Technically Speaking, November 2019

As the leaves finally turn here in the New York area, the stock market has once again reached new highs, at least according to the big indices. But just when you stopped looking, the Russell clawed back to the top of its year-long range and the NYSE composite – the average Joe index – is at a two-year high.

Could it be that the converse to “sell in May” is finally going to work? The answer is, of course, who knows?  The usual suspects still hold us hostage: China and the Fed. The latter seems to be on hold after the last rate hike.

There are a few things of note, namely the resurgence of retail stocks and banks. The dollar may be breaking down, too. Copper may still be comatose, but look at platinum soar!

This month in Technically Speaking, we’ve got part two of Bruno DiGiorgi’s History of Wall Street and a twist on an old, less-well-known indicator by David Steckler. New York and Minnesota Chapters weigh in with speaker reviews, and our member interview is with Ken Tower, CMT, a past president of the Association.

We’ve also got a similar interview with CMT Association Executive Director Alvin Kressler. It is easy to think of him as just an administrator, but when you look at his career, he is truly one of us.

Of course, we’ve got Association news, including the announcement of 27 new CMTs.

If you’ve got a book out, let us know so we can tell everyone. Also, if you are hiring technicians, we can post that here.

And as usual, I ask members to submit articles they’ve written (not forecasts but methods) or write something new to share your knowledge with the group. If you are new, this is a great way to develop your chops as an analyst and a writer.

Michael Kahn, CMT

Editor

What's Inside...

President’s Letter

CMT Association Asia Pacific: the APAC Auspicious Golden Cross!

I hope this brief note finds you well and prospering in...

Read More

The PopSteckler

Many equity traders strive to identify stocks that are ready to break out and begin a sustained move higher in...

Read More

New York Chapter Speaker Review

On Tuesday, October 22nd, the New York Chapter hosted Sam...

Read More

The History of Wall Street

This is the second installment of a rerun of periodic series chronicling the history of the street. The series originally...

Read More

Minnesota Chapter Speaker Review

The Minneapolis chapter hosted Dave Keller, CMT, Chief Market Strategist of StockCharts.com, as our October 2019 guest speaker.  Dave started...

Read More

Interview with the Executive Director – Alvin Kressler

Please tell us what you do professionally.

Currently I am the Executive Director and CEO for the CMT Association.

How...

Read More

Northern Ohio Chapter Speaker Review

J.C. Parets, founder of All Star Charts, visited the Northern Ohio Chapter of the CMT association last month and gave...

Read More

Member Interview – Ken Tower

Please tell us what you do professionally.

I run a small 40-year-old research firm focused on price momentum covering...

Read More

Charles H. Dow Award

The submission window is now open!

The 2020 Dow Award, which highlights outstanding research in technical analysis, is currently accepting...

Read More

Members in the Media

Gathering his insights from a five-decade career, Walter Deemer published a book titled, “When the Time Comes to Buy, You...

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Job Postings

Live Seminar Presenter/Instructor
VantagePoint A.I. – Tampa, Florida

If you’re a presenter capable of helping people gain knowledge about...

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Membership News

Members on the Move

The CMT Association would like to congratulate the following members on their new positions:

  • Rohit...
Read More

President’s Letter

CMT Association Asia Pacific: the APAC Auspicious Golden Cross!

I hope this brief note finds you well and prospering in your markets.  Excuse my liberties with the term “APAC Golden Cross” – but hear me out!

For the first time ever (in this current CMT exam administration) the number of APAC candidates has turned up and through the number of North American candidates – thus my reference to the “Golden Cross.”  This is a bullish indication for our members and candidates in APAC.  Additionally, it’s a huge positive for our organization at large.

Will this be a trend?  We believe it will be a secular trend over the next several years.  It is a strategic area of focus for us.  It is why the CMT Association is investing in an India office.  It is why we’re planning Regional Summit conferences in the APAC region.

Keep your eyes on the activities and technicians in the region.  It is going to be an exciting future!

PS – Did I specifically mention the India Summit on November 23rd in Mumbai? If you can make it – please do.  It’s a great lineup of speakers and a chance to connect with fabulous technicians and quantitative traders.  Please see the CMT Association website or our posts on social media for the details.

Contributor(s)

The PopSteckler

Many equity traders strive to identify stocks that are ready to break out and begin a sustained move higher in price.  The difficulty lies in identifying which stocks are setting up to break out and determining when the breakout will occur.

