WEBVTT - Interview With Louise Yamada: Masters in Business (Audio) 0:00:00.120 --> 0:00:03.239 Brought to you by Bank of America Merrill Lynch, committed 0:00:03.240 --> 0:00:06.280 to bringing higher finance to lower carbon named the most 0:00:06.320 --> 0:00:10.240 innovative investment bank for climate change and sustainability by the Banker. 0:00:10.640 --> 0:00:13.920 That's the power of Global Connections. Bank of America North 0:00:13.960 --> 0:00:20.400 America member f d i C. This is Masters in 0:00:20.480 --> 0:00:24.599 Business with Barry Ridholts on Bloomberg Radio this week. On 0:00:24.640 --> 0:00:29.040 the podcast, I have an extraordinary technician. Her name is 0:00:29.120 --> 0:00:33.840 Luisia Mada, and she has been looking at markets, sectors, 0:00:34.479 --> 0:00:37.639 stocks for close to forty years. She spent twenty five 0:00:37.760 --> 0:00:42.960 years at City Group, eventually becoming their managing director. UM 0:00:43.240 --> 0:00:47.479 worked with many of the legends in finance, including Alan Shawn. 0:00:47.560 --> 0:00:52.400 We had a really interesting conversation about how people use 0:00:52.560 --> 0:00:57.280 technicals to help their investing and their trading. UM. We 0:00:57.360 --> 0:01:00.960 don't really get as many technicians UH in in the 0:01:00.960 --> 0:01:03.920 studios as I've liked, as I would have liked. I've 0:01:03.960 --> 0:01:08.240 previously spoken to Jeff de Graff, whose name basically is 0:01:08.440 --> 0:01:13.479 refers to technicals, as well as Tom Dorsey, Paul Desmond. 0:01:14.080 --> 0:01:17.160 Pretty much that's it. For the people who are full 0:01:17.200 --> 0:01:20.480 time technicians, I know they're out there. They work at 0:01:20.520 --> 0:01:23.119 various funds. Um, there are a number of people I'd 0:01:23.120 --> 0:01:24.720 like to get Allen Seawan here, I'd like to get 0:01:24.800 --> 0:01:27.120 John Broken here. Their number of people I'd like to 0:01:27.160 --> 0:01:29.920 sit down and talk with. If you are a trader, 0:01:29.959 --> 0:01:34.320 if you work as a person who is a fundamental 0:01:34.400 --> 0:01:37.679 analyst and would like a little more insight as to 0:01:37.840 --> 0:01:43.120 why stocks and sectors and markets sometimes do what they do, 0:01:44.319 --> 0:01:47.440 then the technical side might provide some insight as to 0:01:47.520 --> 0:01:51.160 the timing of of how things happen. Um. That was 0:01:51.240 --> 0:01:54.960 part of my conversation with Louise uh. If you are 0:01:55.120 --> 0:01:59.559 interested in technicals, if you like anything on the more 0:02:00.360 --> 0:02:02.600 wonky side, then this is going to be for you. 0:02:03.120 --> 0:02:07.200 With no further ado my conversation with Luisia Mata. We 0:02:07.280 --> 0:02:09.000 know each other for a long time. I've been a 0:02:09.000 --> 0:02:11.560 fan of your work for a while. But for the 0:02:11.680 --> 0:02:16.839 late person, explain what is technical analysis? Well, technical analysis 0:02:16.919 --> 0:02:19.760 is really the study of supply and demand in the marketplace, 0:02:20.240 --> 0:02:23.680 whether a stock is under accumulation, or whether a stock 0:02:23.760 --> 0:02:28.560 is in an uptrend or under distribution or in a downtrend. 0:02:28.639 --> 0:02:32.040 So so let's unpack that a little bit under accumulation 0:02:32.680 --> 0:02:38.480 generally means big institutions are accumulating shares on an ongoing basis, 0:02:39.120 --> 0:02:44.079 Distribution is the opposite, and simplistically on a price basis, 0:02:44.120 --> 0:02:47.320 because what we're following is price. We're not following any fundamentals. 