| ATAA Blast! Newsletter #169 – June 2024
| Dear ~~first_name~~
Welcome to the fourth edition of the ATAA Blast! Newsletter in 2024. We are very keen to tell everyone about the latest news from all corners of the ATAA, so contributions are very welcome from any ATAA member - especially from the Chapters, and the SIGs, and the network groups. (I normally aim to publish the Blast! News in the first week of the month.)
In this edition of the ATAA Blast! newsletter you will see (with links for an easy and speedy goto to the relevant section below):
- ATAA National President's Update for June.
- ATAA Website Resource Library updates - With lots of information about the immensely useful and growing Resource Library, including the now hundreds of video session recordings from the SIGs and network groups.
- Online Discussion Forums - This resource is now growing in popularity in the ATAA website (for ATAA members only - login is required).
- ATAA National Board Update - The latest news from the national board of directors, including: "First time visitors free", and from the Marketing Working Group: your email signature block, and ATAA logos to download.
- List of all of the ATAA Chapters, SIGs and Network Groups - more opportunities for the ATAA members.
- The ATAA Conference update - update for the upcoming ATAA Conference(s): an online event later this year, and a regular ATAA in-person conference late in 2025.
- Updates from the ATAA Chapters and SIGs: Canberra, Melbourne, Sydney, and SIGs (or at least from those that have submitted content).
- IFTA Update: Latest information from IFTA.
- TECHNICAL ANALYSIS article - A discussion about Bearish (and Bullish) Divergence.
- Detailed benefits for ATAA members.
Included toward the bottom of this month's Blast! News is a technical analysis discussion about Bearish Divergence. Also the ATAA Member Benefits section at the very bottom.
As the national Marketing Director, I am including key marketing phrases in this Blast!, including the ATAA Tag line in blue below, and the ATAA Elevator Pitch also in blue at the bottom of this email. Feel free to use these in your own correspondence to help encourage new members, and of course to remind existing members of why they are ATAA members.
I do hope you find this Blast! newsletter useful and interesting reading; but do feel free to tell us what you really think, and how we can improve it.
ps: Apologies for any odd formatting that you might find - font size or line spacing etc - but these seem to be oddities in our CE email editor.
Robert B Brain
Blast! Newsletter Editor
ATAA Marketing Director
(and ATAA Life Member)
| The ATAA is the knowledge network
for successfully using technical analysis
in financial market trading and investing
|
National President's Update – June 2024
My May highlight was the visit to the Sydney Chapter Members Bi-Monthly Network Dinner in late May. This is an in-person networking meeting, rather than a formal meeting with presentations, so the purpose of the visit was to get feedback from members in one of the largest ATAA Chapters. The dinner was conducted in an informal setting, but I sought to get feedback from all members present.
Participation in this informal networking meeting was excellent, with much a higher number of members attending than previous similar meetings. This shows that the Sydney members are keen to make their views on the ATAA felt and offer ideas on how the ATAA can improve. We had a lively discussion for about three hours, in which every member had the opportunity to make their views known about the ways the ATAA can better service its members. A number of ideas that came out from this meeting will be followed up.
The Forex Network got off to successful start in May, and I would encourage anybody who has an interest in forex to participate in this group, as networking is one of the key services we offer to our members, whether this is in-person or remotely. The other new group setup this year, the RealTest Coders Workshop, is also proceeding very well, with excellent participation.
The National Board is planning an in-person full-day strategy meeting on the 21st of July. The purpose is to develop and set our strategy to grow the organisation, and planning for this meeting is well advanced. Any further suggestions from members, especially from those that I haven’t had a chance to talk to so far, will be very welcome.
Jim Haralambidis
ATAA National President
national-president@ataa.asn.au
| ATAA Website - Resource Library Updates - recordings from May 2024
In case you've missed the materials recently added to the resource library, here's a brief list of those added in May:
- 9 May - Melbourne Chapter hybrid meeting - Understanding Bitcoin.
- 20 May - Sydney Chapter online meeting - A deep dive into the Markets, and also Trading Psychology - Having the right mindset.
