Technically Speaking, March 2019

The same old news seems to hang over the markets like a low level cow emission of uncertainty. Brexit – will it be hard or soft? China – will there be a trade deal or not? North Korea – nukes or no nukes? The Fed – quantitative tightening or not? Politics – not going there.

The new news was the Green New Deal, spearheaded by the freshman representative from New York. This supposed economic stimulus and equality plan was widely criticized for its disruptive goals and impossibly fast timeline. We’ll leave the debating to the debaters and concentrate on what that means for us and our investing clients. Basically, it means some industries will get a boost and others will get a drag, if not elimination.

Do we, or should we, really care about legislation that probably will not become law? The answer is yes, but for a reason any technical analyst should appreciate. There is already a trend in place towards a greener economy. Fully powered by the free market, we already see electric vehicles, high efficiency heating and cooling in buildings, natural gas heating oil and coal, renewable gas technology improving, solar and wind power costs coming down, and so on and so on. Green is coming, with or without a push from Washington. It’s what the people demand. They just don’t want to go cold turkey with no gas-powered pickup trucks, forced veganism and tripled electricity costs.

This month, we’re getting ready for the 46th Annual Symposium, scheduled for April 4-5 in New York. There is still time to register.

We also continue with our member interview series, this month featuring Mark Arbeter, CMT. In addition to this, we’re carrying on the interview theme with a revisit to a presentation I did for the CMT Association last year called “Writing for the Media,” which teaches a few things about doing it right. And Lance Roberts offers some tips on being a good interview subject for TV or radio.

Minnesota and Chicago chapters sent in reviews of recent meetings and Tom Bruni, CMT and our own Tyler Wood reviewed the recent Chart Summit weekend in Colorado.

Of course, there is association news, including reason to show off your CMT designation. Be a CMT, loud and proud!

Michael Kahn, CMT
Editor, Technically Speaking

What's Inside...

Letter from the CEO

I want to take a few minutes to highlight some of the changes to the CMT Program and our online...

Read More

President's Letter Redux

This letter was originally published last month and re-ran in light of the upcoming Symposium.

Symposium Time: Learn – Connect...

Read More

What Makes You a Good Interviewee?

Anyone who manages money or sells research benefits from exposure in the media. Sure, we can get clients by taking...

Read More

Member Interview – Mark Arbeter, CMT

What do you do professionally?

I am President of Arbeter Investments LLC, which I started in late 2014. I write...

Read More

Brandishing the “CMT” Designation

Every CMT charterholder has worked hard to earn and maintain their charter.  What’s more, every charterholder has a vested interest...

Read More

Chart Summit 2019 - Review

Chart Summit 2019 took place February 22-23 in Breckenridge, Colorado, hosted by JC Parets of Allstarcharts and Brian Shannon of...

Read More

How to Write for the Media

This month, we have part 1 of an informal block of “wisdom” on dealing with the media with more coming...

Read More

Minnesota Chapter Meeting - Notes & Review

The Minnesota Chapter met February 19 at Piper Jaffray Headquarters with featured speaker Greg Schnell, CMT, MFTA, Senior Technical Analyst...

Read More

Chicago Chapter Meeting - Notes & Review

The Chicago CMTA Chapter kicked off its first meeting of 2019 with one of its favorite guest speakers, Katie Stockton....

Read More

CMT Association Mourns the Loss of David Fuller, Annual Award Winner

It is with the deepest regret I inform you David passed away on the 15th of January at his home...

Read More

2019 Annual Symposium Speaker Previews: Clare Flynn Levy & Emanuel Derman

Leading up to the 2019 Annual Symposium next month, we’re previewing two highly-anticipated presentations as well as the speakers’ professional...

Read More

Letter from the CEO

I want to take a few minutes to highlight some of the changes to the CMT Program and our online presence, including changes to our website, that are ongoing.

The first change, which we recently highlighted in an email and which many of you have already noticed, is the gating we’ve introduced on the website. This gating is a form of member-restricted access, moving more of the Association’s content and programming behind a paywall. That means you must be logged into the website as a member in order to access this material. Some material will continue to be open to anyone, but most of the content will now be accessible only to members, who support the creation, delivery and storage of that material through their membership dues.

To that end, beyond the website, guests and non-members will now need to pay a fee to attend certain events (including chapter meetings and webcasts). Programming that is directly related to the CMT program will be available to individuals who are currently exam candidates, as well as members, for free.

The second big shift in our online strategy is an uptick in our social media activity across several platforms. We are looking to become more proactive in highlighting the achievements and activities of our members, broadcasting our “Members in the Media” and “Featured Publications by Members” content more regularly. You can help us in this effort by sharing your activity with our social media profiles, or by tagging us in your posts, so that we can celebrate your accomplishments with a wider audience.

Another significant change specific to the CMT Program is the recent revitalization of the CMT curriculum, as well as the program content overall. As many are aware, starting in 2015, we moved to a consolidated textbook for each level. What this means in practice is that we have worked with our publisher, Wiley, who in turn worked with other publishers to secure the rights to the relevant pages and chapters. The result was a consolidation and republishing of those works into a single volume compendium of the material necessary for each CMT exam level.  

