Uncategorized Archive

Putting It All Together

Posted June 23, 2016 By APTA.org.au

http://stockcharts.com/articles/wyckoff/2016/06/putting-it-all-together.html

Mr. Wyckoff created a methodology that requires the trader to use judgment for positioning trades. We live in an era where sophisticated computer algorithms are all the rage in trading circles. These automated systems are designed to remove trading judgment from the human process and build it into the computer’s functions. In Wall Street lore these automated trading systems were called a ‘Black Box’. Black Box systems were popular because they promised to remove ‘flawed’ human emotion from the trading process and therefore generate steady profits. In the end the markets would turn on these automated systems and render them ineffective. It could be argued that if Black Box systems really did work and were the holy grail of investing, cyclicality of prices through the business/investment cycle would become history. And we know from the recent past, that is not the case. The investment cycle is alive and well.

Black box methods (secret mechanical systems) were around in Mr. Wyckoff’s era. But he rejected the notion that such techniques could succeed in the long run. He strongly believed that a trader must understand the ‘Real Rules of the Game’ of speculation. The driving force of price trends is in the campaigns of the Composite Operator. The C.O. is dependent on the large up and down trends of prices and the tendency of the majority of investors to do the wrong thing at the wrong time. Mr. Wyckoff understood that this co-dependent relationship would never fundamentally change. He advised the devoted investor/trader to understand the real rules and develop the skills and knowledge to conduct trading operations in harmony with the large informed interests of the Composite Operator.

The impulses of human nature tend to work against being successful in investing. Therefore, the Wyckoff Method was designed to help the devoted individual trader to shed those natural impulses and replace them with the habits that make for successful speculation. It takes time and practice to retrain one’s thinking to be in sync with the forces that create the big profitable price trends.

We have covered much ground on the disciplines of ‘tape reading’ (chart reading) the Wyckoff way. Putting the pieces together means to integrate what we have learned so far into a cohesive process that maximizes the potential for success in our trading campaigns. This methodology should solidly align us with the interests, motives and forces of the large informed interests. We conduct our campaigns when they conduct their campaigns. We buy when they buy. We sell when they sell. We rest when they rest. The classic human impulse is to buy when the C.O. is selling and to sell when the C.O. is buying. This instinct leads the average investor to hold large stock positions when the C.O. is out of the market (during large markdown phases) and resting up for the next big bull campaign.

Here is the framework for our market campaigns.

* Understand the Present Position of the Market. Is the market in an Uptrend? Is the market in a Stepping Stone Reaccumulation in an ongoing uptrend? Is it in the final stages of an Accumulation? From this analysis we can make a judgment about the markets readiness to begin a move. Determine which stage the market is likely in (Accumulation, Markup, Distribution and Markdown). Using trading range and trend analysis methods, Wyckoffians have superior tools for making these determinations.

* Select a Stable of Stocks that are Poised to Move with the Projected Trend of the Market. Using industry group analysis and stock analysis, identify stocks that are leading the market. These are stocks that you are expecting to move further and faster than the market will move. Using Vertical Charts and the excellent tools in stockcharts.com, relative outperformance can quickly be determined. A quality list of leading stocks, in leading groups will prepare us for that moment when markets jump into uptrends.

* Identify a Good Cause (Point and Figure Analysis) where Absorption has Taken Place. Accumulation or Reaccumulation can be measured using horizontal PnF counting techniques to estimate a potential for price appreciation. Only consider stocks that exceed your minimum reward to risk objectives.

* Select Stocks that are Ready and Poised to Move with the Market. Find those stocks that are poised on the ‘springboard’ to jump upward and out of their area of absorption and into a new or continuing uptrend. There will always be stronger stocks ready to lead the market upward, and these are the stocks we seek to campaign.

* Wait Patiently Until the Market is Ready to Begin Turning Upward. When a new uptrend begins the speculator has the wind at her/his back. By timing purchase commitments to coincide with a fresh new uptrend, profits can build quickly. Be alert and ready to act at the beginning of the markets ascent. Markets can move suddenly and quickly. By completing the above processes, a Wyckoffian is ready to make the best decisions at the right times. Integrating these ‘Best Practices’ will put us in alignment with the methods and the activities of the Composite Operator.

Mr. Wyckoff has provided us with all of the required tools to do the above analysis and to be prepared to act in a timely manner. It takes practice and skill to integrate these elements with a high degree of mastery. Practice will bring us closer and closer to the ideal.

Note: For declining markets, the concepts above are applied in reverse.