0:02:47.320 --> 0:02:50.960 You're just following the price. Accumulation simplistically looks like a smile, 0:02:51.480 --> 0:02:54.919 and distribution simplistically looks like a frown. In other words, 0:02:55.400 --> 0:02:59.360 you've had a stock cell off. It's come down for 0:02:59.400 --> 0:03:01.639 a while, it's going sideways, and then all of a 0:03:01.680 --> 0:03:05.560 sudden it starts going higher. Um you also reference the 0:03:05.600 --> 0:03:09.480 phrase trends. Tell us what a trend is. Once a 0:03:09.600 --> 0:03:13.960 stock moves out of an accumulation pattern or a distribution pattern, 0:03:14.040 --> 0:03:18.120 it moves into an uptrend from an accumulation pattern, or 0:03:18.200 --> 0:03:21.440 into a downtrend from a distribution pattern. And basically a 0:03:21.520 --> 0:03:25.040 trend up trend is a higher high followed by a 0:03:25.120 --> 0:03:29.440 higher low, higher low following a series of steps higher 0:03:29.520 --> 0:03:33.679 than the trend, even the pullback is above previously exactly, 0:03:34.080 --> 0:03:37.640 and and a downtrend is and that represents demand. Somebody's 0:03:37.680 --> 0:03:40.160 coming in to buy that stock without letting it fall 0:03:40.280 --> 0:03:43.040 below the prior low. So it's had a nice move up, 0:03:43.120 --> 0:03:45.840 it starts to soften the price comes down and someone says, 0:03:45.880 --> 0:03:48.040 I want more of this, that's a good price. They 0:03:48.080 --> 0:03:51.360 step in and that creates a floor on the price. 0:03:52.280 --> 0:03:54.880 The ceiling is the opposite on the down trends. It 0:03:54.920 --> 0:03:57.760 could rally, but only so far be sellers come out exactly. 0:03:57.880 --> 0:04:01.320 And is it fair to say what you're describing is 0:04:01.360 --> 0:04:06.640 just a battle between buyers and sellers, between supply and demands. Absolutely, so, 0:04:07.200 --> 0:04:12.120 how does this differ from fundamentals, Well, fundamentals doesn't follow 0:04:12.160 --> 0:04:14.960 the stock price at all, doesn't care about it. Looks 0:04:15.000 --> 0:04:17.479 at peas, look at earnings, could look at credit, it 0:04:17.480 --> 0:04:21.279 looks at all those uh fundamental things about the company, 0:04:21.360 --> 0:04:25.839 the the quality of the company, etcetera. But it's really 0:04:25.880 --> 0:04:30.040 interesting is that, if you think about it, the difference, well, 0:04:30.080 --> 0:04:31.640 I think we're going to get to that. But the 0:04:31.680 --> 0:04:35.719 difference is that, for instance, if you're at a cocktail party, 0:04:35.760 --> 0:04:37.920 you can guarantee someone that you're never going to buy 0:04:37.920 --> 0:04:41.160 a stock at the low the day it records record earnings, 0:04:41.440 --> 0:04:44.160 and you're never going to sell a stock at the 0:04:44.279 --> 0:04:46.760 high the day it cuts the dividend, because you have 0:04:46.800 --> 0:04:50.279 this discounting mechanism where people smarter than you and I 0:04:50.360 --> 0:04:52.840 are taking action on the price of the stock. In 0:04:52.960 --> 0:04:55.719 other words, markets are somewhat efficient, and a lot of 0:04:55.760 --> 0:04:59.000 the news that eventually comes out is either partially or 0:04:59.000 --> 0:05:02.520 fully reflected in the price before the news itself is released. 0:05:03.000 --> 0:05:06.800 That makes plenty of sense. So Ralph A. Himpora once 0:05:06.839 --> 0:05:10.560 said something very interesting, and I full disclosure I took 0:05:10.560 --> 0:05:14.760 the course with Ralph last century is when I did it. 0:05:15.240 --> 0:05:19.000 Fundamentals tell you what to buy, Technicals tell you when 0:05:19.040 --> 0:05:21.599 to buy. That's right, discuss that. Yeah, I think that 0:05:21.600 --> 0:05:27.919 that's particularly valid from the perspective of value investors, because 0:05:28.000 --> 0:05:31.320 value investors may go in too early. They may go 0:05:31.400 --> 0:05:34.599 in as a stock is still completing its downtrend and 0:05:34.640 --> 0:05:37.159 shame stocks get cheaper. Yeah, and then they have to 0:05:37.240 --> 0:05:41.040 hold it through this entire you know, finish the decline 0:05:41.040 --> 0:05:44.679 and hold it through the entire accumulation pattern. I always 0:05:44.720 --> 0:05:49.400 suggest that value investors keep a watch list, and then 0:05:49.680 --> 0:05:52.920 when the pattern starts to look like there's an interest 0:05:53.120 --> 0:05:56.000 out there for that stock, is the time to start 0:05:56.040 --> 0:05:59.000 accumulating it. Well, who is going to be the buyer 0:05:59.120 --> 0:06:01.720 at the lows of not the value investors aren't they 0:06:01.760 --> 0:06:06.440 helping form that? But not all of them follow technicals. 