Transcript: A case study in technical analysis
 

A case study in technical analysis

Peter Ashton

October 3, 2018, 12:00 pm to 1:00 pm ET

[This event will begin shortly.]

ANITA: Hello, everyone. Thank you for taking the time to join us today. On behalf of CIBC Investor's Edge, I would like to welcome everyone to our webinar. My name is Anita, and I will be your host for this event. Now just a few things to know before we get started.

[Disclaimer]

CIBC Investor Services Inc. does not provide investment advice, tax advice, or recommendations. The information presented here is for educational and informational purposes only. The inclusion of any specific securities detailed is for illustrative purposes only. No information contained in this presentation is intended to constitute a recommendation by CIBC Investor's Edge to buy, sell, or hold any stock, option or securities. Please note, we will be recording today's webinar session and a link to the replay will be email to all registered participants.

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[PETER ASHTON]

Our topic today is a Case Study in Technical Analysis. We are very excited to have Peter Ashton join us once again as our speaker for today's presentation. In this webinar, he will explore major technical patterns and indicators that every trader needs to know as well he will demonstrate how to apply these principles using a live demo of the technical insight tool, available on the CIBC Investor's Edge website. Peter Ashton is a Vice President of Client Services at Recognia, and is a frequent speaker at industry events, such as, the MoneyShow and the Traders Expo. With great pleasure, please join me in welcoming Peter Ashton. PETER: Well, thank you very much, Anita. It's a pleasure to be here. And thank you to everybody for attending today.

[A Case Study in Technical Analysis]

Today's topic is a Case Study in Technical Analysis.

[AGENDA, What is Technical Analysis? An Event-Driven Approach] [A Case Study Using CIBC Investor's Edge, Q & A]

So in today's presentation, we're going to run through a little bit about what technical analysis is and what it's used for. I know some of you may already be using technical analysis, so consider this to be a little bit of a review. The event go on to talk a little bit about trading centrals event-driven approach for technical analysis that may be slightly different than what you were actually used to today.

We'll then go through a number of examples or case studies taking ideas drawn from today's news and look at how we can use the technical insight tool on the CIBC Investor's Edge website to investigate what technical patterns are driving the price action to given securities. We're going to have a question and answer session at the end of this presentation, so please hold all your questions until the end.

[DISCLAIMER]

So with that being said, I'd like to give you a very quick disclaimer just to say that we're going to talk about a number of examples of real stocks as part of this presentation. We're including these specific securities for illustrative purposes only, and none of the information contained in this presentation is intended to constitute a recommendation by Trading Central to buy, sell, or hold any stock, option or securities.

[WHAT IS TECHNICAL ANALYSIS?]

Now let's begin with what technical analysis is all about. So really at its core, technical analysis is about looking for patterns in the price and volume history of securities that can tell us something about the attitudes of buyers and sellers. So if we think about every trade that takes place on an exchange that trade represents an agreement between a buyer and a seller for what is the fair price of that security at that moment in time, and that fair price reflects everything that's publicly known about that stock or ETF so it includes the fundamentals, it includes the news, it includes the general market sentiment about that stock or that sector of the market at that moment in time, all those things get reflected in the price.

So by seeing how the price moves, it tells us something about the shifting balance of supply and demand for that stock in the market. And by understanding these shifting balances we can make better investing in trading decisions.

[MARKET CYCLES]

Now many people are actually surprised to learn the technical analysis is not a new practice, in fact, that actually dates back over 400 years to the rice markets of Japan. But modern technical analysis like we practice today really dates back to Charles Dow, and this is the same Dow we know from the Dow Jones Industrial Average, he was the same the very first editor of the Wall Street Journal. But Charles Dow observed the stock markets back in the late 1800s.

And Dow believe the markets tended to move in cycles, and he turned those cycles the primary trend, which is the blue line we're showing in the slide and Dow felt the primary trend lasted anywhere from nine months to two years, and superimposed on top of the primary trend we have what Dow called the intermediate term trend in that last anywhere from six weeks to nine months and then further superimposed, again we have the red dotted line, the short-term trend which lasts anywhere from two to six weeks.

So what's important here is to note that in some cases like, on the left-hand side of the chart we can find a place where all three trends are moving in the same direction, in other words, upwards, but other places, for example, on the right-hand side of the chart, we can find a place where the short-term and intermediate-term trends are moving up but the long-term trend is moving down, so picking your positions and how long to hold those positions is very dependent on where you are in each of these independent cycles. So we're going to talk a little bit more about how to understand these cycles further on in this presentation.

[WHY STUDY PRICE?]

And if anybody comes away from this presentation with a desire to learn more about technical analysis, I'm going to recommend a really great book called "Technical Analysis of Stock Trends." This is by Edwards and Magee. This book actually came out in the 1950s and probably its votes close as there is to a bible of technical analysis. This currently in its 09th or maybe even its 10th edition, but really goes through a lot of the basics and talks about why technical analysis is a practice that every trader needs to know a little bit about.