One technique I like to use in identifying breakout setups is the Stochastic Pop.  This situation arises when the stochastic indicator goes above the 70 – 80 level.  Instead of reversing, however, the market tends to pop and momentum continues to rise.

The Stochastic Pop is not a new technical indicator; Jake Bernstein wrote about this phenomenon years ago. To increase the odds of success, I have added a few refinements, requiring confirming signals from both the daily average directional index (ADX) and weekly stochastic signals.

When I first showed this indicator to a colleague, he immediately named it the PopSteckler.

I identify a PopSteckler setup when the following set of conditions occur:

  1. Recent price action in a tight daily consolidation range
  2. Daily ADX below 20 and preferably, below 15 (I use a 14-day ADX)
  3. Daily stochastic Slow-K above 70 and preferably, above 80 (I use an 8-day stochastic.  The reader is encouraged to experiment with different time frames and both Slow and Fast stochastics)
  4. Weekly stochastic Slow-K above 50 and rising (I use an 8-week stochastic)
  5. Stock breakout on above average volume (I use a 50-day average daily volume)
  6. Bullish market conditions.

I utilize this methodology using daily and weekly charts to trade equities.  I encourage the reader to experiment with other time periods and/or other tradables.

Why the ADX?

The ADX indicator, developed by J. Welles Wilder, measures the strength of a trend but not the direction.  The stronger the trend, the higher the ADX value.  To better illustrate how the ADX ignores price direction, two stocks moving at the same rate but in opposite directions (one rising and the other falling) will have identical ADX values.

The longer a stock trades in a narrow consolidation (congestion) range, the less trending motion it exhibits during the lookback period.  Just as a strengthening trend is measured by an increasing ADX value, a weakening trend is measured by a decreasing ADX value.  Back testing revealed that when the ADX falls below 20, and particularly below 15, the stock has non-trended too long and is likely to soon break out of its trading range to initiate a new trend.

I look for stocks that have been non-trending too long.  The longer and narrower the consolidation range, the lower the stock’s ADX value and the greater the likelihood that when a breakout comes, it will come hard and fast.  Which direction this breakout takes and whether it leads to the start of a new trend requires the use of additional technical indicators.

Now Add the Stochastic

The stochastic indicator is a useful oscillating indicator that measures when a stock is overbought or oversold.  Its classic interpretation is that a stock is overbought when the stochastic reaches a level of 70 to 80, and is oversold when the stochastic reaches a level of 20 to 30.  Wait for the indicator to reverse direction and enter (or exit) your position in favor of the new direction.  For example, go long (or close a short) when the stochastic is oversold and reverses higher; exit the position (or go short) when the stochastic is overbought and reverses lower.

Bernstein observed that at times stocks would continue to rise even after the stochastic reached a level of 70 to 80.  The key words here are “at times.”  Anticipating that a stock will continue rising merely because the stochastic rose to an overbought level not only flies in the face of conventional analysis but also involves a leap of faith that prices will continue rising.  How do you know that this time the stock will continue to rise?  By observing a rising weekly stochastic concurrent with an overbought daily stochastic, some of this FUD factor (Fear, Uncertainty, and Doubt) is reduced.

The logic behind this is well known to technicians: Trade in the direction of the primary trend.  If the weekly trend is bullish and the daily trend is bearish, savvy traders may use pullbacks in the daily price to pyramid onto their original position.  If the weekly trend is bearish and the daily trend is bullish, traders may use rising prices (particularly if they are on declining volume) to enter a short position, or may sell into a bear rally.

Piggybacking a rising (but not overbought) weekly stochastic on top of an overbought daily stochastic dramatically increases in your favor the odds of a bullish breakout and a Stochastic Pop.

Put It All Together and Wait for the Breakout

A stock with a low ADX value, a rising weekly stochastic, and an overbought daily stochastic is likely to be a breakout waiting to happen.  I wait for the stock to start trading higher than the recent tight range-bound high.  If volume is strong, I enter the position on the long side.  Let’s look at an example.

The chart shows both daily and weekly charts in candlestick format on The Trade Desk, Inc. (TTD).  I selected TTD for illustration purposes only and not as a recommendation.  The daily chart is on the top and includes indicators for volume, ADX, and stochastic; the weekly chart is on the bottom and includes the stochastic indicator.

PopSteckler chart

On the daily chart, note the date highlighted with the black ellipses, and the indicators on those corresponding dates.  The ADX had declined in early June, 2019, trading below 15.  The stochastic Slow-K was flat, trading between the upper 50’s and the low 60’s.  TTD’s action had been bullish, trading above its 50- and 200-day simple moving averages.

