Technically Speaking, February 2021

This month marks the one-year anniversary of the start of the 2020 market debacle. Think about how far we’ve all come since then: new highs, economic recovery, light at the end of the COVID tunnel and plenty of other things. We mourn for those we’ve lost and look forward to when our daily activities can return to normal.

What the pandemic may have done is accelerate trends in innovation and massive changes in how we work and play. Think about that when you fire up your Sony Betamax and Palm Pilot. Does your computer have a floppy disc drive? It may not even have a CD drive, anymore.

To quote an old French proverb, “the more things change, the more they stay the same.” The point is that the economy is always changing and industries come into and out of favor. So does debt. And hard assets. And entertainment. And travel. And real estate. You get the point. Don’t get stuck on yesterday’s trends. We are likely starting some huge ones now.

This month, we’ve dipped into the archives for a piece written by our own Dr. Julie Dahlquist many years ago. It talks about how there is good information in technical indicators. And, of course, it never hurts that it pokes a little fun at our economist colleagues.

And speaking of archives, there is one more photo from deep in the history of the Association. If you have any photos of seminars, speeches, winter retreats or just at the bar with fellow technicians, please send them along. We lost many great photos when our office in the Twin Towers came down on 9/11.

This month’s member interview is with Association Vice President Brett Villaume. And our president, Scott Richter, addresses how technical analysis helped him and his firm navigate the frothy waters of the recent short squeeze-a-palooza. Also, while a little delayed, this month’s chapter summary from Hong Kong presents the most thorough account of their December speakers. For those of us in an American mindset, the focus was on Asian markets, so consider that a treat.

Top it off with Association news and a link to the second offering in our new podcast series, “Fill the Gap,” and some recognition of recent member award winners across the globe.

Don’t forget, we can always use content. How about exercising your writing chops and sending in something about how you analyze the markets or how the Association has made your professional life better? No forecasts, please.

Michael Kahn, CMT

Editor

What's Inside...

President’s Letter

Short Squeeze Lessons – Technical Analysis Makes A Difference!

For the last few weeks, the media has been mesmerized by...

Read More

Paul Ciana and Jake Damien Chow Awarded First Place in Investment Rankings

Institutional Investor Magazine recently announced its 2020 Global Fixed Income Research Team, celebrating the investors and managers who emerged...

Read More

Hong Kong Chapter Speaker Review

The Hong Kong Chapter of the CMT Association and Bloomberg presented “Macro Outlook with Technical Analysis – 2021” at their...

Read More

Would You Pick Up a $100 Bill?

There is an old saying that if you were attending a meeting of economists and you placed a $100 bill...

Read More

Fill the Gap: The Official Podcast of the CMT Association

Episode 2: Louise Yamada – Streaming Now

Perhaps one of the most inspiring entrances into the world of Wall St.,...

Read More

Member Interview with Brett Villaume, CMT, CAIA

Please tell us what you do professionally.

I am the Director of Investor Relations for a publicly-traded, mid-cap bank headquartered...

Read More

CMT Photo Archive

This is an occasional series revisiting the Association in picture, just to offer a glimpse of in-person events as a...

Read More

Membership News

Members on the Move

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

  • Thomas...
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President’s Letter

Short Squeeze Lessons – Technical Analysis Makes A Difference!

For the last few weeks, the media has been mesmerized by the massive short squeeze taking place in the U.S. markets in 10 heavily shorted equity issues.  The story has so many facets to it – here are a few:

  • Good stocks, bad companies!
  • Small Hero Retail Investors vs. Large Evil Hedge Fund Managers!
  • “Stick it To Wall Street – They Deserve It! They Caused the GFC (Global Financial Crisis)!”
  • Retail Investors Roar – It’s Not Just Institutions Anymore!
  • Retail Investors Prosper – Paying Off Mortgages, Credit Cards, Going to School! It’s So Good for the Little Investor!

Well – I’m not on Reddit’s WallStreetBets, but if I were to throw in my 2 Litecoin, I would suggest that we not get all wrapped up in the emotion of who is good or bad, smart or not smart, experienced or not experienced, or hedge fund or retail trader.  I think that logic misses the point.  What matters most is how an investor/trader responded to this episode and whether or not the investor/trader profited from the experience!  Did you?

