CMT Awarded and MTA Information

Apr 22, 2009: 11:02 AM CST

I’m pleased to announce that I have been granted the Chartered Market Technician professional designation from the Market Technician’s Association!  I also wanted to share some background on this and for those interested in persuing the designation.

The MTA (Market Technician’s Association) was incorporated in 1973 and has become the leading professional organization for technical analysts worldwide with roughly 3,000 members in over 60 countries.  The MTA oversees the Chartered Market Technician program which has become the ‘gold standard’ in the field of professional technical analysis.

According to the MTA website CMT Section:

The Chartered Market Technician (CMT) Program is a certification process in which candidates are required to demonstrate proficiency in a broad range of technical analysis subjects. Administered by the Accreditation Committee of the Market Technicians Association (MTA), Inc., the Program consists of three levels. Level 1 is a multiple choice exam; Level 2 is a multiple choice exam; Level 3 is the essay portion of the exam.

The objectives of the CMT Program are:

  1. To guide candidates in mastering a professional body of knowledge and in developing analytical skills;
  2. To promote and encourage the highest standards of education; and
  3. To grant the right to use the professional designation of Chartered Market Technician (CMT) to those members who successfully complete the Program and agree to abide by the MTA Code of Ethics.

To be awarded the CMT Designation, a candidate must “demonstrate proficiency in a broad range of technical analysis of the financial markets.” The CMT is the culmination of a certification process that is made up of an educational component, an experience requirement, an ethics requirement, and a membership requirement.

Personally, I have benefited greatly from the structured educational coursework, interactions with other professionals, and idea/research sharing that takes place among members.  For example, my interest in applying Elliott Wave developed directly through the CMT studies – I was skeptical of its application until I had to learn all the rules and apply them to multiple charts.  I have also deepened my awareness and interest in Fibonacci Applications. I incorporate Inter-Market Analysis as the core of my strategies, which I learned as the result of the program.  My analysis and trading are remarkably improved as a result of the 2-year structured process.

More importantly, I have been trained as a classical technician with a focus on the early “founders” of modern TA such as Charles Dow, Richard Schabacker, Robert Rhea, Richard Wyckoff, etc.  I have been fortunate to combine early research with modern principles from Martin Pring, John Murphy, Linda Raschke,  and many others.

Now that the CMT is finished, the lifetime of learning and collaboration begins.

I am proud and honored to be a new CMT Charterholder, and look forward to contributing to the field of technical analysis through my current and future research.

Corey Rosenbloom, CMT
Afraid to Trade.com

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Intraday Elliott Wave and Flags in SPY Apr 21

Apr 21, 2009: 9:43 PM CST

I wanted to point out a 5-wave Elliott structure and two bull flags that offered trading opportunities in today’s (April 21, 2009) intraday SPY structure.

We started the day with a medium overnight gap which was quickly filled (small to medium gaps have greater odds of filling than large gaps), so that should have been the initial trade.  Once a gap fills, often the second trade is a move back down to test the lows off the open, and an evening star which formed into confluence resistance (yesterday’s close and the 20 EMA) set-up the second (short) trade of the day.

Those proficient in pattern recognition saw the ominous converging trendlines and narrow candles (dojis) of a falling wedge (which is bullish), and the trade entry came when price surged with a bullish candle out of the wedge.  This could also have been treated like a bull flag, which targeted the 50 EMA, though price surged well-beyond these targets.

Since price surged up in a strong move to new highs (price and momentum) on the day, it was a sign to experienced Elliott Wave traders that we could be experiencing a “third wave” which indeed turned out to be the case.  Remember, first and second waves are difficult to identify – you almost have to see them in the hindsight of a powerful 3rd wave.  Only then can you prepare yourself to buy after Wave 4 is complete.

Within the 3rd wave, a “Three Push” reversal pattern (triple swing negative momentum divergence) formed which led to the 4th Wave pullback into EMA support.

At the bottom of Wave 4, a doji formed (which is often a reversal signal) which was followed by a bullish breakout that began your “Wave 5″ Trade.

A unique opportunity arose – that of a Bull Flag within Wave 5.  Look closely as price formed a clean retracement to the rising 20 EMA which set-up the Bull Flag “Measured Move” trade.  Price actually exceeded the price projection into new highs on the day, though the new highs formed on a slight negative TICK divergence (not shown).

Remember, 5th waves are expected to have a 5-wave subdivision, and you can count that into the day’s close (which set-up scalp trades in the structure for very aggressive traders, particularly on the one-minute chart).