On June 4, TTD broke out.  On that date the stochastic Slow-K closed at 70.22.  Volume was heavy at 178% of the 50-day average daily volume (3.084 million shares versus an average of 1.73 million shares).

On the weekly chart, that week’s ending stochastic Slow-K was at 61.13.  Unfortunately, I don’t have access to the intra-week Slow-K value on June 4, but on the previous Friday, the weekly Slow-K closed at 40.47.  The reader can see it rose sharply that week.

TTD closed June 4, 2019 at 222.91. There was a second PopSteckler signal the next day.   By the time it finally stopped rising in late July and began moving sideways, it traded just below 280, a 25.5% gain in seven weeks.

Exit Strategies

For every trader and investor there are different investment goals and objectives, price or profit targets, time frame expectations, risk tolerances, and more.  Where could an exit have been placed using the Stochastic Pop technique?  That is up to the reader.  Some may be looking to capture a few points while others, a few dozen points.  Use an exit strategy and/or money management methodology that works best with your trading style.

Conclusion

Our goals, whether as financial advisors, money managers, traders or investors, are simple: Keep our money risk-free until the “golden opportunity” arrives to strike. Afterwards, when upward momentum slows or reverses, exit and then wait for the next opportunity to arise. Rinse. Repeat.

The less time our money is at risk in the stock market, the safer our capital remains.  The PopSteckler technique is yet another tool in our technical analysis workbench to help us achieve these goals. Keep in mind that it may be considered an aggressive strategy not suitable for all investors or traders.

 

Contributor(s)

David Steckler

David Steckler worked in the financial industry for 24 years, managing investment portfolios for institutional clients and hedge funds.  He retired in 2011.  His interest in technical analysis began in 1987 when he read William O’Neil’s book, “How to Make Money in...

New York Chapter Speaker Review

On Tuesday, October 22nd, the New York Chapter hosted Sam Stovall, Chief Investment Strategist at CFRA Research. Sam’s presentation was entitled “The Rules Rule! – Rules-Based ETF Rotation Strategies.” He covered the seven rules of Wall Street and practical ways to implement these age-old adages in the markets.

Stovall introduced the presentation by speaking about the emotional flaws that hold him back as an investor. He noted that many investors are indecisive, impatient, and emotional. That is why he developed strategies that would help mitigate those biases and assist not only himself, but others, as well, in meeting investing goals.

Next, Sam got into what he calls “The Seven Rules of Wall Street.”

  1. Let your winners ride, but cut your losers short
  2. As goes January, so goes the year
  3. Sell in May, then go away
  4. No free lunch on Wall Street (oh yeah, who says?)
  5. Don’t get mad — get even!
  6. Don’t fight the Fed (at least for too long)
  7. There’s always a bull market someplace

After setting the stage with those seven rules, Sam discussed the use of momentum as an early signal of future returns and benefits from a dynamic rebalancing perspective. He discussed the forward returns of various benchmark indices following strong (and weak) January and February periods. He demonstrated the importance of sticking with the sectors and sub-industries showing the highest relative strength. He then shared the numerous results created by combining various sector holdings, rebalancing periods, and other factors in his study.

Next up was a conversation about the “Sell In May” phenomenon that suggests weaker returns and higher volatility during the period of May through October. Sam provided possible explanations for this seasonal tendency, including fund flows and market movements. He also shared several sector rotation strategies that can be used to improve risk-adjusted returns during this time period.

Last, but not least, Sam discussed the “Free Lunch Portfolio” that creates a 50/50 portfolio of Technology and Consumer Staples stocks to yield a higher return/risk ratio than the broader market or the Technology sector on its own. The strategy seeks to provide a healthy balance between the work required to implement this type of portfolio and its level of outperformance relative to its benchmark.

Overall the presentation was very engaging and provided a great perspective on how sector rotation strategies are developed and implemented in practice. If you’re interested in obtaining the full slide deck, you can email Barbara@cmtassociation.org for access. Additionally, Sam and CFRA Research publishes a free S&P sector relative strength scorecard every Saturday morning at SPDJI.com.

Thanks again to Sam for taking the time to share his insights with us!

As for the New York Chapter members, we’ll see you back here in November for a presentation from Gina Martin Adams, CMT, CFA.

Contributor(s)

Tom Bruni, CMT

Tom Bruni, CMT, is the Head of Market Research at Stocktwits, where he publishes the brand’s flagship market recap newsletter, “The Daily Rip,” for one million subscribers and oversees the platform’s growing publishing efforts. Bruni has been at the intersection of finance and media...