And there's a great quote from his book that I wanted to use to talk about why, you know, technicians are so obsessed with studying the price? And Edwards and Magee said that the market price reflects the hopes and fears and guesses and moods, both rational and irrational of hundreds of potential buyers and sellers. Price is the only figure that counts. So again, it reflects that belief by technical traders that by understanding the price you're also understanding all the things that go into driving that price which includes the fundamentals, includes the news, includes the general market sentiment and so on.

[AN EXAMPLE...]

So with that said, let's go on to talk about an example. So how could you actually use technical analysis in your trading? Well, here's an example of a real stock chart and it's kind of got an interesting price history. So you can see the stock was trading down around $10 in late 2013, went on a huge run went almost straight up to about $34 in late 2014, and then there's a decline, you can see these grey trend lines we've drawn here is with decline within this channel over roughly the next one year, year and a little bit into early 2016 to hit a bottom around $10, then it rallied again, almost straight up back to $32 over the subsequent 12 months.

Well, how would you've been able to pick a good entry point into this particular stock to benefit it from these very strong trends that are in place. Well, this is where technical analysis can help us. So technical traders would've looked at this particular price chart and said, "Ah, there's actually a pattern here something called a head and shoulders bottom." This is a very well-known technical pattern. It's known as a Bullish Reversal Pattern.

And head and shoulders bottom tells us that the previous trend is likely to reverse. In this case, the previous trend is this downward trend we're marking with the grey trend lines started in, you know, late 2014. And basically, when the head and shoulders bottom occurred, we had basically three successive declines and rallies, decline and rally, decline and rally, and bouncing off that horizontal red line which we call the neckline the first two times. On the third attempt, the price was able to break through that neckline, and that actually confirms the head and shoulders bottom and tells us that a new bullish trend is now underway. So that neckline is basically a level of resistance to the price of the stock and where we crossed that level of resistance that's indicated the start of a new bullish trend.

[TRADITIONAL APPROACH]

Now the traditional approach to technical analysis is, you know, it's really all about looking at price charts. And here's an example of, you know, a particular price chart, I won't say what stock this is, but it's a very well-known stock. And you can see that the stock has actually been advancing over the preceding months, had a little bit of weakness here in June, it looks like and now it seems like it's on an uptrend again. If we're thinking about whether or not to enter a position in this particular stock you might look at some technical indicators, so you might look for example at a technical indicator like, you know, price crossing the moving average.

So here, I drawn the blue line, it's a 21-day moving average, that's very commonly used technical indicator. And here, you can see the price crossed the 21-day moving average in roughly early July in this particular case, so that's bullish for this particular stock. You will look at something else. That's overlaid something called the Bollinger bands. So these Bollinger bands are often a way to judge whether the price of the stock is getting a little overstretched. Basically their form by drawing, you know, two standard deviations away from the moving average.

And you can see in this particular case whenever the stock actually hit the upper or lower Bollinger Band, it tended to resume or return back close to that moving average again. So in this case, we're trading very, very close to that upper Bollinger bands so that would probably tell us that may be a pullback towards the moving average is likely to be seen.

So this is actually a bearish indicator. Look at a couple of more. So here's something called the MACD or Moving Average Convergence Divergence. It's drawn below the price chart at the bottom. There's a couple of things we looked for in the MACD. So number one is the MACD trading above zero, and that's the blue line. Yeah, it's trading at 1.234, so it is above 0, so that's bullish for the MACD.

And also, where the MACD crosses above the signal line, crosses above that red line, that's also a bullish sign. So both of those are actually true for this particular MACD indicator, so that would say that the MACD is telling us that there's accelerating price movement in this particular stock, and that's bullish. We'll look at one more which is the... It's called the RSI or Relative Strength Index. And here the RSI is currently at a level of 66.

Oftentimes, technical traders consider a level of 70 to be overbought. In other words, the stock is getting kind of farther away from its historical range. And oftentimes, level of 70 may indicate a kind of a pullback towards the middle of that range again. So that would, sort of, suggest the stock might be getting a little bit overstretched. So we've looked at four different technical indicators, and we've had sort of a mixed bag of messages.

[AN EVENT DRIVEN APPROACH]

We had two that were bullish and two that were bearish. When that happens in technical analysis, the best thing to do is just go and move on to the next stock on your watchlist. But, of course, if you have 20 or 30 or 50 stocks on your watchlist, this is going to be a very time consuming way to do technical analysis, and it's only so many price charts a person can look at in a day.

Wouldn't it be nice if there is a way we can benefit from computer automation to help us find ideas or to help us understand what are the different technical events that are currently moving the price in any particular stock? And that really comes up with this thing we call our event-driven approach to technical analysis.

[TRADING CENTRAL TECHNICAL EVENTS]

So we at Trading Central have built software that basically helps you to understand what are the different technical events that are currently active against any given security, and we group those into three types. We call them the short-term patterns, things like hammers and shooting stars and gaps and so on, something called indicators and oscillators and we looked at some examples of, you know, price crossing the moving average and MACD and Bollinger Band and so on.

And then the classic chart patterns, things like the head and shoulders bottoms and triangles and wedges and so on. All these different kinds of things are detected automatically in our software. And in fact, there's over 60 different kinds of technical events that we detect. And the great thing is we don't do this just on a handful of stocks, but rather we do it on the entire market every day.

