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Technically Speaking, May 2008

On the Campus

This month, instead of A Letter from the Executive Director and from the Editor, we have decided to provide you with an update from the MTA Educational Foundation. This new column is one we are looking to run frequently in upcoming issues of Technically Speaking.

The MTA Educational Foundation at Howard University

Fred Meissner, Charlie Kirkpatrick, and I, Phil Roth, all lectured at Howard University this spring. Prof. William Barbee, in the business school at Howard University, has been conducting a course in technical analysis for a number of years. The MTAEF has been assisting him with guest speakers. I have been giving a lecture in sentiment and supply/ demand indicators for four years. I spoke this year on April 22, using a Powerpoint presentation that the MTAEF developed. I have made presentations at many colleges and universities, including, among others Tulane, Cornell, Georgia Tech, Baruch, and the University of Texas, and have been conducting my own course in the Graduate School of Business at Fordham University in New York for six years. I am always impressed by the caliber

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What's Inside...

The Metals Maze

by Mukul Pal

Intermarket relationships between metals can not only give cues about the economic cycle but also lead the start of a global equity bear market. Gold did not take much time to move from 800 dollars...

Arms Index

The Arms Index is named after Richard Arms. It is a market-balance index that measures the volume in advancing issues relative to volume in declining issues. 1.00 is mathematically neutral, though...

Open Arms Index

A version of the Arms Index computed using averages of the components to correct for a mathematical problem encountered in averaging raw Arms Index values. This is thought in some quarters to be a...

Must Be Present To Win? Assessing the Fallacy of “Staying Invested Or Risk Missing The Move”

by Ed Easterling

Editor’s note: Market technicians are often confronted with the statement that all of the market’s returns accrue in a very short time and therefore trying to time the market will lead to missing...

Stop and Make Money: How to Profit in the Stock Market Using Volume and Stop Orders by Richard Arms

by Michael Carr, CMT & Dick Arms

Dick Arms has rewritten Edwards and Magee chart patterns and the basic principles of market analysis to include volume in this short book. It is a truly groundbreaking work which builds upon the...

Los Angeles MTA Chapter Meeting 4-22-08

by Kristin Hetzer, CMT, CIMA, CFP

The LA MTA Chapter met at Il Morro Restaurant in West LA for its spring quarterly meeting. Frank A. Barbera Jr., CMT was the featured Guest Speaker for the evening. Mr. Barbera is the Senior Vice...

Would You Like to be Called Professor?

It’s hard to believe that MTA members have been involved on college campuses for the past 30 years. For perhaps 15-20 years we have been guest lecturers filling in at courses on investing with a...

David Krell, CMT Chairman; International Securities Exchange Holdings, Inc.

by Molly Schilling & David Krell, CMT

David Krell is the founder and Chairman of International Securities Exchange Holdings, Inc. (ISE) located at 60 Broad Street in lower Manhattan. We met in his expansive corner-window office...

New MTA Chapter: Columbus, Ohio

by Craig Fullen, CMT

The Columbus, Ohio Chapter of the MTA has been established for professional traders, technical analysts and other investment professionals who currently use or are interested in technical analysis....

The Metals Maze

The Metals Maze

Intermarket relationships between metals can not only give cues about the economic cycle but also lead the start of a global equity bear market. Gold did not take much time to move from 800 dollars in Dec 2007 to move up to 1000 dollars. Now it is holding steady at 930. While Gold (Fig 1) and Silver (Fig 2) might be hanging tight, metals as a group are scattered on the price performance scale.

Figure 1

Figure 2

For example few would like to talk about Zinc, which has crashed 50% since Nov 2006. It was then a few emerging stocks from India like Hindustan Zinc (Fig 3) started topping despite a positive Sensex (Indian Benchmark). The love has turned into hate. And all

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)

Mukul Pal

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Arms Index

Arms Index

The Arms Index is named after Richard Arms. It is a market-balance index that measures the volume in advancing issues relative to volume in declining issues. 1.00 is mathematically neutral, though the long term average is more like 0.85 due to the long-term positive stock-market bias. 2.00 means there is twice as much volume in declining issues on average as there is in advancing issues and 0.5 means there is twice as much volume in advancing issues on average as there is in declining issues. The formula is: Arms = (advances / declines) / (up volume / down volume). The most important versions are for the NYSE and NASDAQ.

Reprinted from markettechnician.com and used with permission.

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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Open Arms Index

Open Arms Index

A version of the Arms Index computed using averages of the components to correct for a mathematical problem encountered in averaging raw Arms Index values. This is thought in some quarters to be a superior market-timing tool.

Reprinted from markettechnician.com and used with permission.

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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Must Be Present To Win? Assessing the Fallacy of “Staying Invested Or Risk Missing The Move”

Must Be Present To Win? Assessing the Fallacy of “Staying Invested Or Risk Missing The Move”

Editor’s note: Market technicians are often confronted with the statement that all of the market’s returns accrue in a very short time and therefore trying to time the market will lead to missing those best days and those big gains. This short study, although dated, demonstrates that the market also endures most of its losses in similarly short timeframes. Market timing can help avoid these days.