The History of Wall Street

This is the second installment of a rerun of periodic series chronicling the history of the street. The series originally ran in Technically Speaking beginning in September 2000.

Last month, I noted that the Dutch not only came up with the idea of selling part ownership in trading adventures in the form of stock, but that they were also responsible for making those shares of ownership salable, or fungible.  While the latter truly is a strange word, if not disgusting imagery, it’s just a financial term for something which can be readily exchanged or sold for something just like it, such as stocks or bonds.

The idea of selling your shares before your ship literally came in, allowed investors to cut their losses or take early profits.  Either way, the arrangement gave the investors some peace of mind when they couldn’t see the day to day events of the excursion itself.

Early Colonies

It was fortunate for Henry Hudson that in 1609, when he sailed into what is now New York Harbor, the investors couldn’t see the day to day goings-on of his voyage. Landing on the island between the two rivers, Hudson quickly met and impressed the local Lenape Indians (known as the Delaware people by early settlers), who never having seen such a large ship as the “Half Moon,” suspected Hudson to be a god of some sort.

At the feast to celebrate their meeting, the Natives brought beads, meat and tobacco. Hudson brought adult refreshments – wine mostly.  The Natives showed Hudson how to fill a bowl and Hudson showed the Natives how to empty a cup!  When the Chief was first handed the cup of spirits, he took one sniff and passed it down to the next in line who in turn passed it down until finally it came to the lowest man there who reluctantly drank it all, promptly passing out.

As you can imagine, this created quite a stir among the locals who were certain the poor fellow was headed for the happy hunting grounds. However, in a few hours when the brave awakened and described how happy he felt since drinking from the cup, it became all the rage. Soon everyone was taking turns at the cup — and passing out.

It was no surprise that this party soon became the talk of the countryside and the place where it was held, that island between the two rivers, was forever after referred by the Indians as “Manahachtanienk.” Loosely translated from the Lenape dialect, it means “that place where we all got drunk.” Manahachtanienk was recorded in Henry Hudson’s log as “Manna-hata,” which was later shortened by the White Man to its present-day name, Manhattan.

Editor’s note: This explains a lot of what goes on there!

Next time: Why they call it Wall Street or how to make money in real estate with nothing down.

Contributor(s)

Bruno DiGiorgi

Minnesota Chapter Speaker Review

The Minneapolis chapter hosted Dave Keller, CMT, Chief Market Strategist of StockCharts.com, as our October 2019 guest speaker.  Dave started his career at Bloomberg and later moved to Fidelity before he arrived at StockCharts.com.  David is also President and Chief Strategist at Sierra Alpha Research LLC.  Dave’s presentation was titled “Five Modes of Mindful Investors.”

The five modes of mindful investors presented were:

  1. Recognize what one is doing
  2. Restrain one’s emotional state
  3. Respect that the markets are out of one’s control
  4. Review what is happening
  5. Reflect on longer-term progress

One: Mindful investors recognize what they are doing.  Mindful investors live in the present, learn from the past, and prepare for the future.  As an investor, being mindful means having an awareness of oneself.  Dave suggested a number of different ideas to help improve mindfulness, including meditation, yoga, and keeping a daily three-page journal.  Dave felt three pages of daily journaling was helpful because he found it often took to the third page to get meaningful insights about that day.

Two: Mindful investors restrain their emotional state.  Dave told one of his favorite anecdotes, “Don’t take yourself so damned seriously.”  He mentioned that one’s emotions can be used as an indicator. For example, one’s exuberance is often a warning to be cautious.  As part of keeping emotions in check, Dave suggests using checklists.

Checklists help make an emotional reaction non-emotional.  Dave highlighted how pilots use checklists throughout the flight process to avoid errors and ensure safe travel.*  A well-trained pilot in a life-threatening emergency would go through a checklist of corrective measures vs making a haphazard emotional reaction.  Dave offered an example of a technical checklist:

  1. Check whether the Dow Theory indicates an uptrend or a downtrend
  2. Check trendlines
  3. Check moving averages
  4. Check chart patterns
  5. Check support and resistance levels
  6. Check confirmations or non-confirmations
  7. Evaluate relative strength.