In my opinion, what we had here (be it GME, AMC, or FIZZ, et. al.) was nothing more than a good old-fashioned case of supply and demand in rapid action!   Leave it at that.  You just needed to know what side of the trade to be on!

With that said, what better way is there to take advantage of a supply/demand episode like this?  Answer – Technical Analysis!

TA provides the tools and context necessary to navigate these situations with confidence.  And, isn’t it good to know that you can develop those tools and situational learnings through the CMT Association?  If you’re already a member – isn’t it good to know that you have a community to connect with and face these market episodes together?

So, what boosted my confidence in trading these volatile markets and in particular “shorts” like GME, AMC, and FIZZ? (full disclosure – the hedge fund my partner and I operate had a position in FIZZ)

A few things stand out:

  • Logic Over Emotion – I had logic of Technical Analysis methods to address the squeeze. I had a framework and a system with rigor.  I didn’t have to fly by only my emotions to make decisions.  I had trend deviations, oscillator extremes, and exhaustion metrics among other things.  That body of TA knowledge provided me with the preparedness to face the situation with confidence.
  • Pattern/Market Condition Recognition – The TA discipline has been through this sort of thing before. Decade to decade, the names change but human emotion does not, and it plays out in the price of the security (see the WSJ article about Piggly Wiggly to see a similar short squeeze situation from the 1920s).  Understanding TA, I knew about the lifecycle of a security – the accumulation, the climax, the distribution, and the decline.  I understood the mechanics of a short squeeze and the velocity with which actions could happen.  I had an advantage versus the crowd and I could pick my spots to profit – and there were many.  I wasn’t caught up in the emotion of “sticking it to the MAN!” or listening to someone who “likes the stock” and has a $1000 price target because s/he said so!  I had a useful model that helped me make decisions. And that was powerful.
  • Risk Management – If all went wrong – I had a plan in place to keep the losses small. Why?  Because I/we’ve learned this is what is necessary to win the game.  I intended to win with my execution strategies, but if I didn’t, I would be able to play another day.  While I didn’t have to exercise this contingency plan, it was there in case I needed it.  That provides a lot of comfort to me as an investor/trader.
  • Better Outcomes – There are many outcomes one can measure here. I would focus on the financial and personal emotions outcomes.  Both were good.  Financially, the portfolio trade was very profitable.  The return was an IRR (internal rate of return) of approximately 160%.  Not bad for a few months’ work, and it was a reasonably good size position in the portfolio.  Size of bets matters.  It will definitely add to February performance.  Emotionally, it was exciting, but I tempered that enthusiasm with getting the job done.  I stayed balanced and that was a great outcome in light of all the hysteria!  This is what we learn by practicing TA.  Were my actions without mistakes or errors in judgement? No!  Even so, it was a successful set of outcomes plus there are lessons as well.  There are elements I am reviewing in the postmortem trade analysis that will help me do it better next time – yet another benefit gleaned from our TA and trading peers in CMT Association.

As I suggested earlier – a well-executed TA methodology can be a huge advantage in the markets.  What we just witnessed with the recent “short squeeze” was a nice opportunity to use TA to profit from a technical condition, inexperienced traders (hedge funds and retail), and a mountain of emotion.  The CMT Association is out in front, providing professional education and a community.  Please get involved if not already – get others involved and share the experience.  In doing so, you’ll be building yourself as well as others into professional, profitable investors/traders.

Blessings.  Profitable investing and trading to you in 2021!

Contributor(s)

Scott G. Richter, CMT, CFA, CHP

Scott Richter, CMT, CFA, CHP is a senior portfolio manager for Westfield, which manages over $4B in AUM.  He is the lead portfolio manager for alternative assets and is also responsible for investments in the energy and utility sectors.  He was formerly...

Paul Ciana and Jake Damien Chow Awarded First Place in Investment Rankings

Institutional Investor Magazine recently announced its 2020 Global Fixed Income Research Team, celebrating the investors and managers who emerged from the early-pandemic chaos with winning strategies. The CMT Association is proud to acknowledge its many members and charterholders who were among the finalists and winners in several categories.