0:06:06.480 --> 0:06:09.480 So some will be early uh and and means that 0:06:09.520 --> 0:06:12.480 their capital is being put to work and not seeing 0:06:12.560 --> 0:06:14.880 much of a return for a while. You like being 0:06:14.880 --> 0:06:17.680 a little later in that smile because you're not tying 0:06:17.760 --> 0:06:21.160 up capital while it's going sideways are going down. Why 0:06:21.200 --> 0:06:24.800 do these charts actually work? That's a tough question. It 0:06:24.920 --> 0:06:29.200 is a tough question. Um, Sometimes they don't and certainly not. 0:06:30.200 --> 0:06:34.120 But when technolo analysis is making you money, what's the 0:06:34.240 --> 0:06:39.000 narrative rationalization behind white charts actually are effective? Well? I 0:06:39.000 --> 0:06:41.720 think because you are watching what other people are doing 0:06:41.720 --> 0:06:45.440 with their money, basically, and when they stop buying, you 0:06:45.480 --> 0:06:50.480 start to see a frown developed, so to speak. And uh, 0:06:50.800 --> 0:06:54.080 and then you see a support broken. I mean, there's 0:06:54.160 --> 0:06:58.120 the whole seven questions. Has a has a stock um 0:06:58.320 --> 0:07:01.400 had a move of substance that would reverse We're gonna 0:07:01.440 --> 0:07:05.400 We're gonna go through all seven questions in a few minutes. Um, 0:07:05.560 --> 0:07:09.240 let me ask you one quick question. What do most 0:07:09.279 --> 0:07:14.400 people misunderstand about technical analysis? I think, well, first of all, 0:07:14.400 --> 0:07:16.560 a lot of people call it voodoo. I mean, it 0:07:16.600 --> 0:07:20.080 has such names for their patterns as head and shoulders 0:07:20.080 --> 0:07:23.280 and double tops and flags and triangles. And everybody thinks 0:07:23.320 --> 0:07:26.720 that that could be just ridiculous, but it should be 0:07:26.760 --> 0:07:29.560 considered a tool in the investing process, and it's a 0:07:29.640 --> 0:07:33.360 valuable tool. You have the fundamentals and you have the technicals, 0:07:33.400 --> 0:07:36.000 and as I said before, you know you the technicals 0:07:36.000 --> 0:07:39.080 are going to help you when the fundamentals could be 0:07:39.400 --> 0:07:43.480 fabulous and the price starts going down or breaking through support, 0:07:43.920 --> 0:07:47.960 and that's a warning that's something to come in the fundamentals. 0:07:48.000 --> 0:07:52.320 They're not mutual. They're not mutually. I'm Barry Ridhults. You're 0:07:52.400 --> 0:07:55.840 listening to Masters in Business on Bloomberg Radio. My guest 0:07:55.920 --> 0:07:59.880 this week is Luisia Mata. She is a technical analyst 0:08:00.080 --> 0:08:05.040 and runs the research shop Luisia Matta Technical Analysis. Let's 0:08:05.040 --> 0:08:08.440 talk a little bit about the modern era and and 0:08:08.480 --> 0:08:13.560 how you. You came to technical analysis sometime last century. 0:08:13.920 --> 0:08:16.680 I was working for a gentleman named Guy Ortmann who 0:08:16.720 --> 0:08:22.400 had taken the Technical uh Analyst class at the knee 0:08:22.440 --> 0:08:26.760 of Alan Shaw, and he urged me to also take 0:08:26.840 --> 0:08:29.680 the class, which I took with Ralph A. Kampora. You 0:08:29.680 --> 0:08:31.480 you worked with Alan Shaw for Quoite a while. I 0:08:31.520 --> 0:08:35.240 definitely did. He was my mentor and um I got 0:08:35.280 --> 0:08:39.880 into technical analysis because I was picking stocks and watching 0:08:39.920 --> 0:08:42.000 them go up and watching them come back down. And 0:08:42.040 --> 0:08:44.120 I finally called a broker and I said, how do 0:08:44.160 --> 0:08:47.360 you know when to sell? And what was the broker answer? 