As this effort evolves, we have begun to write our own introductions and transition sections to help the flow of material and improve comprehension. For the 2019 edition of the curriculum, Stanley Dash and the Curriculum and Test Committee commissioned the writing of several chapters to bring more focus and clarity to sections of the material, replacing republished material and saving the association from paying royalties. Over the next few years we are planning to develop and commission more work, so that over time the Association will be the direct owner of all the content used within the CMT program.

One final highlight regarding the CMT program: we have experienced very strong growth in the program as well as a changing demographic composition of exam candidates, as illustrated by the following table.

Region

CY2015
Candidates
% of Total CY2018
Candidates
% of Total ’15-‘18 Growth
North America 547 49.4% 931 47.6% 70.20%
APAC (incl. India) 350 31.6% 685 35.1% 95.71%
Europe 109 9.8% 170 8.7% 55.96%
Middle East 33 3.0% 58 3.0% 75.76%
Rest of World 69 6.2% 110 5.6% 59.42%
Total 1,108   1,954   76.35%

 

As always, we continue to seek feedback on our programs and look for volunteers to help us deliver on our mission to advance the discipline of technical analysis worldwide, and provide sophisticated, trustworthy connection opportunities to our members.

Contributor(s)

Alvin Kressler

Alvin Kressler was the Executive Director & CEO of the CMT Association from 2015-2024. Alvin was instrumental in establishing a partnership between CMT Association and with CFA Institute. Alvin was previously Director of Research and Corporate Access at Bloomberg Tradebook.  Before joining...

President's Letter Redux

This letter was originally published last month and re-ran in light of the upcoming Symposium.

Symposium Time: Learn – Connect – Grow

The 2019 CMT Association Annual Symposium will take place April 4-5 in New York City.  We will gather with 250 or so peers and thought leaders from around the world and discuss markets, share ideas about all things technical, and size up the industry.  

Bill Kelleher, Tyler Wood, Alvin Kressler and the staff at the CMT Association have a fantastic program lined up with prominent practitioners from around the globe. This year’s event theme is Behavioral Finance. It’s a timely and important subject to understand. In fact, Richard Thayer received the Nobel Prize in Economic Sciences in 2017 for his work on Behavioral Finance; even academia recognizes the importance of this topic.  

I’ve made my plans to attend and I’m excited about our premier event of the year! Please consider joining us – you’ll be glad you did.

Now, before you dismiss my message as some advertising blurb that I’m forced to say because I’m on the Board, please know, I mean what I say when I tell you that the time, effort, energy and overall costs are worth showing up at the symposium.

Why do I feel strongly about you attending?

This is a smaller, warmer, interactive conference, very different from an average industry convention.

You’ll hear from industry leaders. More importantly, you’ll likely get to meet them and talk directly with them if you’re motivated to do so.

You will advance your learning of TA, markets, and our organization. We’ll cover a broad landscape of topic categories, from Behavioral Finance and Artificial Intelligence/Machine Learning, to the current state of the markets, and new tools/methods that may help your investing/career.

You can engage and chat with members of the CMT Association Board and staff. If you want to make your voice heard by the Board, this is the chance to meet up face to face! Learn about our growth plans. Get involved with our governance and future direction.

Lastly, you’ll make some enduring friendships. I’ve been lucky to have become very good friends with many of the top technicians and market analysts in our business because we met several times at the annual Symposium and spent some quality time together (at the gala dinner, the reception, or just between speaker sessions).

Make an investment in your learning and your career by attending. You’ll be glad you did!

Also, please look me up if I can help you navigate the event, or if you’d like an introduction to one of our members or staff. I’ll be glad to help you.

Contributor(s)

Scott G. Richter, CMT, CFA, CHP

Scott Richter, CMT, CFA, CHP is a senior portfolio manager for Westfield, which manages over $4B in AUM.  He is the lead portfolio manager for alternative assets and is also responsible for investments in the energy and utility sectors.  He was formerly...

What Makes You a Good Interviewee?

Anyone who manages money or sells research benefits from exposure in the media. Sure, we can get clients by taking out ads, but they are expensive and really do not work well. Or, we can cultivate a client base that loves us so much they tell all their friends, who tell their friends. That takes years to develop.

The most efficient way is for the media to advertise our services for us in a “soft sell” approach. In other words, have reporters and bloggers quote us in their work for our expert opinion. It can be where we think stocks are heading. Or it can be how to invest every time a politician opens his or her mouth. Or even how to run a small business.

It does not matter. With 24/7/365 media – TV, radio, blogs, podcasts, books, YouTube – there is a huge, and I mean huge, need for content. Believe it or not, reporters NEED us.

The problem is that WE as individuals may not be what THEY need.

Sorry for being harsh, but experts in any subject, from charting to law to astrophysics, are not the most entertaining of folks. They may be very smart and very accomplished but they are not – as a group – ready for prime time.

News is still a business, so a guest must be good on their topic but also entertaining. News needs viewers, plain and simple, and bored viewers do not tune in.

It is important to be right, but it is more important to be interesting.

There. The dirty little secret is out.

Think about who you see in the media all the time. Why are they always there? Are they smarter than you? Nope. They provide interesting and useful fodder for the interviewer and once a reporter locks on to sources, they always go back to them.