Notably, Paul Ciana, CMT placed first in both the Asia and Europe categories for the second year in a row, as well as securing the #2 spot in the US rankings.

See the entire Institutional Investor rankings here: https://www.institutionalinvestor.com/research/10844/Global-Fixed-Income-Research-Team

We’re also proud to acknowledge Jake Damien Chow, CMT, placing first in AsiaMoney Magazine’s Best Analysts/Commentators of 2020 awards in the Singapore region. Jake is a co-chair of our Singapore chapter.

Read the entire AsiaMoney award rankings here: https://www.asiamoney.com/article/27i6gralrq1bhg3whzzls/polls/brokers-poll/best-analysts-commentators-2020

As we head into 2021, the CMT Association is proud to see our membership and charterholders positioned around the world as knowledgeable sources of technical information, sought as columnists, commentators, and general voices of reason regarding technical market action.

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...

Hong Kong Chapter Speaker Review

The Hong Kong Chapter of the CMT Association and Bloomberg presented “Macro Outlook with Technical Analysis – 2021” at their December 7, 2020 meeting.

There were three speakers.

  • Darryl Guppy (https://www.guppytraders.com/), author, speaker, frequent guest on CNBC Asia who is also known for his Guppy Multiple Moving Average and Count Back Line. Darryl trades his own capital and has the unique experience of trading both Western and mainland Chinese markets. He is also a Mandarin speaker.
  • Lee Zhao, CMT, CAIA and Emily Chan, CMT both from Bloomberg. Lee oversees the North Asia business relating to charts, technical analysis and data visualization. His market insights are featured on Bloomberg and he currently serves as Hong Kong Chapter Co-Chair and Admissions Committee member of the CMT Association. Emily specializes in corporate, commodities and education partnerships in Bloomberg. She is a CMT charterholder as well as a part time University lecturer.

The theme of Darryl’s presentation was “Trade what you see, not what you believe.”

There is a gap between the fundamentals and reality, as evidenced by new market highs amidst headlines of high unemployment and closed businesses. He illustrated this “irrationality” by showing a chart that tracked the rise of the Dow with a rise of COVID-19 cases when logically the relationship should have been inverted – higher the cases, lower the Dow.

While this sort of disconnect between market activity and fundamental activity has always existed, COVID-19 in 2020 has made this apparent disconnect starker.

To tackle these markets, Guppy says he is constantly looking for “three islands of rationality in a sea of irrationality” – time, volatility and statistical rationality.

The first method is to watch the crowds and the chart patterns they form. Social media and the influx of new traders has resulted in many using, what Guppy calls, “suspect TA.” They interpret chart patterns incorrectly. He explains his concept using two chart patterns, out of a half a dozen of his favourite chart patterns, the Cup and Handle and the Triangle, both of which are common but incorrectly interpreted by a vast majority of the market participants.

Guppy says such mis-interpretation creates irrational market behaviour. To avoid acting irrationally along with the majority of the crowd, Guppy is looking for patterns that adhere to the ideal template as far as practicable.

In the case of the C&H pattern, Guppy is willing to wait for the handle to form before measuring the breakout target, along with the time spent and the regularity of the price action in the belly of the pattern.

In the case of the triangle – the upward sloping triangle to be precise – there are three things that need to exist.

  • a well-tested resistance level,
  • an upward sloping trend line with a good anchor point and two or three successful tests, and
  • a base which has three to five days of activity where the price is moving in the same direction.

By waiting for a pattern to conform to the ideal pattern, that is, waiting for time to form the pattern, one can create an island of rationality which provides for better trade targets and risk management.

As for rationalizing volatility, Guppy uses the Count Back line concept (https://www.guppytraders.com/cbl-info). Because volatility is the key to placing stops, Guppy finds his Count Back Line approach, one of the two methods he uses, more effective because it is not based on a set calculation like the ATR thus acting like a self-adjusting volatility trigger.

By rationalizing volatility, Guppy says, we give ourselves another way to trade in a market where fundamentals don’t provide a reliable guide. So the focus is trading what one sees, not what one believes.