Three: Mindful investors respect that the market environment is out of their control.  As investors, we sometimes fall victim to the “Illusion of Control,” thinking we can make the market do what we want.  Investors should remember markets can do anything at any time.  Dave reminded us of a line from the Serenity Prayer: “God, grant me the serenity to accept the things I cannot change…”

Four: Mindful investors review the market landscape. They have “situational awareness.”  As investors we often operate with blinders on, not paying attention to areas of the market outside our immediate focus.  Often, we have the right tools but aren’t aware of conditions around us.  A consistent process to review market conditions can help establish market awareness. Dave has a video about this at stockcharts.com, entitled Dave’s “Morning Coffee Routine.”  Screening tools used regularly also help develop market awareness.

Five: Mindful investors reflect on their past performance.  It helps to put notes on charts that can be reflected upon later – Dave suggests using stock charts as a notebook rather than a painting.  Studying our longer term past performance allows us to recognize the progress we’ve made and identify areas for corrective adjustments.

In the current market environment Dave sees market breadth weak as the stock market rallies up towards highs.  He sees fewer stocks above their 50-day moving averages, and fewer stocks making 52-week highs.  That makes him a bit cautious on the stock market at present.

* See Judgment for Traders: Lessons from Dead Pilots, a Technically Speaking series starting September 2018.

Contributor(s)

Mahesh Johari, CFA

Mahesh Johari is an independent investor based in the Minneapolis area. He holds degress in mathematics and economics from the University of Illinois and the University of Arizona.

Interview with the Executive Director – Alvin Kressler

Please tell us what you do professionally.

Currently I am the Executive Director and CEO for the CMT Association.

How did you get there?

I started my career on Wall Street on the buy-side in Chicago at a long-only institutional equity manager, with a value orientation. I say value orientation, because when you look back at the process, it was really more of value process with a momentum overlay. The firm managed $10-12 billion and only held 40 full positions with several in flux at any time. I had the good fortune to have responsibility for the tech sector within a value fund (a lot to potentially unpack here, but we won’t go into that now).

After a few years there, I moved to New York and joined a sell-side tech sector boutique shop covering semiconductor stocks. Ultimately, I moved into managing research and research products and then had the opportunity to run CFA-NY (at the time NYSSA – New York Society of Security Analysts).

From CFA-NY, I went back to industry and joined Bloomberg and shortly after leaving Bloomberg, I heard the CMT Association was looking for a new CEO. In looking back at my career to that point, one of the interesting things that stood out was that there were always strong technicians on the teams.

Who was an early mentor in your career?

Early on at the buy-side shop, many would have assumed it was the CIO/PM, but the mentor who impacted me the most was actually the head trader who would beat me up over understanding the trading behavior of the stocks I covered. Later in my career, it’s been more of a network effect and keeping conversations going with former colleagues. This provides a much broader perspective of what may be going on in the market and in the management of businesses participating in the markets.

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

It was not really a TA book, but The Fourth Turning: An American Prophecy was influential. Next was What the Cycles of History Tell Us about America’s Next Rendezvous with Destiny by William Strauss and Neil Howe. At its root, the book is a study of human behavior patterns over time and how these behavior patterns roughly follow an 80-year arc, with four generations interacting to form the behavior of society.

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

With four kids, my free time is pretty well occupied with their activities and events, including the two who are out of the house (at college and post graduate research). When I do find time, in the warmer months (March-November) you’ll likely find me out on the water fishing.

What brought you to the CMT Association?

Looking back as I was interviewing, there were two primary challenges present in the organization: (1) Moving the organization from thinking and acting like a club to operating like a business with membership values, and (2) Bringing TA more fully into the process of investment decision making – the manifestation of that would be growing the CMT program.

For me it was always interesting to look at my most successful clients when I was a sell-side sector analyst.  They largely fell into two categories: (1) those who were truly like Warren Buffet and could buy and wait for a decade or longer for an investment to play out. There were very few of them, as value investing does not equal “we invest like Warren Buffet.” There’s an entire discussion to be had on this topic alone.  (2) Those who, whether or not they admitted it openly, had integrated TA as part of their investment process.  As I highlighted in an earlier question, I worked early on at a “value shop,” but we were beating the S&P 500 in the mid/late 90’s.  You really didn’t do that in that market unless you had an approach that integrated market behavior into your process for managing the portfolio positions on entry, exit, sizing etc.

What it the most useful benefit of membership for you?

At this stage, the most beneficial aspect of membership for me is the networking.

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...

