Tom Dorsey opened the 2015 Annual Symposium with a presentation on the process that helped him build a $6 billion asset management firm. The complete presentation is available at the MTA’s Knowledge Base, the web’s free repository for everything related to technical analysis. Tom explained how Dorsey Wright and Associates (DWA) has always focused on the price of a security because it is the ultimate measure of supply and demand in the marketplace. DWA used tools including relative strength and point and figure charting to cut through the clutter of day-to-day market action. These simple tools help identify meaningful patterns in daily share price movements. The same tools, with the same rule set, can be applied at the country, sector, or individual share level, and across a variety of asset classes. His epiphany, the realization that supply and demand are all that matter for stock picking, came from the book How to

The Charles H. Dow Award is presented annually for outstanding research in technical analysis. The 2014 winners, Michael Gayed, CFA, and Charles Bilello, J.D., CPA, CMT, demonstrated research can be put to practical use. They have used the analysis presented in their paper to manage mutual funds and separately managed accounts. They have now created an index to track the results of their analysis. Pension Partners, LLC, recently announced the launch of the Beta Rotation Index (Ticker: BETAEQ), using the strategy outlined in their 2014 Charles H. Dow Award winning paper “An Intermarket Approach to Beta Rotation.” Pension Partners developed the index in partnership with S&P Dow Jones Indices LLC and the index will be independently calculated by S&P Dow Jones Indices. The Beta Rotation Index is a total return index that measures the hypothetical performance of an equity rotation strategy. Using the signaling power of Utilities outlined in the Dow Award-winning

Editor’s note: This article is an extract of a paper originally published at the MIT web site. All references and additional support for the ideas tested can be found in the original. Abstract Stop-loss rules—predetermined policies that reduce a portfolio’s exposure after reaching a certain threshold of cumulative losses—are commonly used by retail and institutional investors to manage the risks of their investments, but have also been viewed with some skepticism by critics who question their efficacy. In this paper, we develop a simple framework for measuring the impact of stop-loss rules on the expected return and volatility of an arbitrary portfolio strategy, and derive conditions under which stop-loss rules add or subtract value to that portfolio strategy. We show that under the Random Walk Hypothesis, simple 0/1 stop-loss rules always decrease a strategy’s expected return, but in the presence of momentum, stop-loss rules can add value. To illustrate the practical relevance

Editor’s note: This article was originally published in the May 21 issue of Bloomberg Brief: Technical Strategies. Below is an extract of that article. In Bloomberg Briefs, Paul Ciana, CMT, demonstrated the value of charting a commodity in multiple currencies. He wrote, “The chart above displays five charts of the continuous front month wheat future that trades on the Chicago Board of Trade. The top panel is wheat priced in U.S. dollars. The second panel is wheat priced in euros, followed by Australian dollars in the third and Indian rupees in the bottom panel. Each chart has the 50-day (magenta), 100-day (green) and 200-day (blue) simple moving average applied.” Based on the chart, he believes wheat futures face significant resistance at the moving averages. The exception is wheat priced in rupees but that could be due to the fact India recently increased imports of wheat from Australia. The breakout in rupees could

Editor’s note: This article was originally published in the May 21 issue of Bloomberg Brief: Technical Strategies. Below is an extract of that article. Alex Cole has put together a screen to show the trend of major currencies, sovereign yields, commodities and global stock market averages. Based on the charts, he concludes: The dollar held support while the British pound extended its breakout. Most major sovereign yields are testing resistance or breaking out. The euro-zone bonds lead the way, having broken out of a downward channel. Crude oil futures are trying to maintain their rally. The S&P 500 is barely holding at all-time highs. Alex Cole is a technical analysis specialist in Bloomberg’s analytics department. He can be contacted at ACole9@Bloomberg.net.