The third island of rationality that Guppy uses is what he calls statistical rationality. He says there are enduring statistical relationships that persist in the market, as found in average daily range relationships (not ATR) which he uses to trade foreign currency and commodities in combination with Guppy Multiple Moving Average (https://www.guppytraders.com/gmma-info). The 5 average range is a simple calculation. If the move is 100, 110, 90, 80 and 130 pips for 5 days, then the 5-day average is 102 pips. As per Guppy, there is an 85% probability that the next day’s price move will achieve 75% of the value of this average range. Since the direction is not certain, Guppy uses GMMA to confirm the probable direction.

Lee’s presentation related to visualizing technical and fundamental data on the same chart. He presented evidence that better market timing can be achieved visualizing technical and fundamental data on the same chart during transition phases from a bear to a bull market and vice versa. His material was based on his contribution to the latest edition of the “Hong Kong Chartbook” on Bloomberg.

Quoting Ralph Acampora, “Price is a fact and value is an estimate,” Lee showed a chart which overlaid a long term 144-month simple moving average on the Hang Seng Index (HSI) book value. He pointed out how the book value line has acted as the support for the HSI since 1993 and the combination of the SMA and the book value line had correctly indicated the market bottom in HSI in 2003, 2011 and in March 2020.

Explaining his choice of 144 SMA, Lee went on to illustrate how subjective patterns look perfect in hindsight compared to objective indicators and used a custom indicator channel on the HSI from 1965 to 2020 and a Gartley pattern that called a bottom in 1982 and in March 2020 on the HSI to illustrate his point.

That is why, Lee argued, indicators or quantitative analysis is more popular among institutions.

Going back to the theme of combining technical and fundamental data, Lee added quarterly GDP data and the monthly retail sales value in the middle panel of the previous RSI chart showing how RSI signals can be backed up by data showing a recovering macro economy.

He further illustrated this with a chart that combined the RSI chart with import and export data and the drop in the price of Cathay Pacific airline with the rise of COVID cases in Hong Kong.

He cautioned, however, that while creativity is good, there is a need for a boundary or else we would have charts, as seen by him, which compared a rise in worldwide COVID cases with Bitcoin’s rise.

Lee then pointed out that while there is no set formula as to what type of fundamental data should be combined with technical indicators, sensible combinations always provide an insight. He illustrated this with a template that they use in Bloomberg (Bloomberg users – G BBTA 2018) for tracking global equity markets.

Emily Chan spoke about effectively communicating the key themes of the 2021 outlook using the data visualization tools available in Bloomberg.

The three themes she identified were:

  • Together or apart
  • Winners and losers, and
  • Value and growth

Emily illustrated the first theme using a line chart of the ratio of Copper to Gold. The importance of this ratio lies in the fact that historically, the ratio has had a direct correlation with the yield of U.S. Treasuries with a declining ratio – lower Copper price relative to Gold – signaling a less inflationary environment and vice versa. She pointed out that the ratio has been at all time highs since the beginning of 2020, led by a rise of Copper prices in Shanghai since March 2020. The market viewed this as indicative of confidence from investors and manufacturers towards economic recovery. She further illustrated her point using import data for Copper (into China) and a seasonality chart of Copper prices.

Looking ahead, Emily felt that the price of commodities and Treasuries would depend largely on government actions and policies. To keep a tab on this, she suggested using the Bloomberg function READ to see what the terminal users are reading. The most read news for the last thirty days from 7 Nov to 7 Dec  2020, for instance, has been those that related to vaccines and virus.

The second theme of winners and losers was illustrated using the RRG function – Relative Rotation Graphs. Emily put up a RRG chart of the sub-indices of the Hang Seng Index. While the technology sector was in the leading quadrant – top right – in August 2020, by the beginning of December 2020 it showed flagging momentum giving up its position to sectors related to manufacturing such as materials and industrials effectively confirming the manufacturing revival indicated by the rising Copper-Gold ratio.