Northern Ohio Chapter Speaker Review

J.C. Parets, founder of All Star Charts, visited the Northern Ohio Chapter of the CMT association last month and gave a tremendous presentation full of charts, charisma, and good old-fashioned technical analysis.  We were lucky enough to have Strategic Wealth Partners host the event, which enabled J.C. to deliver his timely, top-down analysis of global markets.  Overall, J.C. made a compelling case for being bullish on US equities and Europe, while pointing out commercial hedgers have their largest net-short position in history in the gold market.   Other surprises included a bearish view on bonds, a bullish perspective on the Aussie, and sector rotation away from tech.

Contributor(s)

Patrick McKenna

Bio Coming Soon

Member Interview – Ken Tower

Please tell us what you do professionally.

I run a small 40-year-old research firm focused on price momentum covering all major asset classes. Our clients are hedge fund managers, mutual fund managers, and corporate treasurers.

How did you get there?

I was lucky! Lucky that my junior year Portfolio Management & Securities Analysis class textbook had a chapter on technical analysis. Reading that chapter was like the proverbial light bulb turning on. Market action was all about demand and supply! Therefore, price movement reflected the ever-shifting balance of demand and supply in the market.

From there I went to William O’Neil’s chart books and joined the student investment fund. Then I’d go down to the TV room after lunch before my fraternity brothers came down to watch the Three Stooges. I’d watch the primitive cable news channel that had a ticker tape running across the bottom and updated market average prices every two minutes. By my senior year I had collected some money from friends and was trading options.

After college, I looked for a job in Boston, but they told me to go to New York. Then I was lucky again and was introduced to Anthony Tabell through a friend of my parents. Tony ran a technical analysis shop that was part of the money management firm Delafield, Harvey, Tabell Inc (DHT).  Tony hired me as an institutional sales trainee and our two primary products were point & figure charts and market data.  That was back in the dark ages when we still updated the graphs by hand.  For six to nine months, that was my primary focus; updating the graphs and learning how they worked so I might say something intelligent to our institutional clients.

Besides the paper-based p&f charts Tabell had a powerful computer (for that time) full of market related data (DHT helped Bill Doane create the Fidelity chart room).  As any technician would, I was interested in adding indicators to the graphs.  Moving averages, making the scaling more flexible, getting past the fixed box size of traditional p&f, etc.

The basic rule was $0.50 box size under $20, $1 box size from $20 to $80, $2 box size from $80 – $200 etc.  That worked for most stocks, but some were more volatile than average and some were less volatile than average, so the standard box size had limitation.  By this time, I was a CMT Association member and exposed to lots of great ideas people routinely used in bar charts.  Average True Range appealed to me as an objective measure of a stock’s volatility.

But the problem was that our p&f postings (from Morgan Rogers – or was it Morgan Roberts?) only came in $1 increments.  If the ATR calculation was $1.5 how would I graph it.  We had a large database of daily individual stock prices and I used that to create 1 box reversals from open, high, low, close data.  This deviated from the original p&f concept of monitoring all intraday price swings, but I found I could produce 95% similar graphs (days like the crash of 1987 being the big exception) with the o, h, l, c data.  Now that I had programmed the computer to draw reasonably accurate graphs it was easy to have it draw odd box sizes (example $1.7 or 2.5).

The next problem was scaling for long-term graphs.  Here again the computer could easily calculate the log of the price and then draw the P&F on a log scale.  I also added 10 & 20 column moving averages on the graph (I later found out that this had been done in the 1960’s, but of course that was before computers so it would have been quite time consuming. And in any case, it’s the first thing I think any technician would want to do).  It was then also possible to use intraday data to create shorter-term graphs.

In short, I tried to expand p&f from a hand-drawn product using daily data to one with many indicators and timeframes commonly found on bar charts. Sadly, despite my efforts to promote p&f charts they have largely disappeared.

Who was an early mentor in your career?

Tony Tabell and Bob Simpkins were my primary mentors.

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

My first TA book was William Scheinman’s ”Why Most Investors Are Mostly Wrong Most of the Time,” 1970, while still in college.

Because DHT specialized in point & figure charts, I learned a lot from Alexander Wheelan’s “Study Helps in Point and Figure Technique.”

I also learned a lot about our industry from “Where Are Customers’ Yachts?” by Fred Schwed Jr. with the added benefit of it being highly amusing!

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

I enjoy bicycle riding and watching movies and TV.

What brought you to the CMTAssociation?

Both my mentors were past presidents of the CMT Association so our firm was firmly connected to the organization. I joined and became a full member as soon as I could qualify.

I became more involved with the CMT Association and eventually became president.  It was during my time as an officer that we finally arrived at a consensus about creating the CMT program.