- 21 May - Canberra Chapter meeting - The Art and Science of Trading: Crafting a Personalised Strategy Tailored to Your Objectives.
- 27 May - STANZ (New Zealand) - Analysing Fractals and Elliott Waves in the Financial World (Part 1).
All of these items can be found from the ATAA website menu: Resources > Presentations by Date. Make sure to browse the earlier recordings in the Resource Library, because you might never know what you've been missing. | | SIG and Network presentations in the Document Library - There is a growing collection of session recordings and other materials in a section of the ATAA website Resource Library. The latest one (from the Forex Network) can be found by following the menu (as shown in the screenshot below): Resources > Resource Library Folders, then expand the tree hierarchy under the Document Library heading: Member Resource Library > Presentations by Group. | | Presentations by Group - Session recordings for these ATAA groups can be found on the website:
- Bigalow Network
- Forex Network
- FX SIG
- Holy Grail Trader SIG
- MetaStock User Group SIG
- MEL Quant Traders SIG
- Technical Analysis Chat SIG.
| | | ATAA Online Discussion Forums - Check out the growing list of online discussion forums on the ATAA website, on a range of T.A. and trading topics. The link to access the forum (in the website menu) is enabled after you login to the ATAA website (see the screenshot below). The most active forums currently include: Bigalow Network, and the MEL Quant Trader SIG. And this week I have posted a new discussion thread in the "Indicators and Charting" forum on the topic of Bearish Divergence.
Robert Brain
(Marketing Director) | |
ATAA National Board updates
| | |
Meeting Visitors - First Time Free
At a recent national board meeting the ATAA board agreed that all first-time visitors to Chapter meetings be permitted to attend for free. Non-members are always welcome to attend ATAA meetings, and pay the $40 Visitor Fee. This is normally done online in advance when you register to attend the meeting. However, if you have not attended an ATAA meeting in the past, you are welcome to attend your first meeting for free - and preferably register on the ATAA website so that we will be expecting you as a special first-time visitor.
| ATAA Marketing Working Group Update
| The Marketing Working Group (WG) is keen to share two things with ATAA members.
- ATAA logos for you to use - There are several versions of the official ATAA logo which ought to be available for ATAA members to use as appropriate. For example in chapter promotional materials (posters, etc.). To find these jpeg and png files and download them, login to the ATAA website and use the menu option: Resources > Resource Library Folders > Association Documents > Marketing. There is also a PDF document which describes the reasoning behind each element of the current ATAA logo.
- Email Signature Block - For more information about this, see the next block below.
The ATAA board is preparing for the 1-day face-to-face board meeting in late July, where we will focus on two key questions:
- What else do we need to do to retain members, and encourage them to renew their membership when it falls due?
- What do we need to do to attract more new members into the ATAA?
Then we will be preparing a marketing strategy aimed it retaining members, and also at recruiting new members. If you have some thoughts along these lines, we will welcome your input into the discussions.
"Visitors - First time free" - Don't forget, at a recent board meeting the board agreed that all first-time visitors to Chapter meetings be permitted to attend for free.
| | The official ATAA email signature block. This jpeg file (shown herewith) is available for ATAA members to download from the "Resources Library", and then include in your own email signature block at the bottom of your emails. To find this file and download it, login to the ATAA website and use the menu option: Resources > Resource Library Folders > Association Documents > Marketing. | | | We need your opinions - To help the ATAA grow, and help more and more traders and investors, we need your opinion about what is working, and what is not working. We are preparing two very important surveys.
We are preparing a Special Member Survey, similar to what we have done a couple of times in the last 12 or so years. We will ask all members to help us understand if the ATAA is fulfilling your expectations, and providing you with value for your membership money. We will ask you which membership features you are utilising and enjoying, and those that need improving. We will also ask you about anything that we need to do better, or do more of. This survey will be ready within the next few days, and we will email you and ask you to take a couple of minutes to complete it for us. Your feedback from this survey will be fed into the one-day in-person board meeting on 21 July.