So we've basically done the heavy lifting so you don't have to. So it makes the process of uncovering trade ideas through technical analysis much more approachable to the average investor because you don't need a high level of knowledge about technical analysis and you don't have to have invest all this time to be looking at many dozens and dozens and dozens of price charts.

[A CASE STUDY USING INVENTOR'S EDGE]

So that being said, actually demonstrate what's possible by going through some examples, that's why we call this a case study. So I'm going to, kind of, go through some examples drawn from today's news and we'll talk about, you know, how we can evaluate different technical, different technical events and three different time horizons, we'll talk about how we can get target prices using technical analysis, we'll talk about support and resistance levels and why those are important to understand risk and reward and where to your orders, and we'll talk about stop loss levels as well.

We'll move on, we'll talk a little bit about getting a new idea, so if you don't have an idea today but you want to use technical analysis to suggest, you know, stock that might be poised to move, we can also talk about how that is possible. And last, we'll mention how we can stay on top of our positions such that we manage our risk and don't wind up taking a loss that's not... We didn't have to take.

So what I'm going to do at this point I'm going to share my screen and I'm going to move on to actually switch to the CIBC Investor's Edge websites. And here, I haven't brought up on the screen right now. And I've already logged in. The first thing I'm going to do is show you where to find the Trading Central tools on the Investor's Edge website, and we are actually found in... You go into Quotes and Research, and then we're in the Market Center, so you click on Market Center, there's a variety of different things you can look at in the Market Center organized into these different tabs across the top of the screen.

The Overview, Markets at a Glance, Market Movers, and so on. And notice the last tab is called Technical Analysis. That is where you're going to find our technical insight tool so you can see technical insight. And now basically, this gives us a place where we can actually type the name or the symbol of a stock or ETF, and basically, see what is actually happening with regard to that stock. So I was trying to think, you know, what would be some interesting examples this week.

And, you know, I think the big news this week was that on Sunday evening we got our Free Trade Agreement with the US, so I think a lot of the price action we're seeing in the market right now is kind of influenced by some of that news. So one of the things that we're, you know, we're thinking of. Well, what were the industries that maybe we're going to be hurt by the lack of a Free Trade Agreement?

Well, one of them was certainly the auto industry. There was a lot of talk that there might be new tariffs put in place on Canadian autos entering the US. I would certainly hurt our auto industry. So we'll be interested to look at a couple of stocks that are tied to the auto industry and one that comes to mind is a Linamar, company that makes auto parts, they sell to many other different carmakers, and it's a Canadian company. So I can actually type LNR, if I know the symbol or if I don't know, I can just type a little bit up the name of the company, for example, that will suggest for me here, the company name itself here. So I'm going to click on that. And what technical inside is going to do is going to show you what technical events are currently active against this stock in three different time horizons.

So at the top of the screen here you can see this is the latest price 60.85 Canadian, industry is autos, and here you can see a price chart, and notice that there's all these sort of green dots and red squares scattered across this price chart. So what those represent are green dots are bullish technical events and the red squares are bearish technical events. So notice that this big decline in the stock went through in May and June of this year was all preceded by many, many different bearish technical events. Now this is what's called the Summary View. And this tells me there's 30 different technical events active in the Summary View, but I can also look at that perspective in three different time horizons. Short-term, Intermediate-Term, and Long-Term.

And remember, Charles Dow in his market cycles. Well, that's where this comes from. So the short-term are events that will play out in the next two to six weeks, intermediate-term are events that play out in the next six weeks to nine months, and long-term events are ones that will play out in more than nine months. So I can, for example, look just at the short-term events. And I'm going to actually just maximize my screen here. And you can really clearly see that we hit a sort of a local bottom here around August 24th and the stock has been moving up, but Monday, this week was October 1st right here where I've got my most cursor.

And notice, there's a big gap up on Monday morning. So basically, traders were very encouraged by the fact that there is now a Free Trade Agreement, going to be signed between Canada and the US, so the stock actually gapped up on Monday morning and opened well above its close on Friday. Now traded down a little bit on Tuesday, but certainly that's encouraging sign for Linamar.

And again, if we go back to the summary view, you know, if I look down here, there's currently 15 active bullish events and 11 bearish events in total, but looking just at the short-term, we have 11 active bullish events and just 3 bearish events. Those 3 bearish events were shown right here. So oftentimes, technical traders will talk about the weight of evidence approach. It's very common. Look at that example we did earlier on where we found two bullish and two bearish technical indicators that particular stock.

Well, in this case, we have 11 bullish and 3 bearish indicators, so the weight of evidence is telling us that, you know, they're certainly much more telling us that the stock is likely to rise and there is, telling us a stock likely to decline. So I think that combined with the good news that the market had on Monday morning would suggest that probably the stock may continue its advance over the coming weeks.

Let's turn our attention to the intermediate-term view, and you can see the stock has been declining, you know, since roughly May 11th, but in the intermediate-term, you see it looks a little bit more bearish, so there's 3 bullish and 5 bearish events, and then in the long-term, currently have just 1 bullish event and 3 bearish. So Linamar certainly looks very bullish in the short-term and whether that bullish trend evolves to become something more intermediate-term or not, we'd have to wait and see. But, you know, certainly we can see the impact that the news has had on the stock in the short-term already this week.