0:08:47.480 --> 0:08:51.559 And he said he sent me some newsletters on technical analysis. 0:08:51.600 --> 0:08:53.800 I think the main one was Grandville at that point. 0:08:54.280 --> 0:08:57.240 And uh, so I went to the Finance Institute and 0:08:57.280 --> 0:09:00.560 I took the first class with Ralph A. Kampoor and 0:09:00.640 --> 0:09:05.679 Alan taught the advanced class in his chart room. And 0:09:06.000 --> 0:09:09.880 uh during that period he offered me a job. So 0:09:10.000 --> 0:09:12.199 you must have been one of the better students in 0:09:12.240 --> 0:09:15.400 the class. Well, let's hope. So the fascinating thing about 0:09:15.440 --> 0:09:17.920 that era And I heard this from Guy Ortmann, and 0:09:17.960 --> 0:09:21.360 I heard it from Ralph Acampora, and I've heard this 0:09:21.800 --> 0:09:26.440 about Alan Shaw, never from his mouth directly. Um, they 0:09:26.520 --> 0:09:29.880 used to do these charts day by day, by hand, 0:09:29.920 --> 0:09:34.200 by hand. Point and figure charts. Absolutely we had, and 0:09:34.280 --> 0:09:38.600 regular charts. Regular supplied them, not just the XS and os, 0:09:38.600 --> 0:09:42.040 but the regular charts that we see. Honest people used 0:09:42.080 --> 0:09:45.559 to do those also every single day by hand. I've 0:09:45.600 --> 0:09:49.880 walked into rooms with people manual charts on the wall. Right, 0:09:50.000 --> 0:09:52.960 It's amazing. We had a whole library on a on 0:09:53.000 --> 0:09:55.920 a turntable with all the New York Stock Exchange stocks, 0:09:55.920 --> 0:10:00.240 which we plotted each one point intra day reversal by hand, 0:10:00.000 --> 0:10:04.240 and then that got translated into what people call the 0:10:04.320 --> 0:10:07.480 three point. But what people look at as a three 0:10:07.480 --> 0:10:11.320 point today is not the classic three point, which is 0:10:11.360 --> 0:10:13.560 derived from the one point and gives you a much 0:10:13.640 --> 0:10:17.080 broader sense of accumulation and distribution. So let me ask 0:10:17.120 --> 0:10:21.160 you um an obvious technology question, how much do we 0:10:21.360 --> 0:10:24.920 lose now that we no longer do this, or at 0:10:24.960 --> 0:10:27.880 least most of us no longer do this by hand? 0:10:28.000 --> 0:10:31.880 Just anyone can punch up a Bloomberg terminal or anything else. 0:10:32.720 --> 0:10:35.400 What is lost when when we've given up the manual 0:10:36.679 --> 0:10:40.000 drawing of charts and and can simply call one up 0:10:40.040 --> 0:10:44.480 anytime we want. What's missing is the degree of a 0:10:44.559 --> 0:10:48.120 top or a bottom. Now you can obviously see that 0:10:48.200 --> 0:10:51.679 on a chart, can't you don't? Yes, you can, but 0:10:51.800 --> 0:10:57.960 you don't necessarily see the same breadth and volume of 0:10:58.880 --> 0:11:02.959 that's spread. I guess trying to describe the Yes, when 0:11:02.960 --> 0:11:05.600 you're looking at it day by day, you're noticing things 0:11:05.640 --> 0:11:08.319 that you don't see if you're just letting the computer 0:11:08.400 --> 0:11:13.280 draward for you right in nineteen we saw these tremendous 0:11:13.360 --> 0:11:15.959 two year tops, and in the Bristol Myers and all 0:11:15.960 --> 0:11:18.520 the drug stocks in in merk we saw it in 0:11:18.559 --> 0:11:23.480 the consumer goods Capital Coman, Campbell Soup and Hershey Foods. 0:11:23.480 --> 0:11:26.680 I mean, these were tremendous two year tops that led 0:11:26.800 --> 0:11:30.960 us to the understanding that something very different was coming about. 