Review - Jan Arps presentation on Technical Analysis at the MTA meeting

Rating: B+

A couple of weeks back; I attended Jan Arps' presentation on Technical Analysis at the local MTA meeting. Thought I would post a quick review of some of the key points mentioned. I find that meetings such as these help me refresh my trading intelligence as well as give me an idea of what others are doing. Without further ado, let me post his website link

http://www.janarps.com/main/

As you navigate the website, it will be abundantly clear that Jan is out there to make money selling his various trading tools as well as his book “Complete Idiot’s Guide to Technical Analysis”. There were a few laughs over whether you were an idiot for buying the book or not buying it. Since I have not read it, I cannot comment on it. Nothing wrong with the selling pitch either but be forewarned that information costs money, most of the time.

Jan started of describing the three strategies.

1. Breakout from congestion
2. Trading a pullback on a long trend up
3. Trading exhaustions after trends

First question he asks is are we in a trend or not? He talked about the Arps Triple Trender which are short term, mid-term and longer term stops or support levels drawn on the chart by his software. Reminded me of the Chandelier trailing stop indicator. By changing the length of period, one could get three different levels. When the stock price is above all three lines then we are on a long trend. One could enter on a short term pull back and exit when the short term signal going against the other two.

He has added entry points to this by using “show me dots’ which signal pullbacks and better entry points. I think they looked good to me. Similar to a contrarian entry signal once the trading direction has been established. I like it as one of my own systems for trading trends is based on this logic.

Next he described the logic for trading breakouts using a flagpole which is the breakout from the congestion and a flag which is the pullback. Again, I think his logic is sound. Wait for the breakout, then the pullback to enter.

He discussed the third strategy of detecting trend exhaustions using the price-volume relationship and what he calls a Fear-Greed Index which looked very similar to OBV (On balance Volume) to me. I like OBV. Of course I do not know what the Fear-Greed indicator is and would have to purchase the system to compare. He discussed price acceleration and deceleration of the stock. Again I found this similar to a custom indicator that I like.

Jan also mentioned spotting divergences between price and key price indicators like MACD, RSI or Stochastics as a sign of trend exhaustion. When the price reaches a new high but the MACD does not and turns down, a divergence is created.

Finally Jan put all of the tools together by pulling up Tradestation and using his scanning for profits tool. I did not particularly like the charts and the automatic drawing of the length of the axis. Although I felt somewhat lost on the page at the time, I think a scanning tool is very useful and I think his tools are good. They are based on price, MACD, RSI or Stochastics and can be done by any trader who is knowledgeable. The advantage of using his tools is it saves you the time to create your system. Negative of course is the price and the time it takes to learn to use them effectively. Still, I would give him thumbs up for a useful set of tools and methodology.