Bill Doane, founder of Fidelity’s Chart Room, passed on recently. He was a great technician–he liked to think of himself as the father of big base investing–and a good friend of mine for many years. As chairman of the Awards Committee, it was a great honor for me to present him with the MTA’s Annual Award. I am absolutely bereft. The past few years have seen so many of the great technicians pass on to the boardroom in the sky. Bill’s passing strikes me as especially poignant as he had such a deep command of the history of our craft and its practitioners. I like to think that I am a good historian, but Bill’s grasp was so much wider than mine that I was forever asking him questions. All of these passing’s leave me feeling like I am in a library that is burning down a section at a

Editor’s note: this is an example of how the tools of technical analysis are gaining wider acceptance in economics. Economists with the Bank for International Settlements are now tracking the credit-to-GDP gap. This indicator: captures the build-up of excessive credit in a reduced-form fashion. It is defined as the difference between the credit-to-GDP ratio and its long-run trend, and it has been found to be a useful early warning indicator of financial crises. This data set covers 43 economies, starting in 1961 for the economies with the longest run of data. As input, we use the data on the credit-to-GDP ratio as published in the BIS database of total credit to the private non-financial sector. The credit series capture total borrowing by the private non-financial sector (ie households and non-financial corporations) from all sources. Technical analysts might know this indicator as the price-to-moving average ratio. Now, economists are finding that the more a

Editor’s note: this is an extract from the recently published book, Higher Probability Commodity Trading. Understanding margin management and adjustments magnifies the lasting power of traders in a predicament. To understand the premise of margin adjustment, it is necessary to be familiar with the mechanics of margining in a futures and options account. Futures margin is straightforward in that there are concrete initial and maintenance margin requirements, and although the requirements are adjusted from time to time, they are relatively static. If you are still unsure of the difference between maintenance margin, initial margin, and the basics of SPAN portfolio margin, it might be worthwhile to review Chapter 1 of Higher Probability Commodity Trading “Commodity Refresher”. Controlling futures margin with net delta The most common question I receive from beginning traders is, “What do I do if I receive a margin call?” The answer is simple: Don’t panic! In most situations, there is usually

Editor’s note: This was originally posted at AlphaArchitect.com on November 23, 2015 and is reposted with permission. Frog in the Pan: Continuous Information and Momentum By Da, Gurun and Warachka A version of the paper can be found here. Abstract: We test a frog-in-the-pan (FIP) hypothesis that predicts investors are inattentive to information arriving continuously in small amounts. Intuitively, we hypothesize that a series of frequent gradual changes attracts less attention than infrequent dramatic changes. Consistent with the FIP hypothesis, we find that continuous information induces strong persistent return continuation that does not reverse in the long run. Momentum decreases monotonically from 5.94% for stocks with continuous information during their formation period to –2.07% for stocks with discrete information but similar cumulative formation period returns. Higher media coverage coincides with discrete information and mitigates the stronger momentum following continuous information. Alpha Highlight: The account of the boiling frog is an anecdote describing a frog in a pan of water. If