Let me turn our attention to another stock, so what else was interesting with regards to the Free Trade Agreement. Well, one of the things that Canada had to give up to get an agreement was access to our dairy markets so the dairy market in Canada will be open to US exporters to some degree going forward. So how would that affect the Canadian company process in that industry? So let's take a look at a company that makes, you know, cheese, for example. So Saputo is a very well-known Canadian cheese maker. They make other things besides cheese, but that's certainly what they're well-known for.

So how has the Free Trade Agreement impact at this particular stock? Well, again, you can look at the price action and certainly see that there was a lot of bearish technical events right here occurring during the strong downtrend we were seeing in August, but more recently, the more recent events open this up so you can see more detail. More recently you can see that the events have turned much more strongly bullish, so lots and lots of bearish events here, but more recently, looking more bullish.

And again, if we look at what's happened just on say, this week, you know, basically shrink that down, you can see this bar right here occurred on October 1st, that was Monday, so there was a very strong move upward in the price of Saputo on Monday morning. And why would that be? Well, you know, someone who's making cheese has very dependent on their input costs so the cost of milk and milk solids and so on. So if the market's a little bit more competitive due to US imports that may actually help the profits of a company that's producing cheese.

So the market certainly liked the Free Trade Agreement in this particular stock. And so also take a look at just the short-term view here. And again, as I was saying there were a couple of bearish events that occurred back in August, but more recently, the events have been pretty much all bullish or six bullish and two bearish events right now. Looking at the intermediate-term, you can see it's actually quite bearish and then also bearish in the long-term as well.

So again, whether this short-term upward trend that we're seeing will turn into something more intermediate or long-term for the stock, we'll have to wait and see. But right now, it's looking bullish in the short-term. You know, one thing I want to mention to you is we can also use technical insight to do some other things. We can look at things like Support and Resistance levels and Stop Loss levels. This might be a good stock to take a look at. So what I can do is, if you scroll down a little bit, there is these two, we call cards down here that give you some information about Support and Resistance levels and also Stop levels. You can see here it's telling us that support for the stock was currently found at $40.06, and resistance was found at $40.50.

And incidentally, right now... Well, that was... This was done yesterday, but the price is actually right now at $39.96. We've actually just crossed below that level. So I can actually draw those on the screen if I want to. So I can just click on that card, that will actually draw that on the screen for me. And if a zoom in a little bit, you can see where those Support Resistance levels are found. And we can also tailor what time horizon, those are calculated over. So, for example, I can now say I wanted may be calculate that over a shorter time horizon say, one 100 bars, let's say. And over 100 bars, you can see we're finding resistance at this green line at $43.50 and support at $38.50 right here. So we're trading right now at $39.96 right in between those two levels. So, you know, if you're thinking of entering a position and this particular stock, you got some support down below you at $38.50, so you might see kind of a $50 of a price decline before you hit that lower support level.

I will also show you a little bit about stop losses. And I think stop losses are an interesting thing that many people should... Should think about. I think, you know, stop orders are a very good trading practice for a lot of people, especially someone who's not paying that much attention to the market, not necessary looking at it every day. But a lot of times people don't use stop loss orders because they don't really know where to place their stop. And we have a couple of tools as part of technical insight that can help you to do that. So we can help you calculate a stop loss level.

You know, the old fashioned traditional way which is the percentage trailing stop so you can set your stop. Here it says 8%, but I can make that whatever number I want. Say, 8% below and tells me where it entered my stop at $37.03. But the other way you can do this is using what is called the Recognia Trailing Stop. And these are a different kind of stops, these are what is known as volatility-adjusted stops. So we do as we take a look at a long price history for this security and we figure out how volatile it is on a day to day basis and then give you a stop loss level, that's a safe distance away from the current price, such that, you're not likely to get stopped out based on the day to day volatility.

So the idea is that a stock that's a very volatile needs a wider stop and a stock that's not very volatile can have a much tighter stock. So that's basically how this works. So, for example, we're saying the Recognia Trailing Stop medium, it could be set at $38.55. Remember, the stock is trading right now at $39.96. And there's three different levels that are possible here so you can have tight, medium or loose.

And, you know, suffice to say that whether you pick tight, medium, or loose, just depends on your risk tolerance and your investing horizon. This is a stock you wanted to hold for a long period of time and you could tolerate a little bit of downside before you got scared, you could make this a loose stop, for example, so I could say want that to be loose, this now tells me my stop loss level is $37.76, more of a short-term trade for me, I want to take advantage of this short-term uptrend it seems to be under way and I don't want to have... I want to protect my profits as much as possible I could put my stop very tight.

This tells me now my stop loss is $39.34, and these get recalculated every day. So you need to actually go in and recalculate the stop level and technical insight then adjust your stop order in the Investor's Edge system. So I'm going to take that off. Let's take a look at one more area of the market, that's kind of interesting then we'll go on and show you how you can find some trade ideas. So the other part of the market that was quite affected by the Free Trade Agreement this week was the interest rate sensitive stocks. So I'm going to... Examples like, utilities or telecom companies... Now pick Canadian Utilities as an example here. So let's take a look at what the price of Canadian Utilities has done this week.