The more you see these patterns, the better you’ll be able to recognize then trade them in real time – that’s why I find “Idealized Trade Journals” and visual charting of your own patterns to be very valuable in your development as a trader.

Corey Rosenbloom
Afraid to Trade.com

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New Disciplined Investor Podcast with Jack Schwager

Apr 21, 2009: 12:25 PM CST

I was excited to hear that Andrew Horowitz’s guest this week on his Disciplined Investor Podcast series was Jack Schwager, author of the famous “Market Wizards” interview books.

When I first became interested in trading, I read both of Schwager’s books, which have become required reading now it seems – Market Wizards and his follow-up book The New Market Wizards.  I’m sure many of us had similar experiences and were enthralled by reading the experiences/insights from profitable market professionals.

Schwager wrote other, lesser known but information-packed books such as A Complete Guide to the Futures Markets (which is over 700 pages long!) and other introductory books to Technical Analysis.

Andrew had the distinct honor to interview Mr. Schwager on this week’s Podcast entitled “Schwager on Wizards and Kensianism“   I’ve also added the direct iTunes link below:

Be sure to subscribe in iTunes to make sure you get his Podcasts the moment they are released each week (for free).

Head on over and catch this week’s Disciplined Investor Podcast with Jack Schwager!

Corey Rosenbloom
Afraid to Trade.com

5 Comments

A Weekly Look at the VIX on April 21 09

Apr 21, 2009: 11:35 AM CST

The movement of the VIX has been puzzling many people over the last few months, particularly in not confirming market lows with increased upward spikes.  Let’s look at the current structure of the VIX and where we’ve come.

Remember, the S&P (and other US Equity markets) hit new lows in October (2008), November, and March.  One might expect the VIX – were it a pure inverse of the S&P 500 (it is not), to have reached higher levels on each subsequent downswing.

Keep in mind the VIX is known also as the “Fear” Index, as it measures the implied volatility of S&P 500 index options.  High values correlate with highly volatile markets (not necessarily new price lows).

This meant that the October move was more of a shock to the system than the subsequent lows that followed it – the general consensus after October was that we were going to make new lows, so the impact of those lows was less ’shocking’ or ‘threatening’ from a volatility standpoint than the ’surprise’ or rampant volatility of the October plunge.

A lower VIX could even argue the point for ‘complacency’ in a sense.

Anyway, I’m not entirely sure how applicable Elliott Wave methodology is to the VIX index, but it appears we’ve had a 5-wave move up off the May 2008 lows which is culminating now in the final “C” Wave of a complete Elliott full 8-wave structure.

Laying Elliott aside, the VIX just inflected down off its 50 week EMA as resistance.  It’s not out of the question that we could test the 200 week SMA at around 22, but that would mean the general stock market would continue its slow ebb to the upside which would continue to berate the shorts.

It’s perhaps more likely in a sense that the VIX will find support at the 35 level (which was resistance three times in the recent past) and inflect upwards off these levels, which would imply a down-move in the stock market.  Note the imaginary horizontal trendline which could be drawn about the 35 area.

Keep watching the VIX for further clues – and for those who want specialized information on the VIX, check out VIX and More or Adam’s Daily Options Report.

In fact, I just saw that Adam recently posted “Holy VIX!” which discusses the Daily Chart of the VIX.

Corey Rosenbloom
Afraid to Trade.com

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XLE Energy Gaps through Key Support

Apr 20, 2009: 8:53 PM CST

The Energy ETF (XLE) has lagged the broader market, and now it has gapped down through all major support on its daily chart, which could be a bearish omen of things to come.  Let’s take a closer look.

Notice that the XLE failed to break above its February high like some other ETFs did (like XLF – Financials and XLK – technology).  This is a sign of relative weakness both to other sectors and to the S&P 500 (which ‘tied’ its February high).

Here are some other quick chart components to see:

  1. Negative Momentum Divergence
  2. Negative Volume Divergence
  3. Break-down out of Rising Trendline
  4. Break-down out of Triangle Consolidation
  5. Breakdown through the confluence of 20 and 50 day EMA
  6. Subsequent “Breaking” of the Cradle Confluence

Without going into detail on all of these, make at least a mental note of these and that the future pathway seems to be to the downside.

As a caveat, we all deal in probabilities, so there’s no guarantees price will fall to challenge lower levels, but the odds are stacked against Energy Bulls now.  Also, note that Crude Oil itself will almost certainly suffer if we get a continued broader market swing down.

Corey Rosenbloom
Afraid to Trade.com

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