I asked Lance Roberts, Chief Strategist/Economist for RIA Advisors, and Editor at http://www.realinvestmentadvice.com what makes someone a good subject during an interview. “That’s easy,” he said. Here are his thoughts:

  1. Be concise in your answers; get to the point.
  2. Talk in “plain English.” Technical jargon is OK but you have to explain it quickly.
  3. Brush up on your speaking skills. Get rid of filler such as “Like, Umm, and You Know.”
  4. Have a bit of “personality.”
  5. Be willing to have a debate and defend your position without being an ass.
  6. Have a unique perspective that makes the viewer/reader say, “Wow, I did not know that.”
  7. Have a sense of humor … life is already too serious.

I’ll add one of my own – answer the question. Be sure you give a straight answer, even if that answer is “I don’t know.” However, if you don’t know, you cannot leave the reporter hanging. Try to give him/her something to further the conversation. “I don’t know that exactly, but this might help…”

If you are reasonably good on your market calls, but are exceptionally entertaining and informative, chances are you will get a call back. And if you make it easy for the reporter to want to contact you in the first place by offering specific and possibly news-related bits of expertise, the next time a reporter does a story on that, you will be on top of the call list.

Here is a link to a U.S. News and World Report article entitled “How to Get Media Coverage as an Expert in Your Field.” It was written in 2011 but the basics never change. Plus, it includes online resources you can use for free. https://money.usnews.com/money/blogs/outside-voices-careers/2011/02/02/how-to-get-media-coverage-as-an-expert-in-your-field

And this, “The 5 Truths of Modern Media Targeting,” by a great source to let reporters find you. https://www.cision.com/us/resources/tip-sheets/5-media-targeting-truths/?sf=false

 

 

Contributor(s)

Michael Kahn, CMT

Michael Kahn, who holds a Chartered Market Technician (CMT) designation, is a seasoned financial services strategist, analyst, columnist, educator and speaker.  Michael has been working with charts and technical analysis since 1986. He is the author of three books on technical analysis...

Member Interview – Mark Arbeter, CMT

What do you do professionally?

I am President of Arbeter Investments LLC, which I started in late 2014. I write a weekly, technically-based newsletter covering the major indices, sectors, treasuries, the metals, and crude oil. In addition, I write a weekly market letter for Argus Research. I also trade my own account.       

How did you get there?

I got interested in the stock market as a teen in the late 70s. My doctor’s husband was a broker in Doylestown, Pa. He gave me some annual reports, the S&P stock guide, and the Trendline chart book. Honestly, the only thing, even way back then, that made sense to me was the chart book.

In 1977, after graduating high school, I started at Penn State Ogontz in their engineering program, which I chose because they made good money. I quit after a week. Eventually, I got a job at Penn Engineering & Manufacturing (PEM) in Danboro, Pa. in their shipping department, and was quickly promoted to their Production & Inventory Control Department (PIC).

I remember vividly the day I got my first check. I broke into tears and asked myself, why I quit college. While I was at PEM and still a teen, I could see what a well-run company it was so I started buying their stock. Once I made money for basically doing nothing, I was hooked.

My last days at PEM were right near the major market low in August 1982.  I went to night school at Delaware Valley College while I worked at PEM, taking some business classes. Then, after five years at PEM, I decided to go back to college full-time and get a degree finance and economics at Temple University.

I made enough in the market over the five years at PEM to pay for my college. Do you remember Canadian oil stocks in the early 80s? My PEM stock also did pretty well. I completed my undergraduate degree in three years, then got my Masters in Finance and Economics in another year.

I got a job at Standard & Poor’s in August 1987 and started the week the market peaked. So, my career started as a financial writer and I ended up becoming S&P’s Chief Technical Strategist where worked for 26 years, commuting 4+ hours/day from Bucks County, Pa

Who was an early mentor in your career?

I would try to get my hands on any technical research I could back in the early going of my career. Fortunately, we received many great newsletters at S&P and I learned a lot about how these technicians looked and evaluated the market. I read Stan Weinstein, Richard McCabe, Peter Eliades, Philip Roth, Louise Yamada, Marty Zweig and Jeffrey deGraaf among many others.     

What book/author was most influential in helping you understand TA?

While I love most of the books that the CMT requires for the exams, I really believe you learn the most from individual practice. What works well, why it works well, when is it likely to fail, etc. There are far too many assumptions in TA that are based on what is written in the texts. One must go through many market cycles of predicting, getting your head handed to you, learning and admitting why you were wrong, and moving forward without ever being too stubborn.

What do you like to do when you are not looking at markets?

I love the outdoors and country. I fish and hunt as much as I can. Birdwatching. Cooking. I enjoy the simple things like spending time with my granddaughter picking wild blackberries, wild spinach, and other edibles.

What brought you to the CMT Association?

I wanted to further my career as well as increase my knowledge of TA.

What it the most useful benefit of membership for you?

Meeting some of the great people over the years. It’s funny, most technicians are really down to earth people, willing to share and learn even if they been in the business for decades.          

Contributor(s)

Mark Arbeter, CMT

Mark Arbeter, CMT, is currently the President of Arbeter Investments LLC and runs a newsletter entitled “On The Mark” focusing on technical analysis of the U.S. markets. Mark recently ended a 26-year career with Standard & Poor’s Equity Research as their Chief...