So why would this stock be affected by the Free Trade Agreement? Well, the reason is because, you know, should we have not have had a Free Trade Agreement and should significant new tariffs be placed on Canadian exporters that would have been a real drag on the Canadian economy.

And in fact, the Bank of Canada probably wasn't going to be able to go on raising interest rates with the result of that kind of drag on the economy and may even have had to switch their policy from being tightening to actually loosening the interest rates. So stocks that are sensitive to interest rates like utilities certainly were being held back a little bit as a result of that. Sorry. I said that wrong.

Stocks that are interest rate sensitive are going to decline when there's an environment of increasing interest rates and that's kind of what we've returned to now that we have a Free Trade Agreement. So if you take a look at the short-term, for example, you can see that. I'm going to zoom in just a little bit more here. You can see the stock up here of Canadian utilities has actually been in a bit of a down trend for a while and there's been a whole series of bearish events that I've been confirmed recently.

So starting October 1st, which was Monday, we had a Williams %R bearish event, a bearish momentum event, price crossed the 21-day moving average in the downward direction that is bearish. We had a bearish Triple Moving Average Crossover, we had a bearish Commodity Channel Index Event. So one, two, three, four, five different bearish events occurring in the last two days based on the price action we've seen in Canadian utilities. Another example might be something like TELUS. T-E-L-U-S, TELUS. So there is TELUS, and let's see what their stock is doing. Very similar story. So again, over the last few days we've had a number of different bearish events.

Even though this stock was actually been in an uptrend for a little while. So you can see that the prospect of more interest rate increases is probably going to be a little bit of a drag on TELUS, at least, in the short-term. So we take a look at some sort of stocks in the market and how they're affected by the news, and how we could use technical analysis and technical insight to kind of get a sense of what's going on in those particular stocks. But, you know, let's suppose you don't have an idea today.

You know, he didn't come in with a great idea. You're really looking for an idea to come from the principles of technical analysis to, you know, help you find an idea you may not have found on your own. Well, we can also use technical insight to help us with exactly that. So I'm going to go back to the technical insight landing page. And here is the lookup bar that we were using to lookup stocks, but notice when you scroll down we actually have some panels here. We have my recently viewed stocks.

These are the stocks that I have been looking at recently. You can see all the ones I've done in this demo today. We also have some sort of community drawn ideas like the most of you bullish ideas. For example, there was an intermediate-term bullish event on Aurora Cannabis that occurred recently. That was a very widely viewed event. Here we have an event on Blackberry, Aphria, and so on. We also have a panel here at the most popular or most research stocks in Canada right now, and interestingly, a number of these are actually Cannabis stocks, Aurora Cannabis, Canopy Growth, Aphria. Enbridge also on the most popular list, and that's actually moved up 2.94% in the last five days, also Bank of Nova Scotia, HEXO was also cannabis, TD Bank and so on. So you can actually kind of leverage some of what other users of technical insight are looking at to get some ideas.

But the thing I'd like to leave you with in terms of new ideas is really this tool here called the Featured Ideas. So right beside where it says Technical Insight I'm going to click on Featured Ideas. And this is really the idea generation hub part of technical insights. And as I mentioned earlier, we basically analyze every single stock in the market every day. Now we can find some ideas that you may not have come across on your own.

So for example, today, we've presented you with these 10 ideas and all based on different technical events taking place in the market. You need to have five bullish ones that are here in green and then I have five bearish ones as well. And, you know, the very first one here is High Liner Foods. I think it runs at sort of that stock. It's had an interesting head and shoulders bottom pattern that was actually one of the examples that I used earlier in my presentation.

So High Liner Foods had currently trading at 8.62 and it had a head and shoulders bottom pattern that formed on October 2nd, that was yesterday. And you can see marked up on the chart here that head and shoulders bottom. And as we talked about head and shoulders bottom is a bullish reversal pattern, so you can see the decline that's been going on since the spring of this year. And this pattern suggests to us that the price may reverse and actually move higher.

You may ask yourself what is this green rectangle all about. Well, that is what's called the target price region. This green rectangle tells us where the pattern suggests the price is going to go. So this dark green region here that is the target price. So technical analysts have a method of deriving target prices from some kinds of technical events like, classic patterns, basically measuring the height of the pattern, and adding that on to the confirmation price.

So technical analysis would suggest that the target price for High Liner Foods is 10.80 to 11.30, shown here on the left-hand side, that is that dark green region up here, that's where we think the price will go. The width of that rectangle, by the way, is how long we think it'll take to reach the target price. So again, it's just a technique that technical analyst use of measuring the pattern length, but it gives you kind of a rule of thumb. It's not a hard and fast rule, but a rule of thumb for about how long we think it will take to reach the target price. So target price of High Liner Foods right here, we should think it should move to, you know, roughly here by the early December timeframe. You know, if you like this idea you can actually click trade and go right to the equity order entry page and place an order, but what might be more likely is you might say, "Hmm, I want to keep an eye on the stock for a few days and see what happens after this pattern."