Emily illustrated the third theme of value versus growth using a custom index she created on Bloomberg consisting of the 100 growth stocks in terms of EPS in Hong Kong. She compared this index with the level of the Hang Seng Index (https://www.hsi.com.hk/eng), the benchmark index of Hong Kong big market cap stocks. Starting from March 2020, an increasing divergence was noted where the price of growth stocks led the ones of value. After a brief drop in August 2020, the momentum of growth stocks started to pick up again, leading to a record high. To see supporting factors, Emily used the Bloomberg function FTW (Factors To Watch) which showed value factors had an average of negative 70% year-to-date return compared to growth factors which showed a plus 11% year-to-date return.

To confirm this, Emily used the news sentiment / analytics function which analyses news to arrive at a score for sentiments. By screening out the companies with the most positive news, one could see sentiments were positive for cyclical and growth stocks. However, she pointed out that the sustainability of the current premium enjoyed by the growth stocks over value is a function of government stimulus and central bank policy.

Contributor(s)

Would You Pick Up a $100 Bill?

There is an old saying that if you were attending a meeting of economists and you placed a $100 bill on the floor, none of the economists would pick it up.  All of the economists would assume that if there were really a $100 bill on the floor, someone else would have already picked it up.  Each economist would think to himself or herself, “Since markets are efficient, someone would have already picked up $100 off of the floor, so there can be no returns to my putting forth the effort to bend over and try to pick up something that theory tells me can’t be there.”

Members of the academic community have commonly applied this same type of reasoning to the use of technical analysis.   The time and effort that a technician puts forth is likened to the energy and effort that would be used to pick up a $100 bill that can’t be there.

Now, of course, I have never seen an academic empirically test this $100 bill theory.  After all, that would just be wasted time and effort to prove what the theory already tells us.  Likewise, academics have been slow to test technical trading strategies, despite the claims of success by many practitioners.  Could it be that the academic community is more concerned about upholding its theories than noticing $100 bills?

As academics well trained in efficient market theories, but curious about the claims of market technicians, Richard Bauer and I set out to perform a rigorous test of the performance of technical indicators.  Our hope was to somehow bridge the chasm between the disbelief of the academics and the actions of the practitioners.  (After all, doesn’t economic theory tell us that we should assume that these practitioners are rational market players?)  To do this, we examined the performance of 60 different technical indicators for 878 stocks over a 12-year period, using daily data.

At first glance, our results are disappointing.  Our aggregate results indicate that, on average, an investor trading stocks using one of these 60 popular technical indicators would have underperformed a buy-and-hold strategy by about 2 1/2 percent.  In fact, not one of the 60 indicators outperformed a buy-and-hold strategy on the average stock in our data set for the 12-year period.

While it might be tempting to stop here and agree with the academics that technical analysis doesn’t work, doing so would be extremely myopic.  Looking more closely at our results, we see that technical indicators do provide useful information to traders.   For example, let’s focus for a moment on the results we found when we looked at long signals.  On the average day that the technical indicators gave a buy signal for a stock, the daily return for that stock was 0.064 percent.  Since the average daily stock return during the 12-year test period is only 0.055 percent, the technical indicators are indeed picking the “best of the best” days to be in the market.  If you want to be in the market on the days when the market is doing better than average, follow these technical rules!

This is extremely useful information that a technician can use in several ways.  First, we can consider trading with the average technical indicator to be a bit conservative in that it encourages an investor to be in the market when the return will be higher than average.  Stopping here leads to a profitable trading strategy, but one that underperforms a buy-and-hold strategy, because it causes investors to miss out on the positive returns that occur on positive, but below-average to average, return days.  While stocks have positive, and thus profitable, returns on 45.6% of the days during our sample period, the tested technical indicators make long calls on only 27.9% of the days.  An investor can use this information to develop new rules that are not as conservative so as not to miss out on so many positive return days.

Second, the information these indicators provide regarding above average return days may be leveraged using the options market.  An investor may choose to seek out only above average return days to be in the market.  By using the options market to leverage this position, the investor could possibly beat a buy-and-hold strategy.  Of course, the use of options increases risk, but this increased risk is tempered by the fact that the investor is not in the market as often, thereby reducing risk.

