MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved Trend & Momentum “The Trend is Your Friend”

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 2 Viewing the Company versus the Stock A. Philosophy of Supply and Demand

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 3 Support and Resistance A. Philosophy of Supply and Demand

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 4 S&P 500 Stock Index - Weekly H,L,C Cyclical bull market Cyclical bear market S&P Weekly StockCharts.com A. Philosophy of Supply and Demand

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 5 NASDAQ 100 Index - Weekly H,L,C Secondary trend NASDAQ - Weekly StockCharts.com A. Philosophy of Supply and Demand

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 6 Top Bottom Uptrend Downtrend Dow Theory and the Ideal Marketplace A. Philosophy of Supply and Demand

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 7 Dow Theory of “Confirmation” DJIA and DJTA - Weekly - May 2002-May 2005 Confirmation of New High in Transports New High DJ Industrials - Weekly DJ Transports - Weekly StockCharts.com A. Philosophy of Supply and Demand

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 8 Sideways Trend Horizontal Peaks Horizontal Troughs Uptrend Higher Peaks Higher Troughs Lower Peaks Lower Troughs Downtrend The Trend A. Philosophy of Supply and Demand

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 9 Disney - Daily StockCharts.com Line Chart of Daily Close for Walt Disney Co B. Chart Construction

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 10 Krispy Kreme - Weekly StockCharts.com Weekly Bar Chart for Krispy Kreme Doughnuts December 1, August 22, 2007 B. Chart Construction

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 11 StockCharts.com Cisco - CSCO Monthly Bar Chart for Cisco Systems, Inc (logarithmic scale) B. Chart Construction

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 12 Drawing the Candle Lines Definition of Candle Terms B. Chart Construction

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 13 Alleghany Technologies, Inc. One point ($1) box and 3 box reversal B. Chart Construction

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 14 StockCharts.com S&P 500 SPDRs (SPY) 1 pt/box; 1 box reversal chart - daily B. Chart Construction

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 15 Support and Resistance Zones February 7, April 22, 2005 StockCharts.com Walt Disney - Daily D B C A E F C. Trend Analysis

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 16 High-Volume Reversal July 2, August 27, 2003 StockCharts.com One-Day Reversal High Volume Resistance Stops Rally Walt Disney - Daily C. Trend Analysis

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 17 StockCharts.com Walt Disney - Daily Regression Line from Low to High +/- One Standard Deviation Channel C. Trend Analysis Regression Line and One Standard Deviation February 26, September 11, 2003

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 18 StockCharts.com Walt Disney - Daily Uptrend Line Trend Line February 26, September 11, 2003 C. Trend Analysis

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 19 StockCharts.com Walt Disney - Daily A B Uptrend Line with Channel Line Trend Line with Channel Line February 26, September 11, 2003 C. Trend Analysis

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 20 Walt Disney - Daily 60-Day MA Regression Line One Std. Dev. about Regression Line StockCharts.com C. Trend Analysis Simple Moving Average February 26, September 15, 2003

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 21 StockCharts.com Walt Disney - Daily 60-Day MA 20-Day MA Cross-Over Crossover is a Signal in a Trending Market Where moving averages cross is often a Support and Resistance area C. Trend Analysis 2 Moving Averages - Support & Resistance Zone February 26, September 19, 2003

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 22 Entry Breakout Pullback Double Top with Breakout Down D. Chart Patterns

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 23 Triple Bottom with Breakout Up Entry Breakout Throwback D. Chart Patterns

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 24 Descending Triangle with Breakout Up Entry Breakout Throwback D. Chart Patterns

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 25 Diamond Pattern with Breakout Down EntryBreakout Pullback D. Chart Patterns

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 26 Entry Breakout Handle Throwback Cup or Bowl and Handle Variety of a Rounding Bottom with Breakout Up D. Chart Patterns

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 27 Head and Shoulders Top with Breakout Down Entry Breakout Pullback Right Shoulder Head Left Shoulder D. Chart Patterns