The traditional advice of Wall Street has been that “since you can’t time the market” investors should remain invested in stocks at all times to avoid the risk of missing the opportunity for returns. One statistic often cited is that most of the market’s return occurs on a few days and, if an investor is not invested on those days, the investor will under perform the market.

This statistical fallacy relates to the selective use of the extreme numbers in a diverse series. There are approximately

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)

Ed Easterling

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Stop and Make Money: How to Profit in the Stock Market Using Volume and Stop Orders by Richard Arms

Stop and Make Money: How to Profit in the Stock Market Using Volume and Stop Orders by Richard Arms

Dick Arms has rewritten Edwards and Magee chart patterns and the basic principles of market analysis to include volume in this short book. It is a truly groundbreaking work which builds upon the previous writings of this pioneer of technical analysis.

Arms makes the argument that price describes what the market is doing, while volume explains why the market is doing what it is doing. It is his opinion that visualizing volume allows the trader to see the conviction behind the price action – when prices are going up on heavy volume, demand is overwhelming supply; similarly supply swamps demand as seen in the volume associated with a selling climax.

The idea of visually representing volume led Arms to create the Equivolume charting technique. Details on this method were first presented in his 1999 book,

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

Dick Arms

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Los Angeles MTA Chapter Meeting 4-22-08

Los Angeles MTA Chapter Meeting 4-22-08

The LA MTA Chapter met at Il Morro Restaurant in West LA for its spring quarterly meeting. Frank A. Barbera Jr., CMT was the featured Guest Speaker for the evening. Mr. Barbera is the Senior Vice President marketing and Administration for the Wright Fund Management, LLC and Advisor to the Sierra Core Retirement Fund. A stock market veteran of 22 years, Mr. Barbera has a long career in both media and investment markets. From 1989 to 1997, Mr. Barbera worked for both CNBC and KWHY TV as an on-air market analyst providing analysis of the capital markets and the global economy on live television each market day. Following a career in television and media, Mr. Barbera went to work for the Kavanaugh Fund LLC, a subsidiary of Bel-Air Capital Management in Los Angeles as Co-Portfolio Manager, after calling the major top in the NASDAQ (above 5000) and Internet Stocks to

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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Would You Like to be Called Professor?

Would You Like to be Called Professor?

It’s hard to believe that MTA members have been involved on college campuses for the past 30 years. For perhaps 15-20 years we have been guest lecturers filling in at courses on investing with a one to three hour presentations on technical analysis. More recently we have a number of for-credit courses on the undergraduate and graduate levels in colleges in several states around the country. Also interest is quietly growing overseas in select executive MBA programs. As professors “discover” our tools and test them to their own standards and publish their results, we have gained credibility.

Many schools have built “trading rooms” or “interactive labs” to prepare their students for the world of finance and global trading and investing. These rooms with their banks of Reuters and Bloomberg terminals have increased our audience. Students who have grown up in the past 20-25 years have been exposed to one of the

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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David Krell, CMT Chairman; International Securities Exchange Holdings, Inc.

David Krell, CMT Chairman; International Securities Exchange Holdings, Inc.

David Krell is the founder and Chairman of International Securities Exchange Holdings, Inc. (ISE) located at 60 Broad Street in lower Manhattan. We met in his expansive corner-window office overlooking the Hudson and East Rivers with a direct view both of the Statue of Liberty and the World Trade Center landmark. David has served in many capacities for the Market Technicians Association and along the way has been innovative in developing new business in new markets. He gives us the benefit of his wisdom and insight. 

Molly Schilling (MS): Are you still involved with the MTA?

David Krell (DK): I’m an MTA member, and I try to help as often as I can, in any way that I can. I’ve been a Director on the Board, I’ve been President, and have served as head of a number of committees for many years. I have a natural love for the organization and try

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)

Molly Schilling

David Krell, CMT

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New MTA Chapter: Columbus, Ohio

New MTA Chapter: Columbus, Ohio

The Columbus, Ohio Chapter of the MTA has been established for professional traders, technical analysts and other investment professionals who currently use or are interested in technical analysis. We also intend to reach out to those involved in quantitative analysis and behavioral finance, including faculty members at the local universities. Our main objective will be to provide networking and professional development opportunities for our members while increasing the visibility of technical analysis and those who use it in the Central Ohio area.

Until about 2 years ago, there wasn’t a single CMT in Columbus. Now there are five, and three of these people work for state pension funds (Jason Tincher, Timothy Swingle and Timothy Steitz, all of whom have expressed an interest in the Chapter). Therefore, we finally have some people who are visible in the investment community and who can serve as building blocks for establishing the credibility of technical

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)

Craig Fullen, CMT

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New Educational Content This Month

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