So I can put this on my watchlist, so I'll click that button that says watch and now says watching. This little star up here tells us how many ideas we currently have on our watchlist. And I can talk between the featured ideas and my watch stocks by pulling down that little button there. You can see there's high liner foods that I placed on my watchlist recently. We can go through a couple of more. So here's another one called Pieridae Energy, another TSX venture company.

This one's had a pattern called a Bottom Triangle and suggesting a much higher target price in the range of 5.10 to 5.40. This 40%, by the way, this is basically calculated from, you know, where the price broke upward out of that that bottom triangle, and then if you were to actually hit the target price what would be the profit be. It would be 40% in this particular case. National Bank has had a classic pattern, a Continuation Diamond, that's an interesting one. And by the way, if you want to look at a larger version of these charts, you can click on this icon here and this gives you an interactive charting tool so you can explore this pattern in more detail, for example.

And if you didn't happen to know what National Bank was, you've been living under a rock and don't know this company. You can click on the information icon. This will give us a bit of a description of National Banks business as well as all the most recent fundamental data as well. Anyway, you can see there's 10 different ideas you can come through. And, you know, some people are bullish and some people are bearish in any market so you can also look for bearish ideas using the featured ideas as well.

So there's a company called Ventas, for examples, had a double top pattern. But, you know, given we scan so many stocks you may ask yourself, you know, why did we pick these 10 stocks to go on the featured ideas list. Well, the resist thing called the custom settings that will actually allow you to customize, you know, what will be shown in the featured ideas, so we can customize the ideas to you in your preferences.

So you can tell us, for example, you know what exchanges you want to get your ideas from, so you can see here I've got the three major US Exchange is selected, plus the TSX, and I also have the TSX Venture Exchange, but maybe I don't want those little sort of smaller mining stocks and so on, I'll unselect the TSX Venture Exchange. And if you're an option trader, you can click this button to pick optional stocks.

Here I have both bullish or bearish ideas selected, but maybe I'm very bullish on the market right now so I just want to have bullish ideas. And you can see a little bit about your holding timeframe as well. So you're looking for an idea that you're going to hold for the next two to six weeks, let's say, or maybe something a little bit longer, maybe up to nine months or longer still maybe up to two years, you can just customize the holding timeframe. I'm going to say I don't want any really long-term ideas, but I like the intermediate and short-term ideas. And then last, you can say something about your research preferences and the sector of the market that you're interested in.

So here, I said I like, you know, all these different fundamentals and I'm really interested in all these different technicals, but I could certainly customize that if I really liked classic patterns, for example, more than anything else. And then this basically says I like the whole market, all 11 sectors of the market I like but, you know, maybe I don't like the utilities and I don't like, let's say, energy, for example, right now.

So I don't like that particular part of the market. So I can leave myself with just nine sectors and then I click on Finish. And now, this will re-customize the featured ideas based on the custom settings that I've provided. So we still have High Liner foods, but we have some other ideas here as well. So MTY Food Group, Blackberry. Blackberry has had an interesting diamond bottom pattern and so on. So now these ideas are kind of customized to what it is that I'm looking for.

And interestingly enough, these are, you know, these settings are remembered for you so when you come back into the featured ideas tomorrow or next week, what you set your custom settings to will be remembered as well. Other things that we remember, by the way, remember, for example, your chart settings. So if you happen to like certain kinds of chart settings so to be remembered for you as well. So that's another way we can go about getting some ideas.

And the last thing I'm going to talk about before we move on to the Q&A section is, how do we stay on top of our ideas? So let's suppose, you know, we really liked one of those ideas we looked at today, we really liked TELUS, for example, but we weren't really sure that today was the day to buy. What I can certainly do is I can click on TELUS, and if I'm interested in keeping track of TELUS and understand what's happening, I can actually set an alert.

So this little bell you see right here on the price chart for TELUS, this will set an alert. And I can pick two different types of alerts. I can say I want to be alerted to new technical events opportunities. So tell me when technical events are happening in the price action of TELUS or I have price alerts that tell me, you know, when TELUS has crossed a certain significant price level, for example, a level that I set say, you know, $45 or I can say tell me when it crosses a support resistance level or a stop loss level. In this example I'm going to pick technical events, so I'm going to say, you know, tell me if TELUS has any, you know, bullish classic patterns, for example, or candlestick patterns.

That might be interesting, right? And I can basically customize which ones if I want, so I don't like maybe certain ones, I don't like the gravestone, I can take get rid of that, but basically, I can set that and now I say set alert. Now every evening with your analysis and if we happen to find technical events occurring on TELUS that we're to match your criteria we would send you an alert. Other way you can use this is if you already have a set of stocks in your portfolio, 10 stocks, for example, and you wanted to keep an eye on those stocks and be alerted when things were happening, perhaps, bearish technical events were taking place on stocks in your portfolio, you could do that as well.

