To view the charts from this article in full color, please visit Newsletter Archives on mta.org. What are pivot points? A pivot point is a tool used by traders to help determine the best trading strategy for the coming day. More specifically, a pivot point is the average of the previous trading day’s high, low and closing price of an underlying asset. Traders will calculate the pivot point at the beginning of each day, before the start of their trading, in order to establish resistance and support levels based on the extremes and close of the previous day. Developed by professional floor traders—also known as “locals”—to analyse the short-term supply and demand in the market, a pivot point provides locals with an inflection point and an estimated trading range for the day. These pivot points, resistance and support levels are often tested by traders. Calculating pivot points The input needed to calculate the pivot point

The Elliott Wave Principle, the legacy of Ralph Nelson Elliott, is practiced globally – now 62 years after his last work was published. Within its sophistication, as Paul Tudor Jones pointed out, “Elliott Wave theory allows one to create incredibly favorable risk/reward opportunities.”1 We focus on a pioneer’s work and when  impressed by a theory, we wish we knew more about the person. Essayist Ralph Waldo Emerson put it best: “There is properly no history, only biography.” Ralph N. Elliott’s Wall Street career is well known. During the last 13 years of his life, he advanced a unique theory of stock market action. The Elliott Wave Principle was first revealed privately, in December, 1934, to Charles J. Collins, an investment counselor. In August, 1938, a monograph written with Collins’ assistance – The Wave Principle – was published. A year later, Elliott wrote the now-famous twelve articles for the magazine Financial World, where

This paper was recently recognized with the 2008 MTA Dow Award. It presented test results from January 1972 – December 2005. Ajay Jani recently updated the research to see how this research had fared since that time. Between January 2006 and June 2008, the top ranked style had a total return (including dividends) of -0.88%. In comparison, the bottom ranked style had a total return of -5.14%. The S&P 500 had a total return of 7.60% during this time frame. Thus Jani finds that the returns have been a bit less during the past 2.5 years, but there is still a spread between top and bottom ranked styles using the paper’s ranking methodology. These figures all exclude transactions costs, similar to the data in the paper. To Jani, the most striking change is the rank-based returns of the strategy. From 1972 – 2005, there is a monotonic relationship between the rank and compounded

Georgia Tech began exploring a Technical Analysis (TA) class in 2001 with Dr. Robert Kertz spearheading the effort. Dr. Kertz was head of the Quantitative Computational & Finance (QCF) program in the School of Mathematics at Ga. Tech. Dr. Kertz had some knowledge of TA through various sources including general media, other Business Schools, academic articles (e.g. Lo at MIT) and from some of the students in the program. Professor Kertz stated “the main idea was to have some ‘extra value’ courses that would fill in some possible gaps within the education of the students in the Masters of Science (MS) QCF program, and which would be useful to them in one way or another in their broad range of QCF-related careers after their graduation. These would not be courses that would count towards their curriculum requirements, but they would be taken as extra Georgia Tech courses”. Dr. Kertz noted the

The following are some important updates and reminders from the MTA Office. • 2009 Mid-Winter Retreat – Save the Date! The MTA is pleased to announce that the 2009 Mid-Winter Retreat will be held in Las Vegas, NV from January 22nd – 24th. Event registration and more details will be posted shortly. • Charles H. Dow Award – Let the Competition Begin! This year, the MTA Board of Directors have increased the cash prize for the winning paper 100% to $4,000. The recipients of the Dow Award in the past are among the most notable technicians in the market today. The deadline for submissions is February 6, 2009. Submit inquiries to DowAward@mta.org. • CMT Level 1 and 2 Format Change – After consultation with our test administrator, Prometric, we have decided that for the Fall and future CMT examinations we will embed a small number of randomly inserted questions which will not be