All the Best,

Bruce

Roman Bogomazov and I have created a new two part webinar series to help traders and investors adopt or refine the habits – psychological and analytical – needed to acquire mastery of the Wyckoff Method of trading. (click here to learn more)

About the author: An accomplished “Wyckoffian”, Bruce Fraser has been teaching graduate level courses on Technical Analysis at Golden Gate University since the early 1990s, where he has been instrumental in crafting the curriculum. At Golden Gate University, Bruce’s teaching has focused largely on Wyckoff Analysis. Learn More

Highest McClellan Oscillator in 7 Years

Posted March 14, 2016 By APTA.org.au

http://www.mcoscillator.com/learning_center/weekly_chart/highest_mcclellan_oscillator_in_7_years/

Chart In Focus

 On March 3, the McClellan A-D Oscillator hit a reading of +332, which was its highest reading since the +386 reading seen on Jan. 6, 2009.  The cause of that high reading has been a big surge in positive breadth days for the NYSE ever since the Feb. 11, 2016 price low.  The meaning of it, however, is an open point for discussion.

During uptrends, a really high McClellan Oscillator reading means that there is a surge of liquidity, and it promises higher price highs on the ensuing move.  Usually we look to a level of +150 or above on the normal McClellan Oscillator, or +50 and higher for the Ratio-Adjusted McClellan Oscillator (RAMO) shown in the chart above.  The RAMO factors out the changing numbers of issues traded, which can affect the amplitudes of the normal McClellan Oscillator, and thus the RAMO is better for making long term comparisons.

In a bear market, however, it is possible to see a really robust countertrend rally that produces a high McClellan Oscillator reading, and which does not carry the same meaning as when we see a high reading in an uptrend.  So to make a proper interpretation of this most recent high Oscillator reading, we need first to understand whether we are in a bull market or a bear market.

That +386 Oscillator reading back in January 2009 offers us a great case study to amplify this point.  On the RAMO, that was a +122 reading, so the most recent RAMO reading of +105 is comparable.  That January 2009 Oscillator spike was not the start of a strong new uptrend, although it felt like it at the time for a lot of people, and then prices went on to fall to a lower low in March 2009.  Finally in late March 2009, we saw another high Oscillator reading that did mark the start of a new uptrend.

We saw a similar situation in 2011, at the end of QE2 when the sudden end of the Fed’s money pumping activities caused a lot of price volatility.  RAMO spikes to +90 and +85 were just countertrend rallies in a downtrend.  Eventually that 2011 downtrend ended, and another RAMO high reading did mark the initiation point of a new uptrend.

My interpretation is that the current market situation is still a downtrend, and thus that the recent +105 RAMO reading was a sign of a bear market rally’s climax.  This interpretation comes in part because the market is supposed to be in a downtrend right now, according to my eurodollar COT leading indication which I discussed here back in August, and which is a regular feature in ourMcClellan Market Report newsletter and our Daily Edition.  That model calls for another drop to a bottom ideally due the first week of April.

If we see another really high McClellan Oscillator after that upcoming bottom, then such a prospective high Oscillator reading would be more likely to mark the strong initiation of a new uptrend.

Because the recent Oscillator high was the highest one since that January 2009 Oscillator high, it occurred to me to compare the two price patterns.  Check out this comparison, with the price plots aligned as of the high Oscillator days:

2009 pattern analog SP500

It is not the best price pattern analog ever, but there are many points of similarity which do lend support to its validity.  If the current market were to follow this prior pattern exactly, then that would imply a bottom in early May 2016, rather than the early April bottom suggested by the eurodollar COT leading indication.  But it has not been following it exactly.

Bottom Line: A really high McClellan Oscillator can sometimes mean strong upward initiation of a new uptrend, or other times it can mark a climax of a bear market rally.  So having an understanding of the market environment in which you see one of those readings is essential for interpreting it accurately.

Tom McClellan
Editor, The McClellan Market Report

Next APTA Meeting – Tues 5th April 2016

Posted March 11, 2016 By APTA.org.au

Next Meeting

Tues 5th April 2016

The next meeting of the Australian Professional Technical Analysts (APTA) Inc will be held at the City Tattersalls Club, 194 – 204 Pitt St, Sydney, at 6.00pm on Tuesday 5th April 2016.

* Please note that APTA and MTA members receive 3 Continuing Education (CE) Credits for the CMT and AMT qualifications for attending the meeting.

Speaker:

Ric Spooner – Chief Market Analyst, CMC Markets.