The second one will be the Exit Survey where we ask the non-renewing members to help us understand their reason for not renewing their ATAA membership. Maybe it is something that we have done, or not done. Maybe it was a time constraint, or a misunderstanding about what technical analysis is all about. This Exit Survey will be implemented shortly, so anyone who does not renew their membership will be politely asked to help us understand.
Robert B Brain
ATAA Marketing Director
| |
ATAA Conferences
Working Group
| | | 2024 Multi-Speaker Online Webinar Event
Following approval by the Board to hold an online webinar in 2024, the CWG began early planning for it this month. The draft theme is to be “Unlock your profit potential: Strategy Development, Risk Management and Chart Mastery”. A date of 19th or 26th of October was decided upon, to be confirmed later. The group aims to have up to 6 speakers on the day, running from 10am until 6pm.
Feedback from the online survey was used to decide on topics we’d like to see covered, and potential speaker names were brainstormed. The group also discussed ideas for marketing, sponsorship and event ticketing. A price of $99 for ATAA members, and $199 for non-members (perhaps with a trial membership as an inducement) were agreed upon.
The group will now progress organising speakers and setting up event arrangements.
2025 In-Person Conference
It was agreed the next in-person conference would be held in Melbourne, in Spring of 2025. The group agreed to look at a wide variety of venue options, both within and outside of the CBD, that meet a given set of criteria including easy access to transport, car parking, accommodation options etc.
Thank you from your Conference Working Group.
Alan Clement
ATAA (Conference) Director
| CHAPTER and Special Interest Group (SIG) news and updates
| ATAA Chapters, SIGs and Network groups
For the benefit of ATAA members everywhere, the ATAA has a number of: Chapters, and Special Interest Groups, and Network Groups. Current financial members are free and welcome to participate in any of these. We are hopeful that all of these groups will submit some information for publication in the Blast! News from time to time, to help everyone understand more about the opportunities and benefits for ATAA members.
For the latest meeting information, check the ATAA website for details, and also scroll down the website home page to see the latest announcements, presentations and updates to the resource library.
| | ATAA Chapters (alpha order) meeting monthly
- Adelaide
- Brisbane
- Canberra
- Melbourne
- Newcastle
- Perth
- Sydney
| | SIGs and Networks (and contact names)
- Melbourne Quant SIG (Jim Haralambidis)
- RealTest Coders (online) Workshop (Chris Meakin, Robert Grigg)
- Bigalow Network (Romy Baker)
- Forex Network - FN (Romy Baker)
- MetaStock Users SIG (Jerry Bongard)
- FX SIG (Mike Smith)
- TA Practice SIG
See the ATAA website for latest information.
| | | Hi All. After a bit of a hiatus due to the last organiser standing down, Jerry Bongard is stepping up to resurrect the MetaStock SIG and would like your input for arranging the meeting day of the week/time. What topics are you interested in? (i.e. MetaStock capabilities, tools, indicators, add-ons).
Please contact Jerry by email (address below) or through the Online ATAA Discussion Forum with your meeting preference and/or topics of discussion by the end of June. Thanks for your support.
Jerry Bongard
| | RealTest Coders Workshop
(MEL Quant Traders SIG)
| | | Still meeting online, generally on the second Monday of each month at 8:00 pm. EST (to give members in western states a better chance of attending.) More information is available.
Chris Meakin and Robert Grigg
SIG Coordinators
| Bigalow Network and
ATAA Forex Network (FN)
| The Bigalow network - met last Friday and Greg Robotham gave his usual presentation on the Bigalow methodology on our selected charts. Much lively discussion is always a feature of our meetings. The recordings can be found in the resource library.
The Forex network - held its inaugural meeting on 8 May and was well attended. The meeting was terrific with a great exchange of ideas and opinions. Our next meeting is on Wednesday 14 June at 7.30 pm.
You are welcome to join us - If anyone would like to join the Bigalow or Forex Network meetings, please email the undersigned, Romy Baker. We would love to hear from you if you are interested so, please send us an email, or phone us.
Looking forward to hearing from you.
