Friday, 13 January 2012

Should I Become a Chartered Market Technician?

Those looking to become professional traders or market analysts often ask questions related to education and professional credentials. Here’s one I received recently. What is your opinion of the CMT (Certified Market Technician) program the Market Technicians Association has? I just signed up for the program. I just started a new job as an equities trader, and I also have experience trading FX as well. I eventually want to become a technical analyst of some sort (equities and or FX), or a trader for a buy or sell side firm. First of all, I should state that my membership in the Market Technicians Association (MTA) was something which made me stand out from other candidates when I was interviewing for what would eventually become my first job out of college. It was the early 1990s and technical analysis was still somewhat looked down upon in many areas of the markets. To be a college student who was that informed on the subject as to be a member of the MTA was something very unusual. In fact, when a classmate of mine attended an MTA function at the NYSE during our senior year we were the talk of the event. Everyone wanted to see “the college guys”. It was quite the surprise. :-) These days, technical analysis is ubiquitous. It has worked its way into a much more well respected discipline – at least in most areas. Having an MTA membership on your resume as a college graduate wouldn’t be quite so unusual as it was in my time, though it probably would demonstrate one’s commitment to potential employers about as much as it has always done. As for the Chartered Market Technician (CMT) program (not “Certified” as the inquirer said), I have never taken part. I have worked with plenty of them over the years, but never really felt compelled to go through the program myself. Mostly, it was a feeling that I probably wasn’t going to get a whole lot out of it from an educational perspective because I had long done loads of study and research on technical methods already. The other side of it was that I didn’t really feel the need for it given my growing professional analyst experience. The jobs you’ve held (assuming you’ve done them well) will always weigh more heavily on an employer’s decision making process than a certification of some kind. Now, if you are someone new to technical analysis, the CMT program could be a very good way to develop your knowledge and skills. Experience with the methods and techniques will always be the deciding factor, but the program can provide the educational basis for that if you don’t have it already. One other comment. I would say that a CMT could be quite useful opening doors when trying to land an analyst position (though there aren’t actually that many employed technical analyst out there). I wouldn’t put as much stock in it for someone looking to trade. Analysts need to speak to a potentially wide array of technical views. Traders tend to be much more specialized in what they use. I’m not saying a CMT couldn’t help land an entry level trading job. I’m just saying that analysts would make a bit more use of what’s learned through the program. Now, I know at least a few readers of this blog have gone through the CMT program or are in the process of doing so. They are going to be much more up on the subject than I am, so hopefully they will contribute their thoughts to the discussion. If you like this post or find it informative, I encourage you to sign-up for the newsletter.

FOREX: US Dollar Under Pressure Amid Cooling Euro Debt Crisis Fears

The US Dollar (ticker: USDollar) declined against most of its major counterparts in overnight trade as Asian stocks advanced, sapping demand for the go-to safe haven currency. The MSCI Asia Pacific regional benchmark equity index added 0.8 percent after Italy and Spain held successful bond auctions yesterday. Rome sold €8.5 billion in 1-year bills, with average yields tumbling to 2.74 percent from 5.95 percent at an auction of similar paper in December. Madrid sold nearly €10 billion in new debt – twice the targeted amount – with average yields on 3-year notes falling to 3.38 percent from 5.19 percent in December. Meanwhile, the ECB deposit facility saw its fist drawdown in five days, with banks parking €15.3 billion less with the monetary authority (for a total of €471 billion) than the previous day (the record-high €486 billion). Taken together, these developments encouraged hopes that the nearly €500 billion that the ECB lent Eurozone banks in December was actually making its way into financial markets, bearing down on borrowing costs and helping high-debt member states refinance maturing obligations at sustainable rates, thereby reducing the chance of a default within the currency bloc. Supportive rhetoric at yesterday’s ECB monetary policy meeting has also helped. Bank President Mario Draghi said policymakers were seeing “tentative signs” of stabilization in the economy, albeit warning of “substantial downside risks” still in the mix. Perhaps most importantly, Draghi said the ECB’s 3-year LTRO gave banks liquidity insurance, preventing a major funding constrain and going to far as to directly address concerns that funds provided through the facility were being hoarded in the ECB’s deposit facility. On this front, Drahi said the banks that borrowed through the LTRO were not the same as those pushing deposits to record highs, adding that the bank is seeing that money flow into the broad economy. Looking ahead, the spotlight turns to another Italian bond auction, this time of longer-term paper across 2014-2018 maturities. Generally speaking, longer-term bonds are considered riskier (and so pay higher returns) because they expose their holders to larger periods of uncertainty, so another drop in average yield levels similar to yesterday’s bill sale will be an important encouraging sign. While the Eurozone crisis is far from resolved, there is plenty of profit-taking to be done on signs of reduced credit market stress after speculative net-short Euro positioning hit another record high last week. Later in the session, the University of Michigan gauge of US consumer confidence is expected to rise to the highest in seven months. Stock index futures are trading higher ahead of the opening bell in Europe, bolstering the case for an upswing in sentiment through the week-end and hinting the greenback will remain on the defensive against its risk-linked counterparts. The fourth-quarter earnings report from JPMorgan Chase may be a countervailing force however, with earnings expected to drop 34.7 percent to $0.901 per share. The forward-looking guidance component of the report ought to prove most interesting however as traders look for insight on US banks’ vulnerability to Eurozone sovereign stress. Asia Session: What Happened GMT CCY EVENT ACT EXP PREV 23:50 JPY Money Stock M2 + CD (YoY) (DEC) 3.1% 3.0% 3.0% 23:50 JPY Money Stock M3 (YoY) (DEC) 2.6% 2.5% 2.5% 3:00 CNY Foreign Exchange Reserves ($) (DEC) 3181.1B 3200.0B 3201.7B 4:00 JPY Bankruptcies (YoY) (DEC) -6.4% - 3.2% Euro Session: What to Expect GMT CCY EVENT EXP PREV IMPACT 9:30 GBP Producer Price Index - Input (MoM) (DEC) -0.2% 0.1% Low 9:30 GBP Producer Price Index - Input (YoY) (DEC) 9.1% 13.4% Low 9:30 GBP Producer Price Index - Output (MoM) (DEC) 0.1% 0.2% Medium 9:30 GBP Producer Price Index - Output (YoY) (DEC) 5.0% 5.4% Medium 9:30 GBP Producer Price Index - Output Core (MoM) (DEC) 0.0% 0.0% Low 9:30 GBP Producer Price Index - Output Core (YoY) (DEC) 3.2% 3.2% Low 10:00 EUR Eurozone Trade Balance s.a. (NOV) 0.5B 0.3B Medium 10:00 EUR Eurozone Trade Balance (NOV) - 1.1B Medium 10:00 EUR Italy to Sell 2014-2018 Bonds - - High Critical Levels CCY SUPPORT RESISTANCE EURUSD 1.2727 1.2932 GBPUSD 1.5285 1.5505