0:11:31.000 --> 0:11:32.640 A lot of people aren't aware of this, but if 0:11:32.640 --> 0:11:36.840 you're looking at individual stocks and individual sectors, the broad 0:11:36.920 --> 0:11:42.079 market started rolling over long before technology topped out. Oh definitely, 0:11:42.320 --> 0:11:45.880 that was the last one. And I gave up the 0:11:45.880 --> 0:11:50.200 ghost long before the drop in the Nasdack, so that 0:11:50.200 --> 0:11:53.480 that was an interesting warning sign. So other than just 0:11:53.600 --> 0:11:58.200 the technology, what is the difference between the modern era 0:11:58.360 --> 0:12:03.880 of technico analysis and what people used to do years ago. 0:12:04.600 --> 0:12:06.719 I think that what's happening today is you have more 0:12:06.720 --> 0:12:09.239 and more traders, and more and more people are extremely 0:12:09.280 --> 0:12:11.800 short term oriented. I mean they're looking at the trees 0:12:11.840 --> 0:12:14.480 and not the forest, and I think one of the 0:12:14.520 --> 0:12:20.000 important things is to understand where that short term price 0:12:20.040 --> 0:12:24.000 action is taking place in the larger trend of this 0:12:24.320 --> 0:12:26.760 stock or whatever it is. Your So, so let's talk 0:12:26.760 --> 0:12:29.240 about time frames. What what do you look at in 0:12:29.320 --> 0:12:33.960 terms of various time frames, and how the length of 0:12:34.000 --> 0:12:37.160 the chart, be it minute by minute, daily, weekly, monthly, 0:12:37.640 --> 0:12:40.640 affects your interpretation. Well, I like to look at all 0:12:40.679 --> 0:12:43.920 of it. The short term is really is really daily noise. 0:12:44.240 --> 0:12:48.480 I think. I don't disagree. I find I really don't 0:12:48.480 --> 0:12:50.280 want to look at anything less than a weekly chart 0:12:50.559 --> 0:12:53.240 because the day to day action is is so random, yes, 0:12:53.720 --> 0:12:56.960 and almost almost irrelevant. The weekly is where I start, 0:12:57.640 --> 0:12:59.920 and then I also like to see how that week 0:13:00.440 --> 0:13:04.120 is progressing within the longer term monthly profile. And also 0:13:04.240 --> 0:13:07.079 I watched the mac d's the momentum indicators for this, 0:13:07.240 --> 0:13:09.240 So define what mac D is I think of the 0:13:09.280 --> 0:13:13.200 average person listening, Well, it's the difference between two moving averages. 0:13:13.240 --> 0:13:15.120 Am I going to get into the formula? So you 0:13:15.160 --> 0:13:17.640 could take a shorter term moving average in a longer 0:13:17.760 --> 0:13:21.680 term moving average. It's it's a really a second derivative 0:13:22.559 --> 0:13:24.679 of a smooth line. Is that a fair way to 0:13:24.720 --> 0:13:27.960 the short and when one line crosses over under the other, 0:13:28.040 --> 0:13:30.120 you get a buy signal or a cell signal. Now, 0:13:30.280 --> 0:13:33.520 there's been some controversy in some quarters that have said 0:13:34.040 --> 0:13:37.240 the golden cross the death cross. Some of these have 0:13:37.360 --> 0:13:40.559 really been abused by amateur takes. I'm glad that you 0:13:40.679 --> 0:13:44.840 brought that up, because you're you're absolutely correct, and from 0:13:44.880 --> 0:13:48.679 our perspective, we have only considered the very long term 0:13:48.720 --> 0:13:53.080 crossings as valid. You're going to get the fifty day 0:13:53.080 --> 0:13:56.360 moving average in the two day moving average crossing back 0:13:56.400 --> 0:13:59.520 and forth themselves all the time. Even within an uptrend 0:13:59.760 --> 0:14:02.080 and a little pull back, the fifty day may pulled 0:14:02.160 --> 0:14:05.840 down below the two temporarily, and I think that that 0:14:06.720 --> 0:14:12.280 is a it's misleading to the average investor um weekly. Okay, 0:14:12.360 --> 0:14:14.160 maybe you look at it, but you have the same 0:14:14.280 --> 0:14:18.040 frequency of turnover. It does warn you that some kind 0:14:18.120 --> 0:14:20.920 of a correction or consolidation may be coming into play, 0:14:20.960 --> 0:14:23.760 but again it can be within the context of an 0:14:23.840 --> 0:14:27.200 uptrend or downtrend. I like the monthly and we've done 0:14:27.200 --> 0:14:31.320 some back testing historically, and the monthly momentum is has 0:14:31.360 --> 0:14:34.440 a very good history of pegging the cell signals at 0:14:34.480 --> 0:14:37.600 tops and getting you in a little more safely in 0:14:37.640 --> 0:14:41.520 the bottoms. So what to moving average would you use 0:14:41.560 --> 0:14:44.080 on a monthly Well, for our we use a ten 0:14:44.160 --> 0:14:46.520 months and a twenty month moving average, and when that 0:14:46.560 --> 0:14:49.760 cross takes place, that's that's the Golden Cross or the 0:14:49.800 --> 0:14:53.360 Death Cross. I'm Barry Ridholts. You're listening to Master's in 0:14:53.400 --> 0:14:57.600 Business on Bloomberg Radio. My special guest today is Luisia Mata. 0:14:57.800 --> 0:15:01.760 She is the founder of Luisia Mata Technical Research Advisors. 