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Technically Speaking, March 2010

Letter from the Editor

The goal of Technically Speaking is to deliver timely and useful research to MTA members. Since switching to our electronic format, we do feel that we improved our ability to meet these goals. We have significantly expanded our use of charts, and we introduced full color charts. This format also means that we are now able to publish longer research pieces alongside shorter articles. All of these changes make Technically Speaking more of a benefit to our members as a source of ideas and as an avenue for being published. That first benefit is obvious - ideas are always welcome to traders and investors alike and serve as a starting point for individual research. In today’s job market that second benefit may be overlooked but even more valuable.  Being published in a professional publication is a great addition to any resume. It demonstrates that you can not only analyze the markets using technical analysis, but also that you can detail this analysis and present it in an understandable manner. Many positions require

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What's Inside...

Government Bonds: Can You Spare a Nickel?

by Keenan R. Hauke

This article was originally published on January 25, 2010 by Samex Capital Advisors and is reprinted with their permission. Bull markets come and go. Or do they? Investors buying US government bonds...

Economics and Technical Analysis

by Dr Prieur du Plessis

In a recent issue of “Words from the (investment) wise for the week that was (February 22-28, 2010),” Prieur du Plessis offers an insight into how we can combine economics with market analysis....

Correction to February Newsletter Article: Error in Chi Squared formulas

In the February issue of Technically Speaking, we introduced an error into these formulas. We regret the error and thank John R. McGinley, CMT, for bringing this to our attention. “Glad to see...

Month of January Indicator

by John R. McGinley, CMT

(If the month of January is net up, the year will be up. If down, no prediction, a coin-toss) We feel the First Five Days of January is THE best of the January Indicators. A signal is recorded when...

Letter to the Editor

re: Mike Moody’s piece on people losing money in a fund which gained 18% per year Some years ago Peter Lynch wrote in his book that most people lost money in his hugely successful Magellan...

NASDAQ 100 Weekly RSI Divergences Above the Overbought Line

by David Waggoner, CMT

This article was originally published at http://blog.themarketdetective.com/ and is reprinted with permission of the author. The Relative Strength Index (RSI) measures a stock’s or index’s...

Los Angeles MTA Chapter Meeting, January 26, 2010

by Kristin Hetzer, CMT, CIMA, CFP

Ken Winas, CMT, Investment Manager, Author and Radio Show Host was our Guest Speaker. Ken’s talk, “Buy and Hold Investing-R.I.P.” was based on his book, Investment Atlas, published in 2008. Ken...

MTA at the New York Traders Expo

On February 14th, 15th and 16th, the MTA held an exhibit booth at the NY Traders Expo. It was a success as we were able to continue to create more awareness for the MTA and CMT designation. We would...

MTA Announcements

MTA May Symposium – Save the Date! The MTA is pleased to announce the dates for this year’s May Symposium. It will be a two day event held on May 20th and 21st at the Millennium Broadway...

Government Bonds: Can You Spare a Nickel?

Government Bonds: Can You Spare a Nickel?

This article was originally published on January 25, 2010 by Samex Capital Advisors and is reprinted with their permission.

Bull markets come and go. Or do they? Investors buying US government bonds have experienced a nearly 30 year run of consistently higher prices with very little downside disruption. People often cite the powerful bull market in equities from 1980 to 2000 as a unique and amazing run. The current bond market, however, has now outlasted that “once in a lifetime” event by 10 years. We are witnessing an outlier, which by its very existence is begging to be explored. Over the last 20 years, the talking heads have had their say. It is now time for Samex to weigh in using the facts as market participants believe them to be. After all, its market action, not words, that count.

One easy explanation for the longevity of the bull market in bonds is

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Contributor(s)

Keenan R. Hauke

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Economics and Technical Analysis

Economics and Technical Analysis

In a recent issue of “Words from the (investment) wise for the week that was (February 22-28, 2010),” Prieur du Plessis offers an insight into how we can combine economics with market analysis. We might conclude that stocks are overvalued in the intermediate term from his work, which was originally published at InvestmentPostCards.com.

While this is an area deserving of more study, economic indicators seem unlikely to offer precise timing tools. In that way, this data may be more like Dow Theory, highlighting the longer trend in the market. And, in many ways, Dow Theory is the first specific application of economics in technical analysis. 

du Plessis writes:

From across the pond, David Fuller (Fullermoney) adds the following perspective: “Do we have a real crisis today? It is real enough for Southern European countries and obviously heightens sovereign debt concerns from Greece to the USA via the UK, but is this another global

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Contributor(s)

Dr Prieur du Plessis

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Correction to February Newsletter Article: Error in Chi Squared formulas

Correction to February Newsletter Article: Error in Chi Squared formulas

In the February issue of Technically Speaking, we introduced an error into these formulas. We regret the error and thank John R. McGinley, CMT, for bringing this to our attention.

“Glad to see Arthur Merrill’s Chi Squared memos reprinted, but sadly several typos crept in.