Brandishing the “CMT” Designation

Every CMT charterholder has worked hard to earn and maintain their charter.  What’s more, every charterholder has a vested interest in the CMT Association’s goal of “advancing the discipline of technical analysis,” as it has for nearly 50 years.

All of us further this mission in the work we do each day.  This includes pioneering new areas of research, interpreting market action in the interest of clients, and communicating responsibly about technical analysis’ strengths and limitations.

Another aspect of furthering the mission and promoting the responsible application of technical methods should be using our hard-earned “CMT” designation in all appropriate circumstances.  At the least, this credential should be part of our employment record.  And from business cards to promotional materials, on websites and research reports and at speaking engagements, it is important for us to make clear our commitment to this discipline, to its proper application, and to the Code of Ethics by using “CMT” with our names and titles.

Of course, we must be sure that any such use is in compliance with our employer’s procedures and all our statutory and regulatory obligations.  Notwithstanding, the use of “CMT” in reference to our professional work and status is an important element of propelling forward the CMT Association and the practice of technical analysis.

For more information on using the designation, please see Trademark Usage Guide for CMT Charterholders.

Contributor(s)

Stanley Dash, CMT

Stanley Dash is the CMT Program Director at the CMT Association, a global credentialing body. In this role, Mr. Dash works with subject matter experts, candidates, and the Association’s members to maintain and improve the curriculum, the test experience, and the value...

Chart Summit 2019 - Review

Chart Summit 2019 took place February 22-23 in Breckenridge, Colorado, hosted by JC Parets of Allstarcharts and Brian Shannon of AlphaTrends.  Thank you sponsors Stocktwits, Optuma, Speedtrader, TradeIdeas, CMT Association, TrendSpider, TradingAnalysis.com, Investor’s Business Daily, and Investopedia.

Day One

Day one started off with a “Technical Analysis in Social Media” panel with host Sean McLaughlin, Howard Lindzon, Brian Shannon, Ian McMillan and Brian Lichtor.

The biggest takeaway from that presentation was how social media has the ability to accelerate the learning curve of financial markets and investing by providing access to information and mentors. The ability to identify and collaborate with a community of people who have similar interests is something that was much more difficult just a decade or two ago. As with anything there are bad actors out there, but if you put in the work to figure out who you are following and why, you end up with a curated stream that provides value day in and day out.

The next presentation was Matthew Verdow, CEO of Optuma, who walked us through the basics of “A Quant Approach for any Technical Analyst.”

When people think of Quantitative Analysis, there’s a tendency to jump to “black box” programming, but Matthew showed us that no matter what approach we have to the market, we need to show that our work is statistically significant. A back test alone is not a quant process because it has too many axes of freedom. This presentation walked us through the four steps of the testing process: Idea Generation, Signal Testing, Trade Testing, and Back Testing.

At the end of the day we all want to add value; quantitative methods can help us determine what value our process is adding and how we can continue to improve it over time.

JC Parets from All Star Charts was up next, ripping through more than 100 charts in 45 minutes to provide a “Top/Down View of Financial Markets.”

Some key themes he spoke about were the potential for the US Dollar (both Trade Weighted and the traditional Dollar Index) to roll over from current levels.

A weaker US Dollar may bode well for Emerging Markets and JC pointed out an interesting divergence between the Emerging Markets ETF $EEM and the S&P 500 during four key lows over the last two decades. Each time we saw Emerging Markets make a higher low as the S&P 500 made a lower low, a signal that JC says indicates improving risk appetite for equities.

He then got into some International Equity Indices in their local currency, pointing out that it’s hard to make the bear case if the London FTSE 100 is above its 2000, 2007, and 2014 highs.

Market Breadth is a hot topic today given the market’s aggressive rally off the December lows. JC shared a chart showing the NYSE Common Stock Only Advance-Decline Line hitting all-time highs, which is one data point suggesting strong market internals.

What can continue to fuel this rally to the upside you might ask? Cash….and a lot of it. This Bank of America Fund Manager Survey indicates that the percentage of its participants were overweight cash is the highest it’s been since January 2009.

After a little booze, food, and discussion about “Direct Market Access” with Don Hensley from Speedtrader, we were on to Todd Gordon’s presentation about “The Similarities Between Ski Racing and Stock Trading.”

For those who don’t know, Todd majored in economics at St. Lawrence University and competed on their Division 1 Ski Racing Team. Being an expert in charts AND Skiing was just unfair for the rest of us, because he definitely killed it on the slopes and with his presentation.

We can’t get into every similarity, but here’s a teaser of the 10 that were discussed.

  1. Preparation
  2. Equipment
  3. Training
  4. Game Plan
  5. External Factors
  6. Tactics
  7. Anticipation
  8. Counter Intuitive (Intuition?)
  9. Adaptation
  10. Controlled Aggression

Todd is also a big Elliott Wave guy, so he dropped some knowledge for everyone in attendance about what that discipline is and how he incorporates it into his process.

One thing that stood out during the last section of his presentation “Controlled Aggression,” was when he talked about having the courage to make money when you’re right. Not every trade setup or market condition is the same, so being aggressive when the odds are in your favor is critical to helping offset the small losses that you take over time.