0:15:01.960 --> 0:15:05.640 She spent twenty five years at Smith Barney, eventually becoming 0:15:05.680 --> 0:15:09.760 managing director of the Technical Research Group, and has been 0:15:09.960 --> 0:15:13.720 Institutional Investor ranked for a number of years. Let's talk 0:15:13.720 --> 0:15:16.720 a little bit about women on Wall Street and what 0:15:16.760 --> 0:15:21.680 it's like. I've sat with people like Liz Anne Saunders 0:15:21.720 --> 0:15:26.000 and Michelle Myers Um and they've told the story of 0:15:26.280 --> 0:15:30.480 how they've actually seen the industry change over the course 0:15:30.520 --> 0:15:33.640 of their career. What what was it like as a 0:15:33.680 --> 0:15:38.720 woman doing charts and technical works when when you began, well, 0:15:38.760 --> 0:15:41.800 when I began, I was really just interested in learning, 0:15:42.080 --> 0:15:46.280 learning technical analysis and working with the group I had. 0:15:46.520 --> 0:15:49.080 I have tended to stay out of the political frame, 0:15:50.080 --> 0:15:53.480 uh and the administrative frame, to be perfectly honest with you. 0:15:53.680 --> 0:15:57.360 So perhaps I'm not as aware of what was going 0:15:57.400 --> 0:15:59.360 on in the early years in terms of being a 0:15:59.400 --> 0:16:02.600 woman an list on Wall Street, but there were many 0:16:02.640 --> 0:16:06.760 women doing technical analysis. Bernadette Murphy certainly was one and 0:16:06.920 --> 0:16:13.160 Gail do dex or partial. Yeah, Um and um, it 0:16:13.200 --> 0:16:17.680 was probably more. As the twenty five years progressed that 0:16:17.800 --> 0:16:21.160 I realized that to a certain extent, it's very rare. 0:16:21.720 --> 0:16:23.480 There aren't a lot There weren't a lot of women 0:16:23.800 --> 0:16:27.720 more today. But still it's a relative. Numerically, it's it's 0:16:27.760 --> 0:16:33.120 not a big percentage of of technicians are women. So 0:16:33.720 --> 0:16:37.080 let's talk about how Wall Street has changed over the 0:16:37.120 --> 0:16:42.360 past thirty forty five years. You've been a Dennis into 0:16:42.360 --> 0:16:46.840 the Street for a while. How has the the job 0:16:46.880 --> 0:16:51.320 opportunities and how women are treated on Wall Street changed 0:16:52.040 --> 0:16:55.240 over the past few decades. Well, I would say we're 0:16:55.280 --> 0:16:58.480 starting to get certainly in technical analysis, we're starting to 0:16:58.520 --> 0:17:01.840 get more more women interested. There's a part of the 0:17:01.920 --> 0:17:05.320 Market Technicians Association that has a group of women that 0:17:05.480 --> 0:17:09.000 is trying to encourage them and act as mentors to 0:17:09.040 --> 0:17:13.800 bring them forward. Um. I'm not sure to what degree 0:17:13.880 --> 0:17:17.919 it's changed. I think one of the things, Um, it 0:17:18.040 --> 0:17:22.439 can slip. Let's say there can be slippage. Because a 0:17:22.520 --> 0:17:25.240 classmate of mine at Vassa wrote the book called The 0:17:25.280 --> 0:17:30.399 Good Girl's Revolt, which was the discrimination suit that women 0:17:30.440 --> 0:17:35.680 brought against Newsweek in the late sixties early seventies, and 0:17:35.720 --> 0:17:38.960 when the case subsided, it went back to normal. So 0:17:39.000 --> 0:17:41.880 as long as there's attention, as long as you can 0:17:41.920 --> 0:17:45.720 focus on it and continue to to push the careers 0:17:45.760 --> 0:17:49.080 of some of these women, I think that's great. And 0:17:49.119 --> 0:17:52.520 