Romy Baker
ATAA Sydney Chapter
0414 554 967 | The Canberra Chapter continues to have a small and dedicated in-person following and our online presentations are attracting at least 20 participants whenever we have a hybrid meeting.
In May, Bruce Taylor provided his popular ASX review looking at the macro ASX200 view and the movements of some blue chip local stocks. Chris Meakin provided an update on the rotational, systematic variations on Ray Dalio’s All Weather Portfolio and we had an update on the local stock picking competition.
A recent rarity for one of our meetings, we had an in-person presenter streaming nationally as Alan Clement gave another outstanding presentation entitled: ‘The Art and Science of Trading: Crafting a Personalised Strategy Tailored to Your Objectives’.
The presentation on systematic trading was systematic in itself and gave a rationale for all the steps along the way to create a strategy and then test, fine tune and test again to meet the objectives of your system. Members, including non-quants, who missed the presentation and would like to increase the systematic component of their trading will be well-rewarded by accessing the presentation in the ATAA Resource Library.
Our main presentation in June will also be streamed and is by the National President, Jim Haralambidis. It will be held on June 18. If you have questions for Jim, as National President, or regarding his presentation ‘Selling Fast and Buying Slow: What does the evidence tell us about the best rules for buying and selling?’ then do tune in.
Regarding our July hybrid meeting with Graham O’Brien streaming from the ASX in Melbourne, if you have some questions or topics that you would like an ASX veteran of 25 years to cover, please email them to me. We initially thought Graham may focus on Options Strategies and some intricacies of the ASX website. However, Graham is open to present on other ASX and trading related topics.
Good health and good COVID-free trading,
Mark Gleeson
ATAA Canberra Chapter President
[The Canberra Chapter generally meets on the third Tuesday each month.]
| In 2024 the Melbourne Chapter has been running the in-person hybrid meetings all year, with the invaluable networking from 5pm to 6pm, then the broadcast session 6-8pm, followed by further networking and guest speaker mingling over dinner after 8pm. The broadcast segment is usually recorded and uploaded to the ATAA website at some stage. So if yo missed the session, you can view the video recording; but you would have missed out on the great networking opportunities and the exchange of trading tips and knowledge that only happens in the room.
The Melbourne Chapter always meets in-person on the second Thursday of each month, with networking before the 6pm session broadcast. All ATAA members who attend are given a "Door Prize" raffle ticket, with the winning tickets drawn during the mid-session break (when we change-over the speakers). You see, we have a truck-load of pre-loved trading and technical analysis books to give away at our meetings, and these are used as the Door Prizes in the Member give-away. And some of these books are absolute gems - for free!
Don’t forget that public transport (tram) runs past the hotel front door, and there is ample car parking around the corner.
Robert Brain
ATAA Melb Chapter President and interim Secretary
(for the Council team: Paul Ash, Jim Haralambidis, Keith Mundy, Tony Hambling, Tony Leonard, Robert Grigg).
[The Melbourne Chapter generally meets in person on the second Thursday each month, with networking before and after the broadcast segment which is 6-8pm.] | The Sydney Chapter's bi-monthly dinner - on 20 May was well attended. We were delighted to host ATAA National President Jim H to our dinner. There was much lively discussion, and everyone contributed their thoughts about how to strengthen the ATAA to ensure that it continues to add value for its members. Jim took copious notes, so we hope he didn’t feel too swamped and that he went home with some good ideas 😊 A good time was had by all.
Our monthly online meeting was also well attended with ATAA members from most chapters attending. Mary McNamarra gave her usual analysis of the market, which is gold and shouldn’t be missed. Colin Simpson then gave a great presentation on “Trading Psychology”. Colin gave us an example of a client who subscribed to his automated trading system and pulled out after 4 losing trades – demonstrating the power of loss aversion on our psyche. The moral of the story is to develop a trading plan with an edge and adhere to your trading plan.
Sydney Chapter Council
[The Sydney Chapter currently meets online only, and generally meets on the third Monday of each month]
| Don't forget, we have a total of seven chapters around Australia, including: Brisbane, Perth and Newcastle. You can see a list of the seven chapters and their office-bearers on the website - use the menu option: ATAA Overview > Current Office-Bearers > Chapter Councillors > Subcommittees. See the ATAA website for latest meeting and event details.