Ric Spooner

Topic:

A strategic approach to technical analysis and stop loss management

· The conflict between success and pay off ratios and what it means for trading strategy

· Using technical tools fit for purpose

· Developing Stop Loss Strategies

· Using trailing stops

· A technical review of current markets

Biography:

Ric is Chief Market Analyst for CMC Markets in Australia where he provides clients with market insights and commentary on all major asset classes as well as education on trading strategy. He has over 30 years working in financial markets with deep experience in both fundamental and technical analysis.

Before joining CMC Markets his roles included successful private trader, head of the futures businesses of JB Were and Elders Finance and Managing Director of the Sydney Futures Exchange Clearing House.

He was also a non-executive director of Sydney Futures Exchange, and served as its Deputy Chairman.

Ric appears regularly in the financial media. He writes a weekly opinion piece for Business Spectator; and provides daily insights on stocks for Business Insider. He is seen frequently on TV and radio including the ABC, Bloomberg; Sky Business and BBC. He holds a Bachelor of Commerce from Macquarie University in Sydney, and a Certificate of Financial Planning from Finsia (the Financial Services Institute of Australasia).

Cost:

APTA and MTA Members FREE

Non members $30

All non-members must register and pay prior to the event. Late registration will not be be accepted.

Non members will not be admitted without prior registration and payment.

Payment will not be accepted at the event.

APTA and MTA members do not need to register.

Eventbrite - Australian Professional Technical Analysts (APTA) 5th April 2016 Meeting

MTA Members:

Following a collaborative agreement between the Australian Professional Technical Analysts (APTA) Inc and the Market Technicians Association (MTA), members of the MTA receive honorary APTA membership and are entitled to attend all APTA meetings. The APTA Management Committee extend a warm welcome to our MTA colleagues.

APTA Meeting FAQs:

How can I attend APTA meetings?

APTA and MTA members may attend meetings at no charge. APTA and MTA members may attend the Annual APTA Luncheon and Christmas Party at a discounted price. 
Non APTA members may also attend APTA meetings but must register and pay $30 on-line prior to the event. Registration for the Annual APTA Annual Luncheon is more expensive and will be announced in a timely manner by the Committee.

Can I pay APTA at the door to attend the meeting?

No. Unfortunately, all guests must register and pay online at least 2 hours prior to the meeting. Payments can not taken at the meeting and any non member who has failed to register and pay will not gain admittance.

How can I get the details of the event ?

Details are available at the APTA website at www.apta.org.au .

How can I be notified of upcoming meetings ?

Join the APTA Newsletter mailing list at www.apta.org.au .

Could I invite a friend / colleague to come along to an APTA meeting ?

Of course. If you have any friend / colleague that may be interested in attending as well, feel free to invite them, but please remember that they must register and pay prior to the event.

Comments or questions are welcome.

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DeMark Sees Risk of S&P 500 Top Should Stocks Fade This Week

Posted February 25, 2016 By APTA.org.au

http://www.bloomberg.com/news/articles/2016-02-23/demark-sees-risk-of-s-p-500-top-should-stocks-stumble-this-week

The Standard & Poor’s 500 Index’s rally will give way to a full-blown retreat should the benchmark gauge lose altitude over the next few days, according to Tom DeMark, the chart analyst who predicted an advance in oil earlier this month.

A momentum formula employed by the DeMark Analytics LLC founder that compares closing prices with levels four days earlier would issue a bearish signal should the advance fizzle this week, he said. Specifically, it would foreshadow a decline should the S&P 500, which ended at 1,945.5 Monday, slip at Tuesday’s open and close below 1,926.82. Those conditions were met today.

The benchmark index slid 0.2 percent at the open and declined 1.3 percent to 1,921.27 at 4 p.m. in New York.

“The foundation of the ongoing rally is suspect,” DeMark, based in Scottsdale, Arizona, said in a phone interview. “The temporary buying produces a price vacuum beneath the market and accelerates the subsequent decline. The decline is going to be sharp.”

A handful of chart-based calls by DeMark have looked prescient in recent weeks, including a prediction on Feb. 11 that oil would rally and a Jan. 20 forecast for a temporary bottom in the S&P 500. In the same interview he made the crude projection, he said the S&P 500 might go as low as 1,797. It bottomed that day at 1,810.10 and closed at 1,829.08.