as soon as the attention fades, history tells us you're 0:17:52.960 --> 0:17:56.080 some progress might be allowed. It's gotten into the government 0:17:56.160 --> 0:17:58.720 hierarchy now, So I think that the future of women 0:17:59.359 --> 0:18:03.639 now is probably more palatable. And I'm even hearing a 0:18:03.680 --> 0:18:06.320 possibility that one day we might have a woman president 0:18:07.720 --> 0:18:12.639 that that's actually a genuine Post's see how that works out. Yeah, Um, 0:18:12.680 --> 0:18:15.399 so you left, you left the street, you left the 0:18:15.400 --> 0:18:19.560 business in order to set up your own independent shop. 0:18:19.960 --> 0:18:22.840 What was that like? Well, City Group in two thousand 0:18:22.920 --> 0:18:27.959 and five disbanded the entire technical research. Yeah, Kitter had 0:18:28.000 --> 0:18:30.200 already done it. A lot of the big firms had 0:18:30.240 --> 0:18:33.840 done it. You know. We can talk about the potential 0:18:33.840 --> 0:18:36.199 as to why they did it, but the point is 0:18:36.240 --> 0:18:38.119 they did. So we had a month or two to 0:18:38.160 --> 0:18:40.760 pack up and get out. We were essentially retired out, 0:18:40.840 --> 0:18:45.520 which was fine, um, but the clients, um really rebelled 0:18:45.760 --> 0:18:50.480 and yeah, it was quite an upheaval there and complaints, 0:18:50.640 --> 0:18:53.800 and one client offered her office as they all said, 0:18:53.880 --> 0:18:55.520 you know, we want you to stay, we want you 0:18:55.560 --> 0:18:58.959 to come back, and she offered her offices to us, 0:18:59.000 --> 0:19:01.480 which we used during the week. And then as we 0:19:01.600 --> 0:19:04.240 finally got set up, we had a client who gave 0:19:04.320 --> 0:19:07.400 us a couple of subscriptions upfront, which helped us open 0:19:07.440 --> 0:19:11.040 our doors. It was it's got to be very gratifying 0:19:11.040 --> 0:19:13.760 when people say, we know they closed the department, but 0:19:13.840 --> 0:19:16.439 we think your value added right here, let's do this. 0:19:16.600 --> 0:19:20.320 It was very gratifying. And the kindness that came through 0:19:20.440 --> 0:19:23.320 in a business where you don't often see kindness that 0:19:23.320 --> 0:19:27.240 that that's really quite interesting. So that was how long 0:19:27.280 --> 0:19:33.119 ago to and we left in February and February March 0:19:33.200 --> 0:19:35.880 and we started up in October. That's a pretty quick 0:19:35.920 --> 0:19:38.520 turn around. Six months you're up and running. How much 0:19:38.600 --> 0:19:42.120 of the thinking behind kitter And City and other groups 0:19:42.560 --> 0:19:46.440 closing their technical group is that, hey, everybody has, if 0:19:46.480 --> 0:19:50.240 not a Bloomberg terminal, they have access to Internet charts. 0:19:50.720 --> 0:19:54.720 Everybody's a technician these days. Yes, that's probably part of it. 0:19:54.800 --> 0:19:58.080 I think that because you had the financial crisis, there 0:19:58.200 --> 0:20:00.840 was the money aspect to it as well. I mean, 0:20:00.880 --> 0:20:05.359 the technical departments were expensive, perhaps two to maintain. I 0:20:05.400 --> 0:20:08.159 also think that there was, and this is my theory, 0:20:08.320 --> 0:20:11.879 that there was a problem from the legal perspective of 0:20:11.960 --> 0:20:15.959 the fundamental recommendations of stocks that we were putting on 0:20:16.080 --> 0:20:21.160 seals in two thousand and that was that was problematic. 