So the idea is you enter the symbol and then you go to this little bell and you can click on that and see and enter your alerts. Now you can manage your alerts in the alert center, so here, I have all my alerts shown so I just set up a new alert here which was for TELUS, so there it is right there. And note, it says, this is pending, so it hasn't been run, but it will be run at the end of business tonight. If I wanted to turn that on and off, I can suspended, for example, like that or I can delete it with a little trash can icon. I also have some other kinds of alerts set up here. These are called new opportunity alerts. So what I'm basically doing is scanning the market looking for certain kind of alerts. So you're basically saying I want to look for stocks in any Canadian Exchange that have had short-term patterns that are bullish and the prices at least $3 and so on.

So we're basically scanning the market for you according to a certain set of criteria to find you trade ideas. And you can set those kind of alerts up using this new opportunity section. So, for example, I can go here and then I can basically specify what it is I'm looking for. And that can become an alert for me to use to find some featured ideas. I'm going to mention two quick more things before we turn it over to the question and answer session. I'll mention that we've talked about the technical insight and the featured ideas and there is also a newsletter available, so you can subscribe to a daily newsletter of stocks reporting interesting technical pattern, so you can come to that section there and put in your email address and say sign up, that will give you a subscription to our newsletter.

And the last thing I'll mention is, you know, if you forget everything that I've told you in this presentation, you can use our education section. So we have education here that can tell you lots about different technical events, so if you want to learn more about classic patterns or short-term patterns or indicators, or oscillators, you can use the education section of our product to do that. So again, I'm going to look at classic patterns and here's all the different classic patterns we detect in technical insight.

And if I wanted to learn more about, you know, bottom triangle, for example, I can click on bottom triangle, and this will basically show me some technical information about this event. So I think that's probably a good overview, so what I'm going to do at this point is turn it back to Anita and we're going to run an interactive question and answer session. I think I had a couple of questions that have come in already. So the first question I have. Basically says, "How often is the technical insight analysis updated?"

[Questions & Answer]

And answer is that we update this analysis every day. It's done in the evening after the markets are closed. And we do that analysis on price bars of two timeframes. We analyze daily and weekly timeframes. And to build a daily price bar, you have to have the closing price for the day so it requires that the market be closed. So when the markets close, we get our data from the exchanges, we do our analysis in the early evening, and typically, the updated analysis is available on the CIBC Investor's Edge website around 9 o'clock at night. If you have alerts set up, those go out around 9:30 pm or so, and then newsletters are sent roughly around 10 o'clock in the evening.

Another question here is, "What is the coverage of technical insight our ETFs included?" So yes, technical insight covers every publicly traded instrument in the Canadian and US markets. And by publicly traded, I mean, trades on an exchange. So no pink sheets are over the counter stocks, but everything that trades on an exchange is covered so we cover, you know, stocks and ETFs, also ADRs in the US, so all those instruments are included. And another question, "Are these tools suitable for short-term traders?"

So it depends on your definition of short-term, I guess. So certainly, the events in technical insight are intended to play out anywhere from like the shortest term, roughly 10 candlesticks or roughly 10 days, and of course, the longest term patterns may take as much as two years to play out. So if you are looking to hold your position for, you know, days two weeks, you'd be on the order of, you know, five days plus.

Certainly the events in technical insight could be very useful to you to find trade ideas, and I would emphasize, remember, I was showing you the three different time horizons we can get our analysis and you want to be looking at the short-term analysis, which is events that play out in the next two to six weeks.

Question here is, "What about penny stocks?" So as I said, we cover every publicly-traded stock in Canada and US, including penny stocks provided trades on an exchange. Here's a question that says very common. It says, "Which indicator from classic patterns has the highest success rate? The answer is, I don't know. And really it's a question. It's very hard to answer because success rate changes based on market conditions.

So let's suppose, I told you that, you know, right now, the highest probability of success was the ascending continuation triangle. That might be the part of the cause of that, could be the fact we've been in a very strongly trending market, especially in the US. So, you know, strongly trending market patterns that are continuation patterns, patterns that suggest the current trend is going to continue will perform very, very well. And the reversal patterns, patterns that suggest the price will reverse they will not do quite as well.

So, you know, what pattern performs best today may not be the pattern that performs best in the future when market conditions change. And trading central, we don't advocate using any one particular technical events. We've tried to automate the standard practices of technical analysis, make them all available to you. And I would encourage you all to not focus on just one thing, but rather think about the weight of evidence and think about trying to bring all these different tools into your toolbox.

So here's a question. "So are notifications received as emails or on the Investor's Edge website?" So the alerts that I mentioned as part of technical insight or sent as email, so you have to provide your email address and it'll be sent in the evening after our analysis is done. We also talked about the trading central... Trade idea newsletter that is also sent as an email in the evening. Here's a question so, "How do we ensure a quick feeling of order from the technical insights screen? Do we accept the market price or set a new price based on the insight? So there's no easy answer to that question. I think whether you place a market order or limit order, it really depends on you and what you think is the price you're going to pay for that particular share. I think what you would want to consider as part of that is, you know, if you are trying to get into a stock that currently is, you know, looking bearish and maybe you think may reverse higher, certainly would be a very reasonable thing to use a limit order to try to get perhaps a price a little lower than where the stock is trading today.

