As I write this article, I am sitting in the mountains, watching a glass smooth lake warm up in the morning sun. The only ripple is caused by an eagle tormenting some birds sitting in the water. It's a long, long way from the bustle of New York City but its a great place to reflect and review the learnings from this years CMT Association conference.
Each year for the last 7 years, I have attended the MTA Association symposium in New York City. Bill Kelleher and Tyler Wood have organized the conference the last few years. Hats off to them, they do a great job every year. This year was no exception. Thank you Bill and Tyler!
The conference started in an evening setting. Bloomberg hosted the event with a wide ranging interview by Bloomberg Reporter Abigail Doolittle interviewing three leaders in the industry. Jurrien Timmer, CMT from Fidelity, Katie Stockton, CMT from her newly opened firm Fairlead Strategies and Mike Hurley, CMT from Highland Capital Management. That's a kickoff! They are all optimistic this is a correction, not a new bear market. I think we all agree there. The big discussion was what tools would you use to form your market bias. Some great ideas just rolled forward. Jurrien Timmer used charts and added a voice to big picture fundamental backdrops (P/E multiples, earnings growth rates) whereas Mike and Katie utilized technical chart setups. Powerhouse start! The RRG graphs by Julius de Kempenaer were displayed as they talked about sector rotation.
In the morning, John Bollinger kicked off the event and reminded us to never get comfortable. To look at new ways of combining technical analysis, to remain inquisitive, is part of the formula for great technicians. The market is always evolving and understanding that evolution is critical.
Tom Lee of Fundstrat really engaged the audience with information on Crypto currencies. If you blew off cryptos as a gambling game before he spoke, you didn't after he finished. He listed compelling reasons to spend more time investigating the opportunities after the charts had retraced 60-80% of the surge.
One of the more difficult choices of the conference is the breakout rooms, where you have to pick 2 of 3 speakers to listen in on. Choices included Marc Chaikin of Chaikin Analytics - combining fundamentals with technicals (fusion is the industry name for this), Mike Hurley - Catching Turning Points, or Wes Gray, CEO of Alpha Architect - Quantitative Momentum Investing. Seriously, it is impossible to pick. I chose Marc Chaikin and Mike Hurley. Marc Chaikin has been on StockCharts TV and has a power bar for fundamentals on the bottom of his chart, but all of the timing is based on his technical indicators. He compared his indicator setup to the SCTR indicator. I think this is the first time the indicator has been displayed at the CMT Symposium. Woot Woot! I found myself recognizing Mike Hurley's work in my own work. Using sentiment indicators, technical indicators and inter market analysis, Mike has been one of the money management success stories.
As the Calgary chapter chair for the Canadian Society of Technical Analysts (CSTA) and a member of the Board of Directors, I met with Alvin Kressler, the CMT Association president. We covered a wide range of topics including the growth of the CMT charter. This year there are 1700 students enrolled in the CMT accreditation. That is just huge growth. The CMT has grown in rank and awareness. On many portfolio managers business cards, they will list CFA, CMT. This is one of the reasons for the rapid expansion of Technical Analysis in the use of money management. The CFA Society is very engaged with the CMT Society to expand the tools for managing money.
I always find the Symposium engaging. Perhaps it is getting insight to some of the biggest names in the business. Perhaps it is the ideas I pick up through a few days of presentations. Perhaps it is the interaction with other technicians. It is so engaging for me.
I sat in on a presentation from Andreas Clenow on reverse engineering weaknesses in Technical Analysis. When you get a failed breakout, how would you design a trading system to sell when everyone is buying and buy when everyone is selling? Really eye opening.
Navigating the Behavioral Gap by Steven Goldstein was an important hour for me. He discussed the logical process of analyzing a trade, putting on a trade, managing an open position, closing a position with profit or closing a losing position and resetting yourself for the next trade. While this subject can be dry (cough- boring), I found it very informative. He discussed the pressure of trading in an office with others. The fear of being wrong, trading against your bosses position, putting on a trade to be the same as the office while silently wanting to be trading the other direction. He discussed closure on a good trade and closure on a bad trade. Incomplete closure is a problem. His presentation really hit home if you chat with other traders through the workday. They will get you involved in a setup that you normally wouldn't take. Resounding lesson was you must do all four successfully to keep trading.
John Lewis of Dorsey Wright shared his momentum investing style. This is similar to the SCTR ranking system but I always find it interesting to mentally compare what their system sees compared to the tools I use. I still think the SCTR is one of the best tools for identifying strong setups and is very easy to understand.
Brian Shannon of Alphatrends presented a concept called Anchor Weighted Volume By Price. Rather than using VWAP, this idea calculated a VWAP line from emotional places on the charts or from wherever the chartist wanted. Sudden gaps up or down meant you could create a volume by price line from before and after the event. This line showed where the majority of traders were involved and average price levels for the traders. Very interesting concept. I got to spend more time with Brian Shannon and we had some great discussions.
Josh Brown, CEO of Ritholtz Wealth Management, was interviewed about how he got started. You might remember the name from CNBC Fast Money. He is as dynamic in person as he is on TV.
To wrap, there were three notable awards given out at this years event. The Service Award was presented to Phil Roth for continuing to deliver his energy into the CMT Association over the years. A big congratulations to Phil and a big thank you for all of his work. He is just a massive contributor.
The Dow Award went to Giole Giordano for his Ranked Asset Allocation Model. Giole accepted the award by pre-recorded video from Italy.
One other presentation that was particularly notable was the Lifetime Achievement Award to Mr. William O'Neil from Investors Business Daily. His concepts for investing were extremely profitable for him. Many students have learned from his mastery. He always used the chart to trigger his interest. Then he would look to see if he liked the fundamentals. Check out this chart work on Brunswick. Is that intense or what!
His son Scott accepted the award on his behalf. Scott's commentary was like a 'good -morning' inspirational speech. He spoke about how his dad would sit down and get Scott to go through his charts each week. When Scott had reviewed a stock in enough detail, dad would go to the next chart and Scott would have to explain why he liked it in detail. A process driven man that made huge profits in the stock market. William O'Neil started with $5000 and in the first year turned it into $200,000. He was the youngest person to buy a seat on the New York Stock Exchange. Scott posted charts where his father had made immense amounts of wealth off one trade.
With that, it's a wrap. Another great year for the CMT Association.
Good trading,
Greg Schnell, CMT, MFTA
