do you look at any fundamental or economic inputs to develop your opinions?

The analysis of price, volume and spreads are the primary inputs to our quantitative investment models, but we do consider fundamental and economic data as well.

What advice would you have for someone starting in the business today?

My best advice is to find a mentor, someone who is doing the job you would eventually like to. Second, learn from those who have gone before you by reading their work. There is a tremendous wealth of knowledge publically available that can help formulate your investment thesis.

Can

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)

Eric Leake

JPMORGAN TRADING LOSSES HIGHLIGHT RISK MANAGEMENT LESSONS FOR TECHNICAL ANALYSTS

JPMORGAN TRADING LOSSES HIGHLIGHT RISK MANAGEMENT LESSONS FOR TECHNICAL ANALYSTS

By now, the story is well known. In early May, JPMorgan announced that some hedges designed to limit risk had not worked as planned and the bank was facing losses of at least $2 billion. The trades were on certain tranches of credit-swap indexes.

The MTA enjoys a diverse and growing membership and some members may be involved in these specialized markets or even been on the winning side of these trades. It wasn’t always this way. Originally, the MTA limited membership to technicians focused on the stock market and living in New York. Founding members quickly expanded the organization and today it is possible that a member is an integral part of any news story. It is also possible that some members barely follow the news, profitably focusing
solely on charts and ignoring anything else.

Several features of the JPMorgan story show how technical analysis has grown and members are using

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

New Educational Content This Month

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