Much later I had the pleasure of being part of the presentation that won SEC approval of the CMT designation as a substitute for the Series 86 exam.

I wrote a paper about information to be gained by tracking the number of Unchanged Stocks (most people only cared about the number of advancing and declining issues).  When that paper was published in the Journal of Technical Analysis, I received my CMT designation.

What it the most useful benefit of membership for you?

The CMT Association is a great place to meet and learn from people that shared my interest in the markets and love for technical analysis.  It is a great place to network and sometimes connect with clients!

Otherwise, just staying in touch with my fellow price-based analysis users is worth it.

Contributor(s)

Ken Tower, CMT

Ken Tower, who holds the Chartered Market Technician (CMT) designation, is the CEO of Quantitative Analysis Service, Inc (QAS). Ken joined QAS in 2008 after a brief foray into asset management and five years as chief market strategist with Charles Schwab &...

Charles H. Dow Award

The submission window is now open!

The 2020 Dow Award, which highlights outstanding research in technical analysis, is currently accepting submissions! Since its first year in 1994, the Award has received over 160 submissions, and recognized 21 papers for their excellence. Of the winning researchers, eight have gone on to publish books based on their Charles H. Dow Award paper topic. The award carries a prize of $5,000 and is presented at the CMT Annual Symposium, held in New York City each April.

The Dow Award competition is open to all practitioners and academics and will be judged based on each submitted paper’s ability to enhance understanding of market action and communicate applied concepts of technical analysis, as well as on the quality of the supporting research. Additional information on the Standards of Judgment is included in the Guidelines for Submissions.

Deadline: December 2, 2019

Style & Format Tips: The text must be a persuasive and conclusive presentation of the subject. Charts, tables, and figures should be used to exemplify or supplement the text and should not be the primary means of conveying the author’s points.

Statistical supplements are encouraged. Papers should generally be between five and 20 pages in length with additional supporting material placed in statistical supplements as needed.

All references to the author’s name should be removed from the text, footnotes and all supplementary material. All references to other materials and indicators created by the author should be removed or disguised in such a manner that the judging panel cannot identify the author.

The complete guidelines for submission can be found here.

Contributor(s)

Chelsey Clevenger

Chelsey Clevenger is the former Member Services Coordinator for the CMT Association. 

Members in the Media

Gathering his insights from a five-decade career, Walter Deemer published a book titled, “When the Time Comes to Buy, You Won’t Want To.” The name derives from a 1970’s incident at Putnam Investments.

At that time, when he headed up Putnam’s Market Analysis Department, the market started a correction. Fortunately, he had anticipated it. However, some of the perma-bull money managers, who were generally skeptical of technical analysis, were annoyed that the market was going down as he had predicted. They started coming into my office almost immediately: “Is it time to buy yet?”

“No, not yet,” he replied.

This continued day after day as the market kept going down. After tiring of the routine, Deemer shrugged his shoulders and said “When the time comes to buy, you won’t want to.”

He learned that in order to make a point he had to hit money managers quickly and succinctly. That’s why this book consists of a collection of 64 of those succinct one-liners he used throughout his career as a market technician.

Contributor(s)

Walter Deemer

Walter Deemer is a founding member and past president of the CMT Association who began his Wall Street career in July 1963 as a Merrill Lynch research trainee. In April 1964, Walter moved to Merrill Lynch’s Market Analysis Department, where he worked...

Job Postings

Live Seminar Presenter/Instructor
VantagePoint A.I. – Tampa, Florida

If you’re a presenter capable of helping people gain knowledge about the financial markets including: Stocks, Options, Futures & Commodities, ETFs and have a passion for helping traders change their life through a deeper understand of technical analysis, we should talk. This is a paid engagement/consulting position.

www.VantagepointAI.com  has an opening for professional traders who enjoy teaching retail traders and investors their craft of technical analysis combined with our ground-breaking technology. This patented technology is known around the world for its incredible ability to turn global market influences and linkages into actionable data for traders to use daily to determine future trend direction.