Third, this information may be exploited in a portfolio setting.  If the above average return days that the indicators are good at spotting occur on different days for different stocks, a portfolio strategy may be profitable.  The portfolio would be constantly changing so that an investor is invested in above average return stocks.  The opportunity cost caused by not being in the market on below-average, positive days is eliminated because funds are not sitting idle.  Our decision criteria change when we move from a single stock in-and-out situation to a portfolio situation.  If Stock X has a positive, below-average return day and our choice is to be in Stock X or in cash, we would choose to be in the stock and gain some return.  However, if the choice is to be in Stock X, or to put our money in Stock Y, which the indicators are signaling will have an above average day, we would make a different choice.  We would prefer to forego the below-average return on X to maximize the gains from the above average return predicted for Y.  Of course, testing technical indicators in a portfolio setting becomes more complicated.  Issues regarding portfolio size, transaction costs, and allocation of funds within the portfolio become crucial.  This is where we hope to focus additional research.

In recent years, academic economists have placed great emphasis on the value of information.  Our test results indicate that there is indeed valuable information contained in technical indicator trading rules.   No, we can’t claim that there is a $100 bill just lying in plain view waiting for us to pick up.  But we can say there is some information, which if exploited, may point to where some $100 bills are hidden.

Contributor(s)

Julie Dahlquist, Ph.D., CMT

Julie Dahlquist, Ph.D., CMT is Professor of Professional Practice in the Finance Department at Texas Christian University (TCU).  Previously, she served on the faculty in the business schools at University of Texas at San Antonio and at St. Mary’s University. Her teaching...

Fill the Gap: The Official Podcast of the CMT Association

Episode 2: Louise Yamada – Streaming Now

Perhaps one of the most inspiring entrances into the world of Wall St., Louise Yamada joins Fill the Gap for a riveting discussion of macro trends as market volatility peaks and we witness the madness of crowds in 2021.

In this fascinating episode, hosts Tyler Wood and David Lundgren chat with Louise about her incredible career at Smith Barney (Citigroup) working with Alan Shaw, Ralph Acampora, and many others, as well as the past 15 years directing her own research firm, Louise Yamada Technical Research Advisors (LYA).

Louise discusses the major themes that have shaped her invaluable research for clients over multiple cycles, including the real inflation not captured by current measurements and the sensitivity of various sectors and industry groups to the effects of inflation. With a global lens for secular trends, Louise offers insights on the relative performance breakout of Emerging Markets equities and the specific impacts of implementing next generation technology in frontier and developing economies.

Reviewing Louise’s prescient book Market Magic, this episode delves into the unique insights taken from long-term trend analysis, demographic impacts, and historical corollaries. Listeners will even get a lesson in the natural laws of physics that apply to the world economy! Get to know a perennial leader in the Institutional Investor polls, the CMT Association’s Lifetime Achievement recipient of 2016, and a truly gifted market analyst – Louise Yamada, CMT.

Subscribe and listen to the podcast at https://cmtassociation.buzzsprout.com/.

Tune in on your favorite listening service – each monthly episode will be released on the first Friday of the month and will be available on Apple, Spotify, Google Podcasts and wherever podcasts are found.

Contributor(s)

Tyler Wood, CMT

Tyler Wood serves as Managing Director of CMT Association with the aim of elevating investors’ mastery and skill in mitigating market risk and maximizing return in capital markets through a rigorous credentialing process, professional ethics, and continuous education. He is a seasoned business...

Member Interview with Brett Villaume, CMT, CAIA

Please tell us what you do professionally.

I am the Director of Investor Relations for a publicly-traded, mid-cap bank headquartered in Southern California. I’m responsible for managing the company’s communications with institutional investors, both current and prospective, and the sell-side analysts who cover the company. This includes authoring the quarterly earnings press release, preparing slide presentations for use at investor conferences, authoring the company’s annual report and proxy statement, and maintaining the company’s investor relations website. I also advise executive management and the board of directors on matters of corporate governance.

I am also currently serving as Vice President of the CMT Association.

How did you get there?

In 1999, I graduated with an undergraduate degree in Economics and landed a job in Atlanta at The Volume Investor, a boutique institutional research shop that specialized in technical analysis. It was founded and run by Mark Scott, who was Vice President of the Market Technicians Association in 1998-1999. I was surrounded all day, every day by technicians and traders in an open floor plan environment, so I developed an understanding of TA very rapidly. After a few years I was authoring daily market commentary for the company’s newsletter and writing focus reports on individual stocks that were attractive technically and also had fundamentals to back up the recommendation.