Kathy Donnelly has been a Proprietary Equity Trader since 1992 and spoke to us about “The Lifecycle of a Super Growth Stocks” and how to trade it. Her trading style is growth oriented with a holding period of 1-1.5 years or more, so it was definitely an interesting contrast to many of the other presenters who have a shorter timeframe.

Her presentation focused on IPOs, so she first she walked us through the lifecycle phases of a stock: IPO Advance Phase, Institutional Due Diligence Phase, and Institutional Advance Phase.

Kathy used Tesla as an example to walk us through what these phases look in real time and how and when she traded this stock in particular.

This led into a discussion of the six potential patterns of a stock’s lifecycle, each of which have a clever name that helps indicate the type of action it’s describing.

Some other interesting tidbits from her study of IPOs were that 55% of IPOs undercut their day 1 low within three weeks, 91% of stocks eventually undercut their day 1 low, and only 20% of IPOs gain 100% from their first trading day close within 1 year.

If you’re interested in IPO investing, Kathy’s presentation was full of great information.

We ended the night with a “Fireside Chat” between Sean McLaughlin and Jon Najarian, where they discussed trading and options. Jon talked about the importance of knowing the time, strike, and whether the trade occurred on the bid or the offer when analyzing options activity. Generally, when there’s large institutional buying or selling there is a reason for it, so by scanning for those outsized trades he (and other market participants) can find opportunities to ride the trend created by those institutions.

They also discussed the 16 option exchanges and how they all are dark, but that some market participants pay for access to see the feed for bid/offers nanoseconds before people with slower connections so that they can take advantage of it.

They covered too many topics to summarize, but for anyone interested in trading, options, and institutional order flow, this was a real treat.

Day Two

Day two began with JC Parets and Howard Lindzon discussing “Chart Art.” This panel was interesting because JC works primarily in the public markets, whereas Howard is primarily in the private markets. Howard offered his perspective on how he uses information from the public markets to inform decisions in the private markets and vice versa.

They also spoke about the next potential trend in the markets and fintech being around “Data Visualization.” Access to markets and information has never been better, but now people need the tools to organize all of that data in a way that helps them inform decisions. 

Another topic was Howard’s advice for kids today. In the past decades, it was “learn a second language,” but now it’s “learn to code,” or if you can’t, go work for a company whose product is already good so you can learn about how to run a business (sales, marketing, operations, etc.).

Dan Mirkin and David Aferiat spoke about “Quantitative Intelligence and the Significance of Server Technology.” They discussed the role of Artificial Intelligence in trading/investing, some market structure trends they’re seeing, as well as a breakdown of their program “Holly” and how it works.

Some of the market structure trends they’re watching are below, but the one that sticks out is the rise of CMTs as future data scientist. Matthew Verdow spoke about this as well in his presentation about quantitative methods.

The TradeIdeas team made a great case for humans partnering with machines to improve their process and get better results in the market. It doesn’t have to be one or the other, and in many cases using both can improve your edge in the market.

Next, Tom Bruni discussed “Market Breadth” from an educational perspective, describing how the All Star Charts team approaches it and what they’re seeing in the current market environment.

First, he discussed some traditional indicators, such as the S&P 500 Advance-Decline Line, which broke out well ahead of the S&P 500 and continues to lead to the upside.

Equally-Weighted charts are another important part of Tom’s process. He discussed how the largest 10 stocks in the S&P 500 account for 20% of the weighting, so divergences between an equally-weighted chart of those ten stocks and the cap-weighted S&P 500 cannot remain intact over the long-term and needs to resolve itself by one catching up (or down) to the other.

He even gave some great examples from India’s stock market where the largest 10 stocks make up 40% of the index and one stock accounts for 60% of the Energy sector!

Using a free online tool, Koyfin, Tom showed that it’s never been easier to analyze the breadth of an index, ETF, etc. by looking at the weighting and attribution of each holding.

Another point made was that the number of stocks in the Russell 3000 getting overbought, or showing positive momentum characteristics, exceeded its 2018 highs despite prices of the index being several percent off their highs. Another sign of expanding, not narrowing, participation.

To finish off his presentation, Tom walked the audience through the results of his “eye test” where he went through the top 200 stocks in the S&P 500 and shared those that had the characteristics he looks for when shorting stocks (downward-sloping 200-day moving average & momentum in a bearish range). After finding only 5-6 names, the conclusion was that if charts like Altria are the best setups the bears can muster, we probably don’t want to be shorting stocks on any sort of intermediate or long-term timeframe.

After that, Scott St. Clair presented the “IBD Stock Investing Philosophy.” The four pillars of performance are: Stock Selection, Concentration (and Leverage) vs Diversification, Market Timing, and Money Management.

Each section had its own nuggets, but these were a few that stuck out.

In the stock selection section, this quote from William O’Neil was really interesting. “You can come up with the idea from the charts. But it (the stock price) is not going up because of the chart.” This ties well into what Tyler spoke about in his presentation, that over the long-term fundamentals drive the stock price, but technicals can help us navigate the difference between the market value and its intrinsic value in the short and intermediate-term.

In terms of concentration vs diversification, Steve Birch (William O’Neil + Co, CEO) has this to say “When I started out as a novice investor I was always trying to figure out what to buy. After I experienced a few bear markets I figured out when to buy. Now I spend most of my time thinking about how much to buy.”

