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Technically Speaking, October 2010

Letter from the Editor

The Market Technicians Association is continuing to evolve and remain current. We try to capture that in this newsletter, highlighting some of the activities within the organization while featuring the analysis of members and introducing new ideas from the field of technical analysis. We are also introducing a new feature this month where we will review ethics in our profession. As we grow in stature in the financial community, it becomes more and more important to maintain the highest ethical standards. In fact, our Code of Ethics is one of the biggest benefits of membership – it ensures employers and clients that we follow rules, and that our work is based upon more than guesswork. This column will hopefully focus some thinking on ethics, which needs to be considered in all aspects of analysis. Relevancy of this newsletter depends on contributions from you. Consider publishing an example of your analysis or an insight into some aspect of the very dynamic field of technical analysis. We will maintain the highest standards of publication,

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What's Inside...

Welcome, To The Machine

by David Steckler

With apologies to Pink Floyd, “Welcome…to The Machine.” That verse kept running through my head when I tested the newest offering from The Connors Group, called “The Machine.” In case you...

More Thoughts on The Machine

by Michael Carr, CMT

While fully reviewed by Dave Steckler elsewhere in this issue of Technically Speaking, there are a few more points worth considering about this software package. Larry Connors has been very open...

Equity Curve Feedback

by Michael Carr, CMT

On October 13, 2008, Ajay Jani spoke at the New York Region Meeting. The video of his talk is available by clicking here. Ajay focuses on emerging markets, and has done so for more than twenty years....

“Trade like an O’Neil Disciple: How we made 18,000% in the stock market” By Gil Morales and Dr. Chris Kacher

by Gil Morales & Dr. Chris Kacher & Ajay G. Jani, CMT

The first reaction when reading an investment book that has 18,000% in the title would typically be rolling one’s eyes, followed by moving on to the next book on the shelf. In this case, that would...

Ethics Corner

by Michael Carr, CMT

This is the first of what will be a series of case studies related to the MTA Code of Ethics. This one is brief, and seemingly simple, but we want to present the general idea. If you have any...

Long Range Planning: The MTA Looks Ahead

by Michael Carr, CMT

On a beautiful fall weekend, the MTA Board of Directors could be found meeting with volunteers and staff members to discuss several of the important issues facing the organization. Some of these...

Take a Technician or Trader to Lunch

by THE MTA EDUCATIONAL FOUNDATION

The MTA Educational Foundation is reprising its popular ‘Take a Technician or Trader to Lunch’ fundraiser. Just like last year, dozens of technicians, traders and even economists are making...

MTA Announcements

MTA West Coast Regional Seminar – Video Archives Now Available! The MTA is pleased to announce that the archived videos from the West Coast Regional Seminar, held on September 18th, 2010 in San...

Welcome, To The Machine

Welcome, To The Machine

With apologies to Pink Floyd, “Welcome…to The Machine.”

That verse kept running through my head when I tested the newest offering from The Connors Group, called “The Machine.” In case you were wondering, ‘Connors’ is Larry Connors, one of the founders of TradingMarkets.com and the author and co-author of numerous books on trading.

The Machine is the first and only commercially available financial software that allows you to build and actively manage customized, quantified portfolios of equities and ETFs. Accessed through the web, there is nothing for the user to install on his or her computer. Traders, investors, and investment advisors can choose from thousands of back-tested, statistically valid strategy variations to construct their portfolios. These portfolios enable the user to reduce the volatility of their accounts using portfolios that they design, to out-perform their benchmarks.

The Machine is unique in that it allows the user to:

  • Build customized, actively managed portfolios with both

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Contributor(s)

David Steckler

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More Thoughts on The Machine

More Thoughts on The Machine

While fully reviewed by Dave Steckler elsewhere in this issue of Technically Speaking, there are a few more points worth considering about this software package.

Larry Connors has been very open about his strategies for many years. He is well known for printing the exact entry and exit rules, along with verifiable results. This software bundles many of those ideas into one source. Results shown are backtested, but since they are grounded in logical assumptions, they are likely to be as successful in the future as they have been in the past.

High probability strategies like many of the ones found in The Machine lead to low frequency trading activity. This software combines the strategies into a portfolio testing capability. Infrequent trading means that many strategies can then be used at one time. If you will only be invested a small percentage of the time, using multiple strategies maximizes the potential return

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

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Equity Curve Feedback

Equity Curve Feedback

On October 13, 2008, Ajay Jani spoke at the New York Region Meeting. The video of his talk is available by clicking here.

Ajay focuses on emerging markets, and has done so for more than twenty years. In this talk, he explained that he thinks it’s important to have a system with well-designed rules and a position sizing algorithm. The concepts apply to any tradable security in any market.