- Adelaide Chapter generally meets in-person on the third Wednesday of the month.
- Perth Chapter generally meets on the third Thursday of the month.
- Brisbane Chapter generally meets... second Saturday of the month? TBC
- Newcastle Chapter generally meets ... Saturday in the month? TBA
| IFTA webinars: See the latest information about up-coming and past webinars on the IFTA website here.
IFTA Conference - Save The Date - 2024 IFTA Annual Conference in Hainan. 4-6 October 2024. More information soon.
| IFTA and ATAA members - ATAA members are automatically affiliate members of the International Federation of Technical Analysts. ATAA membership gives you access to IFTA resources including: certification programs, educational events and networking opportunities, including participation in the IFTA Conferences. The information below is the latest update from IFTA.
IFTA has announced that the 2024 IFTA Annual Conference will be in Hainan, China, 4-6 October 2024, with the IFTA AGM and Board Meeting one day earlier - 3 October. For more details see the IFTA website.
IFTA Journal 24 (a professional journal published by IFTA) - We are pleased to announce that the 2024 IFTA Journal is now available for viewing and download from the IFTA website. (Note that it is a 79 pages PDF, and 16MB in size).
IFTA Update (quarterly newsletter) - The IFTA Update is a quarterly newsletter that is available to members of the ATAA. The latest issue was announced in the March Blast - see that Blast News for details.
| Join the ATAA to improve your understanding of how to
invest or trade successfully in the financial markets
focusing on the correct use and application of Technical Analysis
| Technical Analysis: Bearish Divergence - What is it? And is it useful?
| When studying price charts, and looking for a potential change in trend, one useful feature to look for in the charts is known as divergence. This refers to the divergence of the price when compared to a chart indicator — that is, when the price is heading in one direction, say up, while the indicator is heading in the other direction, say down. Divergence comes in two variations — bullish divergence and bearish divergence, and each of these types of divergence can be classified as of three different “strengths” — Class A, Class B, or Class C.
In this Article we look at the notion of divergence and explain what it is, what it means, and how to spot it.
Divergence explained — a capital protection tool
Let's first look at bearish divergence, because this can help us to identify pending trouble in the market or in a stock, and help us to protect our investment capital. Conversely, bullish divergence can forewarn us of a pending turn up in the price, and give us confidence of a pending upward move.
In its simplest form, bearish divergence can be explained with reference to the price chart in the first chart sample below which shows the All Ordinaries index (XAO) in the upper pane (weekly chart through 2006 and 2007), and the 28-period Momentum indicator in the lower pane. Firstly, understand that it is normal for the Momentum indicator to move roughly in sync with a price chart. That is, as the price (or the index) is trending up and making higher highs, the indicator usually tends to also move upwards and make higher highs.
In the sample chart here, note the following features:
- As the index rises and falls, Momentum also usually rises and falls, roughly in sync (except for the period flagged as “A”).
- During the period indicated as “A”, the index kept running higher through April, May, June and July 2007 to make a Higher High in October, while the indicator failed to make Higher Highs and in fact made Lower Highs down into October. This was apparent on this weekly chart into late 2007.
|  | Divergence such as this applies equally to stocks, or an index. And it can be observed in various time periods — on this weekly chart, but also on daily and monthly charts (and other periods).
An observation of divergence like this forewarns of price weakness and a possible change in trend for the index (or the stock) in question. It does not forewarn of a definite change, only a possible change.
Notice that this observation is not concluded quickly. In the example shown here, the divergence played out from about March 2007 until the index peaked in October, some 7 months later. And in fact, there are three points on the Momentum chart at equal heights with two of them flagged as “High” in March 2006 and April 2007. The fact that these are about the same level while the index advanced higher was even earlier warning that perhaps the index was peaking.
Also note that we only need to observe a line chart, and not a candle or bar chart. The only significance is the closing prices for the period.