As for market timing, William O’Neil had this to say about patience, “Investors who can be right and sit tight are rare. It takes time for a stock to make a large gain.”

Apple didn’t get to where it is today overnight folks.

Scott’s final word was a quote from William O’Neil on money management, “You positively must understand and accept the first rule for the highly successful individual investor is…always cut short and limit every single loss.” Not sure there’s a better way to end a presentation with a reminder that capital preservation is a must in trading and investing.

After some food and drinks sponsored by TrendSpider, Tyler Wood from the CMT Association talked about “Navigating The Gap Using Technical Analysis.”

His presentation kept it simple from the start, helping answer three simple questions: What is technical analysis, what is the CMT program, and where are the career opportunities?

Due to time limitations Tyler didn’t get into the CMT Designation process or career paths, but there were some great slides at the back of his deck discussing just that.

And here is a great chart of the diverse career paths of current CMT Charterholders.

The next panel, “Women in Technical Analysis” was hosted by Rachelle Daglis and featured Kathy Donnelly and Kim Sokoloff.

It was an interesting contrast to see Kathy and Kim on a panel together because of their two opposing timeframes, Kathy being long-term and Kim being short-term. What the two did have in common though is the theme that women traders have an advantage over men because of their patience, smaller egos, and a variety of other factors.

The two also shared their approach to trading and daily routine in more detail, offering interesting insight into the schedules and habits of two full-time traders.

The second to last presentation of the night “The Future of Technical Analysis” featured Dan Ushman and Jake Wujastyk, walking us through their platform TrendSpider.

First Dan explained the problem that his team’s platform is looking to solve: Technical analysis is hard! It’s difficult to be consistent if you’re relying solely on your ability to interpret a chart and make discretionary decisions based on it. The subjectivity of our field can often lead to profit-killing mistakes and traps.

TrendSpider is a platform that offers charting, technical analysis automation, multi-timeframe analysis automation, and alert automation. All of those features combine to help reconfigure your trading workflow into a more efficient, easier to manage process that’s designed to drive consistency.

Last but not least, Brian Shannon walked us through his “Favorite Swing Trade Setup.” He began his presentation defining swing tradings, market structure, trend alignment, and two tools he uses to help with that process: Moving Averages and the Anchored VWAP.

So, you’ve identified the trend, now what? Brian says you have to answer these two important questions before entering any trade. Where did the stock come from (do not chase)? Where does it have the potential to go? The potential reward must be worth the risk.

He ended his presentation with his “Four Steps For Success, The Alphatrends Way!”

And that’s a wrap! Chart Summit 2019 is in the books. Thank you to everyone that helped make this event a success, it takes a village. Also, congrats if you made it to the end of this post.

To access all video presentations from the weekend, visit ChartSummit.com and register. You’ll receive a notification when they’re available. And for a flavor of the skiing and other festivities, visit Chart Summit Wrap

Thanks for reading and we hope to see you next year for Chart Summit 2020.

Contributor(s)

Tyler Wood, CMT

Tyler Wood serves as CEO and Executive Director of CMT Association with the aim of elevating investors’ mastery and skill in mitigating market risk and maximizing return in capital markets through a rigorous credentialing process, professional ethics, and continuous education. He is...

How to Write for the Media

This month, we have part 1 of an informal block of “wisdom” on dealing with the media with more coming next month. Here is the intro to a PowerPoint presentation I did for the CMT Association in 2018 followed by a link to the slides for that talk.

Let me let you in on a little secret. The last time I checked, which was a few years ago, one of the more popular media outlets for technical analysis was paying the equivalent of $6/inch of copy. Compare that to 25 – 50 cents per word or more that most magazines pay.

Why? Because the typical article submitted needs a lot of work in editing. They expect to spend quite a lot of time rephrasing, rewriting and reorganizing every article and usually they are right.

And that does not even address the content itself, which may not clear or even coherent.

Technical analysts are notoriously bad at communication. We cannot explain what we do. We cannot explain why it works. We cannot convey the concept that we deal in probabilities, not crystal balls. We don’t even use conversational language so it’s no wonder why the media shuns us.  We are handicapped by the brilliant concepts and descriptions that make us great!

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Contributor(s)

Michael Kahn, CMT

Michael Kahn, who holds a Chartered Market Technician (CMT) designation, is a seasoned financial services strategist, analyst, columnist, educator and speaker.  Michael has been working with charts and technical analysis since 1986. He is the author of three books on technical analysis...

Minnesota Chapter Meeting - Notes & Review

The Minnesota Chapter met February 19 at Piper Jaffray Headquarters with featured speaker Greg Schnell, CMT, MFTA, Senior Technical Analyst at StockCharts.com.

Here were his favorite trade ideas:

Japan – Watching another month or so to see if PPO (Percent price oscillator) breaks down. A break down in the JPY could take the markets lower. Noted a breakout in gold but the yen had not followed causing some concern.