In 2004, I became a junior analyst at FIG Partners (now Janney Montgomery Scott), also in Atlanta, which was an investment banking and research firm specializing in the Bank Sector. FIG did not use technical analysis … not even a little. But, since I had the CMT designation, they asked me to speak on the morning research call every day and present on indices and interest rates and any individual stock ideas I saw. After a few years assisting the lead analyst, I began covering banks in the Southeast U.S. on my own, writing fundamental research reports that included earnings estimates, price targets, and ratings. I moved to San Francisco in 2010, stayed with FIG Partners, and built out a coverage list of banks located up and down the West Coast.

In 2015, I “retired” from being a sell-side analyst when the CEO of one of the banks I was launching coverage on offered me a job as the Director of Investor Relations. The role was a natural fit for a Wall Street analyst. In fact, I’ve seen quite a few of my former peer analysts make the move to investor relations over the past few years.

Who was an early mentor in your career?

Mark Scott. When Mark hired me fresh out of college, little did I know he was on the then-MTA Board with legends like Paul Desmond, Dodge Dorland, Nina Cooper, Phil Roth, Gail Dudack, John Greeley, Charles Kirkpatrick, and David Upshaw. Mark had developed a proprietary technical indicator called the Stealth Accumulation Monitor, or “SAM”, and presented it at our conference in New Orleans sometime in the 1990s.

The guys at The Volume Investor (David Parr and Fred “Butch” Powell) encouraged me to take the CMT exams. Mark told me to go down to the Robinson Humphrey offices at Atlanta Financial Center on Peachtree Road and attend a CMT chapter meeting. There I met John Brooks, co-founder of the Association, as well as lot of other CMTs in Atlanta at the time, including Past President Fred Meissner and past Treasurer Tim Snavely.

In 2000, the Association held its 25th Annual Conference in Atlanta and Mark and I attended. He introduced me to EVERYONE: Alan Shaw, Bob Farrell, Arthur Merrill, Ralph Acampora, Bob Prechter, John Bollinger, Connie Brown, Hank Pruden, Dick Arms… I was so blown away that I became a “lifer” in the Association from that moment on.

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

Technical Analysis Explained by Martin Pring. While John Murphy’s book was also required reading for the CMT when I took the exams in the early 2000’s and was the first book I read, it was Martin’s book that gave me insight into what TA really is.

Martin and I taught a class together in TA at Golden Gate University (online) and used his book as the text for the class. The way he introduces Dow Theory and peak and trough analysis in the beginning chapters was easily digested by students and creates a foundation that you can then build everything else on after that – oscillators, price patterns, even Elliott Wave. I feel like that book put a filter on how I view everything in TA going forward.

I have to say though, the award for most influential book/author might be a tie with Evidence-Based Technical Analysis by David Aronson. If Martin helped me know what TA is, Dave Aronson showed me how to figure out what isn’t.

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

I like to read, especially books on Technical Analysis. There are some great books out in the last few years that are either biographies or autobiographies. Linda Raschke’s Trading Sardines is the most entertaining book in the field of Finance I’ve read since Michael Lewis. George Schade’s book about Richard Schabacker is fantastic. If you liked reading Edwin Lefevre’s Reminiscences for the historical tour, you will like this even more.

I also go sailing on San Francisco Bay on the weekends, which isn’t exactly safe or relaxing. If you don’t see me at the Symposium the next time they have it, I’m probably at the bottom of the Bay being eaten by Dungeness crabs.

What brought you to the CMT Association?

Mostly it was learning from experts at conferences and the publications the CMT Association puts out, like the Journal of Technical Analysis and Technically Speaking. But going to chapter meetings, the mid-winter retreats in Florida (back when we had them), and the Annual Symposium in New York resulted in some great friendships that have lasted many years.

I went to the CMT 2019 India Summit in Mumbai right before the COVID-19 pandemic and made a lot of new friends there, such as Sovit Manjani and Foram Chheda, who were volunteers at the Summit. Plus, I got to know my fellow board member Akshay Chinchalkar and Mumbai chapter chair Vishal Mehta a lot better, and of course Joel Pannikot, Head of the India Liaison Office for the CMT Association. Attending CMT events just keeps getting more and more enjoyable.