In February 2014, DeMark said trading in the S&P 500 mirrored patterns of 1929, asserting that if certain conditions were met, U.S. stocks had reached a point resembling the time before the market crash nine decades ago. The S&P 500 rallied 8 percent over the next two months. He has said that those conditions didn’t materialize at the time.

Demark has advised hedge funds including George Soros’s Soros Fund Management and Leon Cooperman’s Omega Advisors. His company makes money by charging traders for access to its indicators. It also sells subscriptions to the indicators on the Bloomberg Professional service.

Now that this S&P 500 trigger has occurred, the benchmark index will decline at least 8.2 percent from Monday’s close to 1,786, a level last seen in February 2014, according to DeMark. Should the market top correspond with what he referred to as “bad news,” the S&P 500 could see deeper selling down to 1,736, an 11 percent decline. DeMark sees the ongoing market rally as temporary relief as investors exit short positions.

“We’ve seen some pretty vicious short-covering come in, which has caused the market to move up,” said DeMark. “When that happens, it really plays havoc with the market once the downside move begins.”

Improving economic data and the worst sentiment readings in three years combined last week to ignite the biggest five-day rally of the year for the S&P 500, including the first three-day stretch of 1 percent gains since 2011. Companies with the highest short interest were also among the best performers.

DeMark’s research looks to identify the likely end of market trends. A series of nine consecutively higher closes, compared with the close four days earlier, often precedes a change in market direction. In this case, the S&P 500 is three trading days from reaching “trend exhaustion” on DeMark’s indicator, although it may experience a shift before then. DeMark’s downside targets are also derived from his indicators.

Improved CMT Body of Knowledge

Posted August 19, 2015 By APTA.org.au

MTA News

Improved CMT Body of Knowledge

As mentioned in previous announcements, the Chartered Market Technician (CMT®) Program is newly improved and remodeled. We want to thank you for
your feedback and make sure you are aware of critical updates in four key areas:

· The recent Job Analysis
· Formation of Learning Objectives
· The MTA’s new custom curriculum published through Wiley
· The adoption of the CFA Institute’s Code of Ethics and Standards of Practice

Please visit the CMT Program “Body of Knowledge” page to learn more about the specific changes to the curriculum click here.

Registration for the October 2015 administration of the CMT exams is now open. The CMT Level I & II exams will be offered worldwide October 15-17, 2015. The CMT Level III exam will be offered on October 15, 2015. Whether you are progressing through the CMT Program or need to retake a previous exam, please register today. 

In order to secure your preferred time, date, and test center location it is strongly suggested that you register as soon as possible. Please note that all test centers may not be available at this time.

Registration is Open!

CMT Program Information Session 
by Gordon Scott, CMT
Originally held on June 25, 2015

In this webinar Gordon Scott, Managing Director of the CMT program, will review the recent job analysis, test specifications, exam question weightings, and revised curriculum materials for the CMT Program. Topics covered include a look at the breakdown of questions and information sources and some suggestions for how candidates can successfully prepare for the exam. Click here to view the recording.

MTA – CMT eBooks Now Available

Posted August 13, 2015 By APTA.org.au
Market Technicians Association - MTA
The MTA is pleased to announce the release of our custom curriculum for the CMT Program!Published by John Wiley & Sons, the new eBooks streamline the CMT curriculum into concise volumes – distinct for each level of the exam. Candidates can work from a comprehensive body of knowledge in a single place. Additionally, our curriculum revision has reduced the total page count for each level by eliminating redundant coverage in the prior collection of required readings, making candidates preparation more efficient.

CMT Level I, Level II and Level III ebooks are now available for purchase through John Wiley & Sons

The curriculum is being released in electronic format only for this administration. Wiley’s digital platform, VitalSource, provides eReader textbooks that will help you study smarter and quickly find the information you need. They are convenient to buy (and carry) – no queues, no waiting, no shipping fees. E–textbooks also save on resources, eliminating the need for much of the material and transportation that goes into manufacturing hardbound books. Here are answers to the top 5 questions from VitalSource®:

1) How are these e-books different from print books?
Books in the VitalBook format have the same content as print books plus interactive features that can help you study:
· Highlight and make notes in multiple colors
· Search for terms and topics in the book and across multiple books
· Share notes and highlights – with friends, classmates and even instructors
· Customize your view – change font size, layout and even colors

2) Can I work offline?
Yes, you download your books, so you can work anywhere you can take your electronic device

3) Is it possible to print? How about copy /paste?
The ability to print, copy and paste is built in. To protect publishers, the number of pages that you can print or copy is fixed to 100 pages. A reader can print one chapter at a time and all chapters are under 100 pages. Note: when you copy/paste, the works cited annotation conveniently stays with it, handy for citing sources.