Germany – Likes using Germany as EUR thermometer. The Euro itself looks like it is going to break lower, sitting at a two-year low and RSI is close to 30 for the past year. There is weakness outside the U.S. but not necessarily in the US. However, weakness overseas could eventually bring U.S. markets lower. Expects resolution sometime around 2Q

USD – Expects the dollar to go higher and likes using Pring’s special K indicator in his analysis. Would view a drop in the dollar as a catalyst for emerging markets and commodities

Gold – Has been having trouble breaking out as measured by PPO, Tuesday’s move was positive and looking for continuation. If gold rolls again on PPO it would tell him USD was going to go higher. Notes gold has not been tracking with the Yen, a divergence from the past.

Oil – Oil is trying to break out. Focused on direction of USD to help guide him. Bullish percent signals are kicking in.

General Statements – If Canada gets weak early it can be an indicator for US. Stated preference for using PPO when analyzing charts long term since it is very similar to MACD but allows for analyzing longer term patterns. See’s a trade agreement with China as providing a pop to equity markets.

Contributor(s)

Kyle Lottman, CMT, CFA, CPA

Kyle Lottman, Wealth Management Advisor at Elevate Capital Advisors. Prior to joining Elevate, Mr. Lottman led a successful analyst career spanning nearly a decade in both equity and fixed income markets. During this time, he obtained the Chartered Financial Analyst® designation; regarded...

Chicago Chapter Meeting - Notes & Review

The Chicago CMTA Chapter kicked off its first meeting of 2019 with one of its favorite guest speakers, Katie Stockton. Katie is a CMT and is the founder and managing partner at Fairlead Strategies. As usual, the guests convened at The Chicago Board of Trade, despite the winter weather that plagues the city this time of year. We had a decent turnout considering the conditions: nearly 30 brave souls trekked their way through the tundra to see Katie.

She went over some of the tactics used at Fairlead. In their “Toolbox,” you will find some classic technical analysis indicators such as MACD, stochastics, and moving averages. However, they also employ some methods that are less common, such as the Cloud Model, also known as Ichimoku. Katie noted that the Cloud Model isn’t as popular in the U.S. as it is in Europe or Japan, where it is used as extensively as MACD and stochastics. Geography doesn’t prevent Katie from effectively using this method to analyze the markets, however.

After the presentation, in which Katie went over charts of many different markets, the group headed down to Ceres to finish off the evening with drinks, appetizers, and more market talk.

Contributor(s)

Jim Erdmier, CMT

Jim Erdmier, who holds a Chartered Market Technician (CMT) designation, has been trading privately and institutionally for 10 years in equities, FX, and futures. He is pursuing a degree in Finance and Computer Science at DePaul University. Jim is Co-Chair of the...

CMT Association Mourns the Loss of David Fuller, Annual Award Winner

It is with the deepest regret I inform you David passed away on the 15th of January at his home in Devon surrounded by family, which is where he wanted to be. He is survived by his wife Graham, and his two daughters, Grayson and Laurel.

He had been battling a heart condition for the last several years. Unfortunately, the muscle was too weak to operate on, so he had been balancing medications in an effort to keep swelling under control and succumbed on the night of Tuesday the 15th.

The family, old friends and I are very eager to organize a memorial service which we envisage will take place in conjunction with the dates of one of our London venues for The Chart Seminar. 2019 will be the 50th anniversary of The Chart Seminar and I think it would be fitting to time the memorial to occur around that time, since Behavioural Technical Analysis is the timeless legacy David is leaving to the world. The London Philharmonic Orchestra, to whom David was a devotee and benefactor will be holding a concert in his honour in October so we will aim to hold a Chart Seminar to coincide with that event.

Anyone who knew David will be familiar with how committed he was to a fit and healthy lifestyle. Unfortunately, he was dealt a poor hand genetically, but it was his lifelong fitness regime which likely allowed him to persist for as long as he did.

It’s all the more ironic because he had a giant heart, with room in it for everyone he met, and it was that trait which I personally found most inspiring from our years of working together. David was always willing to give anyone the benefit of the doubt and gave many successful financial professionals their first leg-up in the industry, most particularly, at his original company Chart Analysis. 

I’m certainly one of those David championed and I owe everything I have achieved to his kind and encouraging tutelage.

In speaking with people over the last couple of weeks one sentiment came through above all others, that life might not be eternal but his legacy is. David was a pioneer in the field of behavioural analysis and was among the most noted proponents of point and figure charting. Cutting through the jargon, messiness and, often, intentional complication he travelled the world teaching financial professionals the merits of looking at markets from a behavioural perspective. That idea was iconoclastic 50 years ago but it is widely accepted as common sense today.

David’s chief insight into the rhyme and rhythm of trends probably originated from his great love of the arts. More than a few subscribers looked forward to his reviews of the London Philharmonic and the Royal Opera’s performances but it was also that regard for music which helped inspire the exploration of the consistency of trends and how that reflects the crowd.

The one thing I believe everyone who ever met David would have been impressed by was his infectious optimism. He believed in the best in people and the ability of humanity to continue to progress despite the obstacles we put in our own way. Even that is a contrarian view in the financial industry today, where we are assailed with negativity and the view the future will be worse than the past. That optimism, however, was not blind, but tempered by the belief in sustaining power of improving standards of governance. His clear belief in the ability of emerging markets to in fact emerge formed the basis for his long-time optimism on the potential for Asia to develop while never forgetting that “Governance is Everything”. 