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 28 Spinning Top Can Be Black or White Harami Candlestick Pattern D. Chart Patterns

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 29 Evening Star and Morning Star Candlestick Patterns Spinning Top Can Be Black or White Evening Star (top)Morning Star (bottom) D. Chart Patterns

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 30 Apple Computer - Daily On-Balance Volume (OBV) StockCharts.com  E. Mechanical Momentum Indicators On-Balance Volume July 22 - October 15, 2005

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 31 Apple Computer - Daily Chaikin Money Flow StockCharts.com Chaiken Money Flow July 22 - October 15, 2005 E. Mechanical Momentum Indicators

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 32 Apple Computer - Daily MACD StockCharts.com     MACD Signal Line Overbought Line E. Mechanical Momentum Indicators Moving Average Convergence-Divergence (MACD) July 18 - October 17, 2005

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 33 Apple Computer - Daily 14-Day Rate of Change (ROC) StockCharts.com       E. Mechanical Momentum Indicators Rate of Change (ROC) July 18 - October 17, 2005

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 34 Apple Computer - Daily 14-Day Relative Strength Index (RSI) Swing FailureBreakoutTriangle StockCharts.com E. Mechanical Momentum Indicators Relative Strength Index (RSI) July 19 - October 15, 2005

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 35 Apple Computer - Daily Slow Stochastic Overbought Down- ward Crossover Oversold Upward Crossover Swing Failure and Breakup Swing Failure and Breakdown StockCharts.com    E. Mechanical Momentum Indicators Stochastic July 19 - October 15, 2005

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 36 E. Mechanical Momentum Indicators - continued Expanding volume confirms rising prices Breakout confirmed by expanding volume Royal Gold - Daily Volume Positive Volume Confirmation Royal Gold - Daily StockCharts.com

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 37 E. Mechanical Momentum Indicators - continued Negative Volume Divergence Pepsico - Daily Uptrend Broken StockCharts.com

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 38 E. Mechanical Momentum Indicators - continued S&P Daily Positive Divergence On-Balance Volume StockCharts.com On-Balance Volume Confirmation S&P Daily

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 39 E. Mechanical Momentum Indicators - continued Price Open Interest Volume Open Interest Copper Futures December 2005 Contract

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 40 F. Relative Strength PRICE TRENDPRICE TREND 1 = Up 2 = Neutral 3 = Down Price Trend versus Relative Strength RELATIVE STRENGTH

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 41 International Flavors & Fragrances Relative Strength - International Flavors & Fragrances : S&P500 StockCharts.com International Flavors & Fragrances F. Relative Strength

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 42 International Paper Relative Strength - International Paper : S&P500 International Paper StockCharts.com F. Relative Strength

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 43 Dow Jones US Food & Beverage Index Relative Strength - DJ Food & Beverage Index : S&P500 Dow Jones US Food & Beverage Index - MACD StockCharts.com Dow Jones US Food & Beverage Index F. Relative Strength

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 44 Dow Jones Industrial Average Capital Goods : Consumer Goods Capital Goods Outperformance Consumer Goods Outperformance StockCharts.com Dow Jones Industrial Average F. Relative Strength

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 45 Portfolio Management Asset Allocation –How much in stocks Security Selection –What to buy –When to buy –When to sell Technical analysis is critical to answering “when?” G. Money Management

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 46 “Almost all of the really big trouble that you’re going to experience in the next year is in your portfolio right now; if you could reduce some of these really big problems, you might come out the winner in the Loser’s Game.” - Charles D. Ellis Investment Policy - Why It Matters G. Money Management

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 47 C-A-N-S-L-I-M C = Current EPS growth – should be a minimum of 20% A = Annual EPS growth – should be at least 15-20% for 3 years N = New. The greatest winners had a major new product, new management, or new industry conditions A new high in price can alert you to new fundamental developments G. Money Management

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 48 S = Shares outstanding – past winners have had an average of less than 25 million L = Leadership – demonstrated by high relative strength for the stock and the stock’s industry group I = Institutional sponsorship – good stocks are owned by institutions M = Market – even good stocks go down in a bear market C-A-N-S-L-I-M G. Money Management