4) Can I have my books on two devices?
Yes – to make it convenient, your books can be used simultaneously on two devices at any given time.

5) What if I buy a new computer or my hard drive crashes?
Relax! Unlike losing a print book, if your device is lost, broken or you upgrade, you can contact VitalSource to update your license and your books will be restored.

Thank you for your patience during this transition as we elevate the professionalism of the CMT designation. The candidate experience is our highest priority. We wish you success in your studies and welcome your feedback in the months ahead.

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Copyright © 2015. Market Technicians Association. All Rights Reserved.

MTA – Register Now for the CMT Level I Webinar

Posted September 5, 2014 By APTA.org.au
Market Technicians Association - MTA
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If you, or your colleagues are interested in learning more about the CMT Program and the MTA’s curriculum, we invite you to attend the upcoming information sessions. Gordon Scott, CMT will provide a free webcast covering the basic concepts of each of the three levels of the CMT exam.
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“The CFA helped me get my job. The CMT helps me keep my job.” 
– Craig Johnson CMT, CFA
The Chartered Market Technician (CMT)  designation allows you to distinguish yourself from other industry professionals. It is a perfect complement to your fundamental, quantitative, and macroeconomic analysis of the financial industry.
To investment professionals who value improved relative performance, the Market Technicians Association’s CMT Program is the leading professional certification program which offers applied risk management techniques and a thorough understanding of intermarket relationships, essential to any asset allocation strategy.
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Performance Analysis
All candidates taking the CMT Level I & II Exams will be issued a performance analysis right at the Prometric test center immediately after taking the exam. The report will tell you not only whether you have passed or failed, but also how well you did in each category.

This new service from the MTA is an excellent resource to help you prepare for your next exam, or improve your performance should you need to retake the exam. Candidates now have the full breakdown of their performance assessment immediately after the exam.
Schedule your exam right now to ensure your preferred time, date, and location.

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Level I & Level II:
October 23-25 2014
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Registration Deadline:
Tuesday, September 23rd
2:00 PM EDT
What is the Chartered Market Technician® (CMT) Program?
The Chartered Market Technician (CMT) Program requires candidates to demonstrate proficiency in a broad range of topics in the field of Technical Analysis. The Program consists of three levels. The CMT Level I and CMT Level II exams are multiple choice while CMT Level III exam is in short answer and essay form.
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The objectives of the CMT Program are:

  • To professionalize the field of Technical Analysis
  • To promote high ethical and professional standards
  • To guide candidates in mastering a professional body of knowledge
  • Those candidates who successfully complete all three levels of the CMT examination and agree to abide by the MTA Code of Ethics are granted the right to use the CMT credential.
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61 Broadway, Suite 514, New York, NY 10006

http://www.businessinsider.com.au/fannie-mae-stock-2014-2

STEVEN PERLBERG 
Fannie mae stock

It looks like a penny stock that would make even Jordan Belfort blush — shares on fire, rocketing 40% in the last five days and 1500% over the last year, nearing that big $US5 mark.

Only one problem: The stock is Fannie Mae, the government-controlled mortgage giant.

And because Fannie was put under the government umbrella during the housing crash, the company has to pay its profits to the U.S. Treasury. Not shareholders.

If you’re just in it for the trade, though, you actually could have made a nice buck. Plenty of investors have — from individuals to hedge funds — as CNBC reported last May.

But what about Fannie’s future? Shareholders don’t particularly love its current form, where all of the dividends go to the government.

They could hope for Congress to make a change, but good luck there.

Or they could hope a court eventually rules that shareholders should get the profits. That’s the most bullish case.

One bigtime investor betting on Fannie (and its government-run sibling Freddie Mac) is Persing Square’s Bill Ackman, who bought nearly 10% of the common stock of both. Motley Fool’s Alexander MacLennan explains:

…Ackman expects even more upside from the common stock, and noted in an investment conference that he expects the GSE shares to increase in value 10 times during the next several years. He also noted his expectation that the Supreme Court would side with the shareholders,and that shares could be worth 10 to 15 times current levels after the decision is issued.

Of course, when major players like Bill Ackman start talking about mega returns, the stock gets a bump.

As the backdrop to all of this, Fannie Mae’s dividend payments to the Treasury keep looking more and more impressive, intensifying shareholders’ fantasy that it could eventually take form in a non-government-sponsored way.

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