  1. “Here is the formula: Χ2 = (D – 0.5)2 / E1 + (D – 0.5)2 / E2” Two carets indicating the power of 2, not times two, are missing.
    This should be: X2 = (D – 0.5)^2 / E + (D – 0.5)^2 / E2
  2. Another similar error: “Χ2 = (130 – 0.5)2 / 799 + (130 – 0.5)2 / 735 = 43.8, a highly significant figure; confidence level is above 99.9%”
    The two terms “(130 -.0.5)2” should be (130-0.5)^2
  3. Below that :”If expectation seems to be even money in your test, such as right/wrong), the formula is simplified: Χ2 = (C – 1)2 / (O1 + O2)”

The term

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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.

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Month of January Indicator

Month of January Indicator

(If the month of January is net up, the year will be up. If down, no prediction, a coin-toss) We feel the First Five Days of January is THE best of the January Indicators. A signal is recorded when they are up. A buy signal was given this year. The record of the down 1st five is 50:50, i.e. the year as a whole is down in only half of them.

The month of January as a whole has very similar numbers, but has a serious problem. Once again we use only the up Januarys. Since 1942 there have been 43 up Januarys, i.e. 43 buy signals. In that period there were only 8 bad calls. This matches the accuracy of the 1st five days. This year, the month of January was down; therefore no signal is recorded. Since 1942, there have been 24 down Januarys; the market was down in

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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.

Contributor(s)

John R. McGinley, CMT

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Letter to the Editor

Letter to the Editor

re: Mike Moody’s piece on people losing money in a fund which gained 18% per year

Some years ago Peter Lynch wrote in his book that most people lost money in his hugely successful Magellan Fund. Fidelity was outraged; they went back to test his thesis and found to their horror that he was right. It’s understandable: people only buy something which has been going up too long to resist. So they buy high. When the fund starts down, human nature keeps them from admitting error until the pain gets too much. They sell low.

We technicians know that.

John R. McGinley, CMT
Editor, Technical Trends

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NASDAQ 100 Weekly RSI Divergences Above the Overbought Line

NASDAQ 100 Weekly RSI Divergences Above the Overbought Line

This article was originally published at http://blog.themarketdetective.com/ and is reprinted with permission of the author.

The Relative Strength Index (RSI) measures a stock’s or index’s strength relative to its own price history. This is different than the more general use of the term “relative strength,” which refers to the measurement of a stock or index relative to another stock or index, usually the S&P 500.

In its basic use as an overbought and oversold indicator, the overbought level is above 70 and the oversold level is below 30. These levels are often adjusted by technicians based on the history of the specific security, the type of market (trending or choppy), and the time frame being traded.

The overbought and oversold signals are most valuable when combined with other RSI signals. One such signal is called the failure swing, which happens when the RSI closes above 70, retraces, then pokes above 70 again but

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)

David Waggoner, CMT

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Los Angeles MTA Chapter Meeting, January 26, 2010

Los Angeles MTA Chapter Meeting, January 26, 2010

Ken Winas, CMT, Investment Manager, Author and Radio Show Host was our Guest Speaker. Ken’s talk, “Buy and Hold Investing-R.I.P.” was based on his book, Investment Atlas, published in 2008. Ken has extensive historical research to back up his analysis. A successful investor must have a good understanding of financial history, it’s as important in the business world as in academia. The presentation was full of historical facts; the longest, shortest bull, bear and sidewides markets. The full impact of not understanding what type of market you are in and protecting assets. The experience of the long bull market of the 1980’s and 1990,s resulted in investors treating savings as investments and not recognizing the devastation of a bear market on side-way market on investment funds. In summary, Ken believes we are in a long term side-ways market which will not end for some time. History matters in investing; you

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)

Kristin Hetzer, CMT, CIMA, CFP

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MTA at the New York Traders Expo

MTA at the New York Traders Expo

On February 14th, 15th and 16th, the MTA held an exhibit booth at the NY Traders Expo. It was a success as we were able to continue to create more awareness for the MTA and CMT designation. We would like to thank those of you that volunteered to help out at the booth. For those of you that stopped by to say hello, it was a pleasure to see you as well. Below are a few pictures of what the MTA exhibit booth looked like.

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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.

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MTA Announcements

MTA Announcements

MTA May Symposium – Save the Date!

The MTA is pleased to announce the dates for this year’s May Symposium. It will be a two day event held on May 20th and 21st at the Millennium Broadway Hotel New York, located at 145 West 44th Street (between Broadway and 6th Avenue) in the heart of Times Square. More information about the theme, topics, speakers, and agenda will be announced shortly.

MTA Annual Meeting – Date Announced!

The MTA Board of Directors has established May 22nd as the date for its Annual Meeting. The MTA Annual Meeting will be held at the MTA Headquarter facility, located at 61 Broadway, Suite 514, New York, NY 10006 (14th Floor Boardroom). The meeting will commence at 10:00 AM. The Secretary of the Board will put out an agenda and any proxy material for voting at this meeting shortly. If you have any questions

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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.

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New Educational Content This Month

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