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved Sentiment (Behavioral Finance Analysis) “The Little Guy is Not Always Wrong”

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 50 A. Transactional Indicators ISE 10-Day Put/Call Ratio Index Ratio S&P Day Ratio

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 51 Options Clearing Corp. (OCC) Index Options Premium Put/Call Ratio 4-Wk. Moving Average S&P 500 Bearish Bullish Index Ratio A. Transactional Indicators

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 52 Bearish S&P 500 Bullish 4-Week Moving Average Index Percent Consensus Inc. Bullish Percentage: Equities B. Sentiment Polls

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 53 S&P 500 Dividend Yield vs. Price / Earnings Ratio Dividend Yield P/E Ratio RatioPercent P/E Ratio October 2009 C. Valuations

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved Supply/Demand (Quantitative Analysis, Flow of Funds) “Investors Make Bottoms and Traders Make Tops”

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 55 Flow of Funds: Net Change in Supply of Stock Index $Billions Quarterly, SAAR S&P 500 A. Investor vs. Trader Participation

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 56 Flow of Funds: Households Equity Percent Total Financial Assets Percent S&P $Billions A. Investor vs. Trader Participation

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 57 S&P 500 Equity Percent Total Financial Assets Percent $Billions Flow of Funds: State & Local Government Employee Retirement Funds A. Investor vs. Trader Participation

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved Monthly $Billions New Equity Financing 12-Month Total $Billions A. Investor vs. Trader Participation

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 59 % of Market Value Margin Debt Prior to January 1997, NYSE figures only $Billions Margin Debt versus % of Market Value A. Investor vs. Trader Participation

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 60 Insider Activity Index S&P 500 Bearish 8-Week Moving Average Bullish A. Investor vs. Trader Participation

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 61 B. Cash & Cash Flows Equity Mutual Funds: Cash Percentage of Net Assets Percent Index S&P 500 Cash Percentage (Monthly)

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 62 S&P 500 Net Sales (Monthly) Net Sales of Equity Mutual Funds (Including Reinvested Dividends) $Billions Index B. Cash & Cash Flows

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 63 $Billions Index S&P 500 Quarterly net flows Net Purchases of U.S. Equities by Foreign Investors minus Net Purchases of Foreign Equities by U.S. Investors C. International Flows

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved Intermarket (Economic Analysis) “Bonds Don’t Lead; Stocks Lead”

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 65 The Stock Cycle versus The Bond Cycle Stocks lead interest rates. Interest rates = the inverse of bond prices. A. Stocks vs. Commodities vs. Interest Rates

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 66 Bonds and Stocks Move in the Same Direction Some Times and in the Opposite Direction Other Times S&P Year Treasuries StockCharts.com A. Stocks vs. Commodities vs. Interest Rates

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 67 CRB Index 30-Year Treasuries Treasury Bonds and the CRB Index StockCharts.com A. Stocks vs. Commodities vs. Interest Rates

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 68 Source: “Technical Analysis Explained,” Martin Pring *Gold - used as a proxy for all commodities B B S S G G Expansion Recession B = Bonds S = Stocks G = Gold* Hypothetical Business Cycle Showing Peaks & Troughs B. Stocks, Commodities, and Interest Rates vs. The Economic Cycle

MTA Educational Foundation Half-Day College Level Presentation – INTRODUCTION TO TECHNICAL ANALYSIS ©2010 This lecture series is produced by the Market Technicians Association Educational Foundation based on the detailed class notes of Charles Kirkpatrick II, CMT Copyright © All rights are reserved. 69 Bond Market Stock Market Gold* Business cycle trough Business cycle peak Source: “Technical Analysis Explained,” Martin Pring *Gold - used as a proxy for all commodities Interaction of Financial Markets During a Typical Business Cycle B. Stocks, Commodities, and Interest Rates vs. The Economic Cycle