His research began with the thought that for capital constrained traders (which is everyone except a central government banker), it would be useful to have systematic tools that help “time the model.” This would help the trader understand when they are in synch with the market and should use a larger position size.

His first attempt to do this was to place a moving average on the equity curve of the system. The equity curve is a measure of how much money an investor

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

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“Trade like an O’Neil Disciple: How we made 18,000% in the stock market” By Gil Morales and Dr. Chris Kacher

“Trade like an O’Neil Disciple: How we made 18,000% in the stock market” By Gil Morales and Dr. Chris Kacher

The first reaction when reading an investment book that has 18,000% in the title would typically be rolling one’s eyes, followed by moving on to the next book on the shelf. In this case, that would be a mistake. Co-authors Gil Morales and Dr. Chris Kacher have a strong investment pedigree, both having cut their stock market teeth working for the legendary William O’Neil, founder of Investor’s Business Daily and developer of the CAN SLIM method of investment. Given the copious amount of materials devoted to this method that has already been published by O’Neil himself, the reader might wonder what Morales and Kacher have to add to the subject of stock investing. While much of the material will be very familiar to CAN SLIM devotees, there are several new twists to stock investing introduced in the book that make it worth the read.

The book begins with a quick run

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Not a member? Join the CMT Association and unlock access to hundreds of hours of written and video technical analysis content, including the Journal of Technical Analysis and the Video Archives. Learn more about Membership here.

Contributor(s)

Ajay G. Jani, CMT

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Ethics Corner

Ethics Corner

This is the first of what will be a series of case studies related to the MTA Code of Ethics. This one is brief, and seemingly simple, but we want to present the general idea. If you have any questions you’d like to see specifically addressed, please email them to editor@mta.org.

QUESTION: A CMT candidate is completing his MBA program and took a job with a company that cleans office buildings in the evening. While emptying trash cans in the office of the CEO of a well known investment bank, he sees a draft press release indicating that a large software company will be buying the stock of a small technology consulting firm at a 75% premium to the current market price. The deal will be announced a week from now. The candidate immediately buys call options on the stock of the small firm and captures enough gains to quit his

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

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Long Range Planning: The MTA Looks Ahead

Long Range Planning: The MTA Looks Ahead

On a beautiful fall weekend, the MTA Board of Directors could be found meeting with volunteers and staff members to discuss several of the important issues facing the organization. Some of these issues included an ongoing review of the CMT program, efforts to enhance the credibility of technical analysis in the financial community, and the efforts of the MTA Educational Foundation to improve the acceptance of technical analysis in the academic community.

The CMT program is truly under constant review. Additional exam questions are always being prepared. The Body of Knowledge faces frequent analysis. The goal is to keep the material relevant and maintain the designation as the gold standard of certifications. From the information presented at the meeting, it is obvious that it’s a large effort which is necessary to ensure that the CMT will be respected in the future. You can help by participating in periodic job surveys that

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

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Take a Technician or Trader to Lunch

Take a Technician or Trader to Lunch

The MTA Educational Foundation is reprising its popular ‘Take a Technician or Trader to Lunch’ fundraiser. Just like last year, dozens of technicians, traders and even economists are making themselves available to help advance the mission of the MTAEF to further the acceptance of technical analysis in the academic community. 

To participate, you simply bid on EBay. The high bid wins the chance to sit and learn from industry leaders over a relaxed lunch. Winning bidders coordinate the time and location directly with the winner. Among the success stories from last year, John Bollinger reported that he was inspired to create new indicators after lunch last year.

A year ago, winning bids ranged from $200 to $7,000. Many lunches were $200 to $300, especially affordable for a good cause and possible tax deduction.

This year’s auctions include analysts from around the world:

  • Ralph Acampora, CMT – New York
  • Guy Adami – Chicago & New York 
  • Robert

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)

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MTA Announcements

MTA Announcements

MTA West Coast Regional Seminar – Video Archives Now Available!

The MTA is pleased to announce that the archived videos from the West Coast Regional Seminar, held on September 18th, 2010 in San Francisco, CA, is now available! We’d like to extend our deepest gratitude to all of the presenters, attendees, volunteers, and sponsors (ProShares and TradeStation) who helped make this event possible.

Click here to visit the MTA West Coast Regional Seminar video archives.

MTA Test Development Committee – Two Openings!

The MTA is looking for two CMT charter holders to join the Test Development Committee as subject matter experts. This is a three-year commitment that involves writing exam questions, grading CMT 3 exams, and attending all conference calls.

We are looking for a minimum commitment of 40 hours per year. You will be paid in quarterly installments and will work as an independent contractor 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.

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New Educational Content This Month

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