Presented by: David Cox, CFA, CMT, FCSI, FMA, BMath Portfolio Manager May 23, 2012 Market Technician’s Association

Swing & Trend Trending Two Tools for Your Shed

2

Which Would You Prefer?

$-

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

Sep

-82

Mar

-83

Sep

-83

Mar

-84

Sep

-84

Mar

-85

Sep

-85

Mar

-86

Sep

-86

Mar

-87

Sep

-87

Mar

-88

Sep

-88

Mar

-89

Sep

-89

Mar

-90

Sep

-90

Mar

-91

Sep

-91

Mar

-92

Sep

-92

Mar

-93

Sep

-93

Mar

-94

Sep

-94

Mar

-95

Sep

-95

Mar

-96

Sep

-96

Mar

-97

Sep

-97

Mar

-98

Sep

-98

Mar

-99

Sep

-99

Mar

-00

S&P 500 During Easy Times (1982-2000)

Buy & Hold 13/34 Week Tactical

A

B

3

What About Now?

$-

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

$1,800,000

Sep

-00

Jan-

01M

ay-0

1Sep

-01

Jan-

02M

ay-0

2Sep

-02

Jan-

03M

ay-0

3Sep

-03

Jan-

04M

ay-0

4Sep

-04

Jan-

05M

ay-0

5Sep

-05

Jan-

06M

ay-0

6Sep

-06

Jan-

07M

ay-0

7Sep

-07

Jan-

08M

ay-0

8Sep

-08

Jan-

09M

ay-0

9Sep

-09

Jan-

10M

ay-1

0Sep

-10

Jan-

11M

ay-1

1Sep

-11

Jan-

12

S&P 500 During Tougher Times (2000-2012)

Buy & Hold 13/34 Week Tactical

B

A

4

A Tactical Approach

$-

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

$1,800,000

Sep

-82

Sep

-83

Sep

-84

Sep

-85

Sep

-86

Sep

-87

Sep

-88

Sep

-89

Sep

-90

Sep

-91

Sep

-92

Sep

-93

Sep

-94

Sep

-95

Sep

-96

Sep

-97

Sep

-98

Sep

-99

Sep

-00

Sep

-01

Sep

-02

Sep

-03

Sep

-04

Sep

-05

Sep

-06

Sep

-07

Sep

-08

Sep

-09

Sep

-10

Sep

-11

S&P 500 A Long Term Strategy (1982-2012)

Buy & Hold 13/34 Week Tactical

B

A

5

The Main Trend

Source: Metastock

6

Checklist Trend: Up vs. down vs. sideways?

What is your strategy?

What are your objectives?

What is your time horizon?

7

Swing Trading Beliefs Most of the gain is made in first several days of a bounce Stocks spend most of their time consolidating and/or declining Money can be made in both rising and falling markets Better to make a quick profit -> then head for the sidelines Stocks cycle from optimism to pessimism and vice versa

8

Plan vs. Expectations Focus on extracting regular profits Time horizon typically lasting from 3 days to 3 weeks High turnover Buy oversold and sell overbought

9

Entries vs. Exits RSI(x) vs CCI(x) Candlesticks (hammers, hanging man, doji, engulfing) Pivot highs/lows Force Index

10

Swing Trading (In Pictures)

Source: Reuters, Metastock

Source: Reuters, Metastock

11

Swing Trading (In Pictures)

Source: Reuters, Metastock

12

Portfolio Comparison

$-

$50,000

$100,000

$150,000

$200,000

$250,000

$100,000 $95,385

$219,178

May 13, 2010 March 31, 2012

Teck Resources (TCK'B-T) TCK'B Common David Cox TCK'B Trading

13

Equity Curve Comparison

$219,178

$95,385

$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000M

ay-1

0

Jun-

10

Jul-

10

Aug

-10

Sep

-10

Oct

-10

Nov

-10

Dec

-10

Jan-

11

Feb-

11

Mar

-11

Apr

-11

May

-11

Jun-

11

Jul-

11

Aug

-11

Sep

-11

Oct

-11

Nov

-11

Dec

-11

Jan-

12

Feb-

12

Mar

-12

Por

tfol

io V

alu

e

BUY & HOLD vs. ACTIVE Management Teck Resources (TCK'B)

TCK'B Common David Cox TCK'B Trading

14

TCK’B Trading Results May 13, 2010 to March 31, 2012 49 total round trip trades (in/out) (LONG ONLY)

48% winners, 52% losers Average # Days/Trade = 5 Average winning gain = +7.2% Average loss = -3.1% Win/Loss Ratio = 2.3x % Days Invested = 34.7% MAX Consecutive Losses = 4 (-12%) MAX Consecutive Gains = 4 (+54.8%, +18.1%)

15

Trend Trading What Is The Trend?

Moving Averages (crossovers, slope) Higher Highs/Lows vs. Lower Lows/Highs Volatile vs. Calm Up/Down vs. Sideways/Choppy

16

Uptrend: In Pictures

17

Downtrend: In Pictures

18

Trend Trading Strategy If the Trend is UP/(DOWN):

Own stocks long/(short) Use volatility stops to protect against adverse price moves Be patient, sit tight and let the trend run How high/low can a stock go?

19

My Favourite View

Source: Metastock

20

Hold It, Hold It, Sell…

Source: Reuters, Metastock

21

Useful Resources Van Tharp Oliver Velez Dr. Alexander Elder www.davidcox.ca: webinars/seminars posted #DavidCoxWG – check me out on Twitter! “Monthly Market Chit Chat” – monthly publication that looks at the risks and opportunities facing investors. Email me at david.cox@cibc.ca to subscribe

22

Questions & Answers

23

RSI vs CCI

Thank You

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