What it the most useful benefit of membership for you?

The CMT designation. The reaction people have when they see the letters after my name has changed over the years. It went from “what’s a CMT?” to “Oh, you’re a chart expert!” Plenty of sell-side analysts and investment bankers I run into not only know what it is but will honestly admit they think it differentiates me from others. They remember me for it, and from what I can tell they think I’m the guy to ask about the chart.

This has gone long, long way in advancing my career. Opportunities happened because of that differentiation and, not to toot my own horn here, but because I could back it up with somewhat intelligent sounding analysis using basic TA concepts. I was on Bloomberg TV and Fox Business News a few times just because I was a sell-side analyst that knew banks and I had “CMT” after my name.

I think the CMT Program has advanced tremendously since I sat for the exams, especially in the past five years, so the reputation of the CMT is definitely going to continue to increase and the designation will be even more valuable in the future. If the only thing I got for my annual dues was the use of the CMT letters after my name, it would be worth it.

Contributor(s)

Brett Villaume, CMT, CAIA

Brett Villaume, CMT, CAIA, is Past President of the CMT Association, having served on the Board of Directors since from 2014 to 2023. Additionally, Brett is a Wealth Advisor at Dogpatch Capital, a registered investment advisor in San Francisco, CA. From 2015...

CMT Photo Archive

This is an occasional series revisiting the Association in picture, just to offer a glimpse of in-person events as a reminder of what we aspire to in the future.

If you have any pictures from seminars, meetings or after work get-togethers please submit them (in digital form, if possible) and include the date, location, and people in the photo. Better yet, if you remember presentations or topics of conversation that relevant to the current markets, let us know. There’s nothing like revisiting market history as it relates to the current environment.

From a Time Unknown

Ken Ward John Brooks Ralph Acampora

Pictured: Ken Ward, John Brooks and Ralph Acampora

For those of you who did not know him, or even know of him, look up Ken Ward. He lived and traded through every major bull and bear market in the bulk of the beginning of the 20th century.  Most of us old timers will remember John Brooks, one of the co-founders of the organization. And who does not know Ralph? If you look closely at the photo, you can see a stegosaurus walking around in the background.

Contributor(s)

Michael Kahn, CMT

Michael Kahn, who holds a Chartered Market Technician (CMT) designation, is a seasoned financial services strategist, analyst, columnist, educator and speaker.  Michael has been working with charts and technical analysis since 1986. He is the author of three books on technical analysis...

Membership News

Members on the Move

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

  • Thomas J. Festa, CMT, Blockchain Developer at Stella Maris Capital
  • David Lundgren, CMT, CFA, Co-Host at “Fill the Gap” investor podcast
  • William Delwiche, CMT, CFA, Investment Strategist at All Star Charts
  • Nathan Rogers, CMT, Director at Polaris Wealth Advisory Group
  • Richard Elia, CMT, CFTe, Course Instructor at Holy Spirit University of Kaslik – USEK
  • Janine Guenther, CFA, CMT, President at Dixon Mitchell Investment Counsel

CMT

We would like to congratulate all the candidates who successfully completed their exams during the December 2020 test administration! We applaud your resilience and determination during this pandemic.

Standard registration is now open and will close on April 12, 2021.

Since June is a busy month for exams at Prometric, we encourage all candidates to schedule their exam as soon as they register.  Candidates have the option to take the exam at Prometric test centers, which are located all over the world, or through remote proctoring.  For more information about remote proctoring please click on the following link: https://cmta.dev/chartered-market-technician/cmt-exams-remote-proctoring/

If you need assistance registering for the exam or scheduling your exam at Prometric, please email admin@cmtassociation.org.

The CMT Association would like to congratulate the following members who received their CMT Designation in January 2021.

  • Bryan Evans
  • Dimitris Kallergis
  • Reem Rawashdeh
  • Jungwook Song
  • Aniruddha Vaidya
  • Peng Wu

Contributor(s)

Marie Penza

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