I’m reminded of his self-styled Fullerisms which are the soundbites that encapsulated his thinking over the years. His exhortation to “pose as the judge at an international beauty contest” and to “adopt the perspective of the naturalist” are among the most memorable. The simple conclusion that a consistent trend is the most reliable continuation pattern so one should scour the world for the best trends is the rationale behind a global strategy service. Remember “a consistent trend is a trend in motion”.

The view that “markets are manmade resources for us to harvest when the timing is right” was a fringe opinion back when David was starting out and arguably still is today in many segments of the market.

David had no time for theory, he was only concerned with objective facts and believed everything valuable to know about an instrument was right there on the chart, if only we allow ourselves to see it. His ‘mistakes people make with charts’ lesson was aimed at trying to foster the ability to see what is in fact there. His exhortation that “we need to adopt the humility to accept the reality provided by the market” is an appeal to develop the emotional intelligence necessary to know ourselves. That also reminds me of another thing he used to say which “behavioural analysis of markets is not academically difficult, but it is emotionally subtle”.

David’s willingness to go against popular opinion and to air views that were truly iconoclastic is a clear example of his rare ability to be absorbed by the markets, while simultaneously sustaining a big picture perspective. That commitment to rely on the evidence provided by the charts rather than to be ruled by emotions led to some of his best calls and was a constant feature of his commentary.  

David had more than a few ways of highlighting the importance of monetary policy ranging from “Central banks are serial bubble blowers” to “the Fed has killed off more bull markets than all other factors combined”, “bull markets don’t die of old age; they are assassinated by central banks” and “monetary policy beats most other factors most of the time”. A related but opposite sentiment is “happiness in the markets is having the trend and the central bank on your side”.

The thing I miss most is our daily discussions and our shared passion for the markets and everything they represent about the prospects for improvements in the standards of living for billions of people. It is hard to express the Greek term philia satisfactorily in English but the fellow feeling we experienced for one another is not something one hopes to replace and its absence represents a void.

David led by example. He had a deep regard for our subscribers and felt a keen responsibility for their welfare. He spent long hours in the evening perfecting his written copy because for him nothing less than his best work was acceptable. He turned down numerous opportunities to manage money over the years because he believed taking responsibility for other people’s money was too onerous a burden to accept. Instead he took the revolutionary step to tell people exactly what he was doing with his own money, warts and all, so they could draw their own conclusions about to do with their money. That is still not a popular strategy in the market today.

This Service was a vocation for David and it was his fondest wish that it persists without him. It’s as much a vocation for me as it was for David and I look forward to taking it onward for the next generations.

Contributor(s)

Eoin Treacy

Eoin Treacy is a technical analyst at Fuller Treacy Money, as well as a writer, strategist, commentator and lecturer. He joined David Fuller at Fuller Money Global Strategy Service in 2003, and engaged in a management buyout of the company with David to...

2019 Annual Symposium Speaker Previews: Clare Flynn Levy & Emanuel Derman

Leading up to the 2019 Annual Symposium next month, we’re previewing two highly-anticipated presentations as well as the speakers’ professional backgrounds.

Emanuel Derman is a professor at Columbia University, where he directs the university’s program in financial engineering. At the 2019 Annual Symposium, he will present a historical perspective on the applications of quantitative finance and the evolution of the discipline during the last century. Clare Flynn Levy is the Founder and CEO of Essentia Analytics, a behavioral data analytics service that helps professional investors make measurably better investment decisions. At the  Symposium, Clare will be presenting on Behavioral Feedback and Control.

The evolution of a quantitative approach to finance has proceeded through many small but significant steps and occasional large epiphanies. Derman’s talk will outline how, over the past 70 years, financial models have quantified the notion of derivatives, diffusion, risk, volatility, the riskless rate, diversification, hedging, replication, and the principle of no riskless arbitrage, and explores their consequences.

Derman was born in South Africa, but has lived most of his professional life in Manhattan, where he has made contributions to several fields. He started out as a theoretical physicist, doing research on unified theories of elementary particle interactions. At AT&T Bell Laboratories in the 1980s he developed programming languages for business modeling. From 1985 to 2002 he worked on Wall Street, running quantitative strategies research groups in fixed income, equities and risk management, and was appointed a managing director at Goldman Sachs & Co in 1997. The financial models he developed there, the Black-Derman-Toy interest rate model and the Derman-Kani local volatility model, have become widely used industry standards.

Clare Flynn Levy’s presentation will focus on equipping attendees with the skill to recognize their own behavioral biases and mitigate the effects of those biases on their investment strategy. Key elements of this recognition include the ability to see the world for what it is, not what we would prefer it to be; the ability to be decisive with this understanding; and the ability to learn from performing this process.

Prior to founding Essentia, Clare spent 10 years as a fund manager, both active equity (running over $1B of pension funds for Deutsche Asset Management) and hedge (as founder and Chief Investment Officer of Avocet Capital Management, a specialist tech fund manager). She ultimately “went native” into the software space as President of Beauchamp Financial Technology, a market-leading provider of portfolio management systems to hedge funds, which was acquired by Linedata Services S.A.
She also serves as a non-executive director of Leathwaite, a global financial services human capital search and consulting practice. Clare holds a BA from Barnard College.

 

Contributor(s)