Bearish divergence - As shown in the chart above can be described as observing a rising stock (or index), with the respective indicator falling. That is, the stock is making Higher Highs, but the indicator is making Lower Highs. (There is an exception to this. See a discussion on Levels of Divergence - in next month's newsletter.)
Notice that when the stock is rising, we are observing the Highs of the stock. This is because the first observation for a rising share price is for Higher Highs (as well as Higher Lows).
Bullish divergence - This can be described as observing a falling stock (or index), with the respective indicator rising. That is, the stock is making Lower Lows, but the indicator is making Higher Lows.
Notice that when the stock is falling, we are observing the Lows of the stock. This is because the first observation for a falling share price is for Lower Lows (as well as Lower Highs ).
This can be interpreted as the downward move in price losing downward strength. A good example is shown in the next weekly chart below - this was the start of a strong upward bull market lasting a few months after the infamous GFC of 2008.
|  | Note that over the period of about 16 weeks from November 2008, the All Ordinaries index (XAO) in the upper half of the chart made successive Lower Lows (indicated with the numbers 1, 2 and 3). Over the same period the RSI indicator (in the lower half of the chart) made Higher Lows. This is especially valid because the RSI was moving upwards from the oversold area below 30. If it had have been in the neutral zone between 30 and 70 it would carry less importance.
In this example, note that there were three successive points of divergence, not just two. This highlights the point that we should not act quickly on the first sign of divergence; but take it as a “heads-up” that a trend change might soon follow (and it might not). Also note that on a weekly chart like this one, the trend change can take place several weeks after the divergence is observed.
Which indicators?
In the examples above we have used both the Momentum indicator and the RSI indicator. The notion of divergence can also be observed with a number of other indicators. One reference source states that there are at least four indicators which have proved to be valuable:
• Commodity Channel Index (CCI)
• Slow Stochastic
• Relative Strength Index (RSI)
• Moving Average Oscillator.
[some price chart examples, and some text regarding bullish divergence is not included here this month]
An example — Telstra (2006)
The weekly price chart in the next sample below shows the Telstra share price making a Lower Low in late 2006, while the MACD indicator (lower pane) is making a Higher Low. This forewarned of underlying strength building in the share price. Note also that the MACD is rising “below it's zero line” during this price (this is another indication of underlying strength building). Note that Telstra went on to rise some 36% in the following months.
|  | Confirmation
Take care! — We can see in the examples above that the presence of divergence is not a definitive warning of an impending trend change. In fact, it can be said that divergences can be considered normal in a strong trend. And they sometimes result in no trend change at all. What they do do is they wave the warning flag that a trend change is possible at some stage in the near future (but not probable). And the time frame might be within days, or it might not be for weeks, or even a few months. The key point is that it is possible so we shouldn't be surprised.
The usefulness of divergence is increased if we can utilise another technical analysis tool to confirm a potential signal — such as a candlestick pattern, or chart feature such as a chart pattern, or price gaps, or even volume. It is important to keep an eye out for any or all of these situations.
Further discussion? - There is a discussion thread in the online discussion forums on this topic, so feel free to browse the discussion there, and even contribute to the discussion.
| Hopefully this article on divergence has been interesting and useful.
Author: Robert B Brain
(c) Copyright, Brainy, 2010 and June 2024
This material and these charts were first published in Brainy's eBook PDF Articles in 2010.
| ATAA Member Perks and Benefits
| If you're not an ATAA member, and you are considering joining, you might be interested to know there are many good reasons to sign-up, including:
- Invaluable education opportunities (with discounts for members);
- Huge and extensive Resource Library (access for members);
- Networking opportunities - meet with like-minded peers for trading and investing discussions;
- Special Interest Groups (SIGs) (only for members) - there are several;
- News and information;
- Online Forums;
- Annual ATAA Conference (discounted for members).
| I do hope you have found this edition of the Blast! Monthly News interesting and useful. it took me longer than expected to compile this edition, but then there is a lot more news and information than normal. If not, or if you have any feedback, please feel free to email me directly.
Robert B. Brain
Blast! Newsletter Editor
| |