By combining your expertise and this technology you will be asked to:

  • Create and present proven strategies and techniques during 3-day workshops in Tampa, FL held three times per year
  • Deliver information in a concise and clear manner
  • Help VantagePoint users adopt techniques to enhance their results even further
  • Assess retail trader’s current strategies and discuss areas for improvement during 1-on-1 sessions
  • Actively participate in developing new ideas and indicators to enhance attendee experience
  • Hold discussions with small groups of traders and provide somewhat individualized attention
  • Coordinate efforts with current presenters and staff

Desired Experience and Skills:

  • Experience in the financial markets as a professional trader or investor is required
  • Excellent communication and interpersonal skills
  • Experience in presenting to groups
  • Strong MS Office skills including developing PowerPoint presentations
  • Ability work with minimal supervision and under deadlines
  • Experience presenting complex solutions a plus
  • Bachelor’s degree in Communications, Broadcast Journalism, Education or Business Administration, preferred but not required
  • Minimum of 3 years of experience developing educational content

Vantagepoint A.I. has a passion for Empowering Traders Daily and is dedicated to the success of its users. We strive to not only have a positive impact on the lives of traders, but also look to have a long-lasting, powerful impact on the community and charities we have supported over the years and continue to support. By becoming part of the Vantagepoint family you will be expected to help us further these causes through passion, innovation, integrity, respect, communication, teamwork, positivity, and purpose.

To learn more, contact Lane Mendelsohn:   LaneM@VantagepointSoftware.com

 

Weekly Webinarist

Ally Invest – remote

Looking for a markets expert to participate in the weekly Midday Market Call online with clients and potential clients. This person will offer market commentary, as well as analysis of a single stock or ETF for use in presenting an options strategy and paper trades for attendees. The co-webinarist from Ally will do the actual options presentation.

Basic options knowledge preferred but not required.

The show runs every Tuesday at noon Eastern Time and lasts 25-30 minutes. The webinarist may present a promotional slide at the end of the call. Other terms/compensation negotiable.

Contact Brian Overby

Senior Options Analyst

Brian.Overby@invest.ally.com

Contributor(s)

Marianna Tessello

Marianna Tessello served as the CMT Association’s digital producer from 2018 until 2021. She was responsible for the management of most of the association’s front-end digital assets during that time, including social media production, current website information and updates, and various communication...

Membership News

Members on the Move

The CMT Association would like to congratulate the following members on their new positions:

  • Rohit Mandhotra, CMT, CFTe, Financial Products at Bloomberg LP
  • Michael Mobley, Co-Owner at Hidden Ridge Farm LLC
  • Adnan Younis, CFA, CMT, Chief Strategy Officer (CSO) at Data Whizz Academy
  • Michael Kahn, CMT, Technical Analyst at Lowry’s Research Corp.

If your membership is about to lapse, don’t forget to renew!  Login to www.staging.cmtassociation.org and on the My Account page, select Join/Renew CMT Association.

Updating Your Profile

Have you moved recently or changed jobs? Now is the time to update your profile!  Updated profiles guarantee continued and accurate communication with the CMT Association and its members. To update your profile, login to the CMT website and under My CMT select My Account.  On the following page, under My Account select Edit My Information.

Your cooperation is greatly appreciated!

CMT Exam

Don’t forget to schedule your exam at Prometric for the December 2019 test administration.  To schedule, go to Prometric.com.  At the Prometric website, in the “Test Owner Search” search area, type in CMT, then click Go, on the next page, select CMT Association; to the left, select Schedule then follow the prompts.

To locate your Member/Customer ID Number, login to the CMT Association website, at the top under My CMT select My Account; your ID is located is located directly below My Profile.

If you encounter any problems scheduling, please contact me right away.

CMT

To the affiliate members who passed the June 2019 CMT Level III exam, don’t forget to apply for the Member Status.  Need help with the process or finding sponsors?  Contact Chelsey Clevenger at chelsey@cmtassociation.org.

The CMT Association would like to congratulate the following members who received their CMT Designation in October 2019.

  • Mohammed Alabbassi
  • Yuki Harunari
  • Richard Allen
  • Steve Jia
  • Halil Emrullah Bariskan
  • Andrew Jostworth
  • Korey Bauer
  • Andre Lapponi
  • Rana Bhattacharjee
  • William Miller
  • Nirvish Chokshi
  • Harshit Miya Bajaj
  • Emre Cipa
  • Jared Motzenbecker
  • Thomas Crandall
  • Vernon Plack
  • Kendall Dilley
  • John Reul
  • Russell Dorf
  • Faisal Shaikh
  • Harold Frankel
  • Nikko Tzitzifas
  • Ryan Gilmer
  • Carlos Vinardell Requena
  • Matthew Gowing
  • Ajay Virk
  • Austin Harrison

Contributor(s)

Marie Penza

Marie Penza serves as the Director of Member Services for the CMT Association.