So if you think that there's some bearish sentiment out there, you can certainly use limit orders to try to get a better fill price. You know, I think if the stock is trending higher and looks very strong and you want to get in on that upward trend, well, limit orders may just prevent you from getting your fill, so it may be more preferable to use a market order in that case. Just going through the questions here, trying to find some interesting ones. Here's a question from Tony. "What certifications in the technical analysis industry are most respected? So there's actually a number of different ones, but I think the one that's probably most common in North America is called CMT, which is the Certified Market Technician.

This is the technical analysis equivalent of the CFA, which is the designation for fundamental analyst. And there's three different levels at the CMT, level one, level two, level three. Anybody who is really interested in technical analysis might want to actually check out the CMT designation, and what's required to actually attain those.

So question from Philip, "Does the system adjust for dividends and stock splits? So dividends aren't really part of the analysis we do in technical insight, but certainly, if the stock is split that will be taken into account in our price history for the security. So if the stock splits two for one, it was trading at 100 and now trades at 50, we will adjust the history we have for that stock to adjust it for the split and we have to redo our historical analysis in that case, but yes, that is done automatically in the technical insight system.

Question from Lee. "Will technical analysis be different ETFs?" Yes. Not really. No, I mean, all the same kinds of technical indicators would be of interest to an ETF trader. So, you know, we do our analysis, as I mentioned both on single stocks as well as ETFs. The one thing I might say about ETFs is that ETF that track and index, especially a very large index, like the S&P 500.

And don't tend to be as volatile as single stocks, so that does determine a little bit about what kinds of technical events are seen, so things like classic patterns which, you know, need some volatility to confirm that might be less of those for some ETFS. But again, we will find all the technical events that the principles of technical analysis that spell out and those are equally applicable to ETFs as they would be to single stocks. And in fact, we can apply technical analysis to any asset class.

We can apply it to commodities trading, for example, or foreign exchange trading or indices. We can actually use technical analysis across all those different kinds of asset classes. "Is the commodity channel index available for stocks on the TSX Venture Exchange? Yes, absolutely, so we cover all the stocks that trade on the TSX Venture Exchange, and CCI is one of our technical indicators and it is available for stocks on the TSX Venture Exchange, yes. Question from Graham. "Can alerts be set up for RSI, the Relative Strength Index?" I didn't see it listed as you went over the chart of the alerts.

Yes, they can, so Relative Strength Index is in the category of indicators and oscillators. So yes, when you set up an alert on a stock, you can specify that alert apply just to the RSI or to RSI, plus some other technical indicators. But yes, that is one of the events that we can cover in Technical Insight. Yes, it says... The question from Tony. "What are the books you recommend to get a strong foundation in technical analysis?

Well, I already recommended my favorite book, which is Technical Analysis of Stock Trends, which is by Edwards and Magee, that's a really, really great book for someone looking for an introduction to technical analysis, but also some follow on deeper understanding. Another book that I really recommend is by a famous technical analyst named Martin Pring called "Martin Pring on Price Patterns," that book came out probably, I'd say about 10 to 15 years ago, but it's really, really a great book for understanding classic chart patterns.

And there are some books by Charles Bukowski that deal with candlestick patterns that are also very good. So all those are books you could find on Amazon for anybody who wanted to learn more about Technical Analysis. Now I'll take one more question then I think we're going to have to wrap it up. So one more question was, "Would you rather trade high or low volume traded stocks when using technical analysis?" So purely from the perspective of technical analysis, it doesn't matter.

We want to look for confirmation of events based on volume, but stock that has volume can certainly have a volume-based confirmation. Just for myself though, I would say, I would always rather trade stocks that have sufficient liquidity. So it's, you know, it's a hard thing to do to get yourself into a stock that doesn't have a lot of trading volume because the question is always, can I get out at the price I want to get out at.

So, you know, I think for most people looking for stocks that have sufficient daily volume to ensure liquidity of the stock is probably important. And in fact, a lot of the volatility in these very volatile penny stocks and so on, comes from the fact that so few shares trade. You can get a lot of the daily volatility. So just for myself, I tend to like the stocks with more volume. So I think that brings us very close to the end of our 50 minutes today. So unless there's anything else from John or Anita, I'd to thank everybody for attending. And I really enjoyed your questions. And I hope this has been a useful presentation for you.

Please check out these tools on the CIBC Investor's Edge website, subscribe to our newsletter as well. And I think you'll find these to be a very useful set of enhancements to your current trading workflow. ANITA: So thank you, Peter, for the interesting presentation and taking the time to answer our audience questions. It looks like that's all the time that we have for today.

[Thank you]

Peter, that was a very informative presentation. It was easy to understand how to use technical analysis to find trade ideas by looking for signs of strength and weakness, and how to stay on top of your investments and manage risk. So again, thank you for the great presentation and demonstration.

A reminder to the audience that if you wish to listen to this webinar again, a link will be emailed to all participants who registered, as well as, I would also like to point out that CIBC Investor's Edge clients have access to our Knowledge Bank to take advantage of free resources for do-it-yourself investors. Again, I would like to thank the audience. We really appreciate you being here. And should you have any questions or comments, please visit the CIBC Investor's Edge website or get in touch with us, either by phone, chat, or email. Thank you for joining us today, and we will see you next time.

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