0:20:21.200 --> 0:20:23.200 I mean, you think about the poor broker. He gets 0:20:23.200 --> 0:20:25.520 the fundamental guy telling him to buy in the technical 0:20:25.560 --> 0:20:27.360 guy telling him to sell. What are you're gonna do? 0:20:27.600 --> 0:20:29.520 You listen to the technical guy and you wait for 0:20:29.560 --> 0:20:32.679 the fundamentals to to the fundamentals are still good. You 0:20:32.680 --> 0:20:35.000 wait for the price. Try to tell you it's a 0:20:35.080 --> 0:20:38.359 when versus a what question. Yeah, I'm Barry Rihults. You're 0:20:38.440 --> 0:20:42.080 listening to Masters in Business on Bloomberg Radio. My special 0:20:42.119 --> 0:20:46.359 guest today is Luisia Matta. She is a technical analyst 0:20:46.520 --> 0:20:51.480 and runs the research shop Luisia Matta Technical Analysis. Let's 0:20:51.560 --> 0:20:54.680 let's get into the nitty gritty of technicals a little bit. 0:20:55.080 --> 0:20:57.399 One of the things I noticed in some of your 0:20:57.440 --> 0:21:01.480 work is you really like ratio. Tell us a little 0:21:01.480 --> 0:21:04.879 bit about how you use those. Okay, I'd be happy to. 0:21:05.200 --> 0:21:08.160 For instance, the dial Gold ratio which goes goes all 0:21:08.160 --> 0:21:10.840 the way back to the twenties, and the Dow or 0:21:10.920 --> 0:21:14.840 the stock market and gold tend to move inversely. So 0:21:14.880 --> 0:21:18.199 you have this incredible chart where the peaks in the 0:21:18.320 --> 0:21:27.000 Dow into seventies two thousand. You had the reversal from 0:21:27.160 --> 0:21:30.199 Dow out performance into a gold out performance. So the 0:21:30.240 --> 0:21:34.880 gold out performed while the Dow was in a bear market. Um. 0:21:34.920 --> 0:21:39.200 But we use it even more significantly in the sector work. 0:21:39.600 --> 0:21:42.879 We use the monthly sector work and we follow the 0:21:43.000 --> 0:21:46.239 price of the sector and the relative strength to the 0:21:46.359 --> 0:21:48.840 SMP five hundred. You can do it. So when we 0:21:48.920 --> 0:21:51.480 talk about ratio, let's let's say we'll take the health 0:21:51.480 --> 0:21:55.639 care sector versus the SMP five. When that line is 0:21:55.680 --> 0:21:57.919 going up, the health care sector is doing better than 0:21:57.960 --> 0:22:00.400 the Bruin index. And when that line is going down, right, 0:22:00.440 --> 0:22:02.520 it's doing worse. And you could look at every sector 0:22:02.560 --> 0:22:05.679 that way. That's exactly what we do. And the concept 0:22:05.840 --> 0:22:09.040 is you don't go into the market to underperform. So 0:22:09.240 --> 0:22:11.920 you want to look for those sectors or those stocks. 0:22:11.960 --> 0:22:14.240 If you want to put any stock versus the s 0:22:14.280 --> 0:22:16.919 and P five hundred in the ratio to find the 0:22:16.960 --> 0:22:21.159 ones that are outperforming. Or on the contrary, those that 0:22:21.400 --> 0:22:25.040 are on the verge of underperforming. And we do that 0:22:25.119 --> 0:22:28.200 with positive or negative divergences. And if I could give 0:22:28.240 --> 0:22:31.520 the example, so we define what a divergence is. Okay, 0:22:31.520 --> 0:22:34.080 a divergence is if the price moves up to a 0:22:34.080 --> 0:22:37.159 new high and the relative strength fails to move to 0:22:37.200 --> 0:22:40.359 a new high, you have an indication that somebody is 0:22:40.440 --> 0:22:43.760 moving away from this sector and the relative strength is 0:22:43.800 --> 0:22:48.240 no longer outperforming. And in reverse, you can have a 0:22:48.280 --> 0:22:52.400 positive divergence in which the relative strength does not confirm 0:22:52.480 --> 0:22:55.720 the new low in price and actually puts in place 0:22:55.800 --> 0:22:59.040 a higher low, and that's an indication that perhaps the 0:22:59.160 --> 0:23:03.960 sector or stock is ready to turn up. So, as 0:23:03.960 --> 0:23:07.439 an example, in two thousand and seven, we had a 0:23:07.640 --> 0:23:11.959 tremendous six year negative divergence. Six years. Remember this is 0:23:12.000 --> 0:23:16.240 the bigger the top, the greater the length of price. 0:23:16.359 --> 0:23:21.200 Evidence that something is on the verge of reversing is 0:23:21.440 --> 0:23:25.520 very important. Um, So we had in two thousand and seven, 0:23:25.560 --> 0:23:27.960 the price of the financial sector made a new high, 0:23:28.040 --> 0:23:31.560 but the relative strength did not. In two thousand and seven, 0:23:31.640 --> 0:23:34.600 early the relative strength broke a six year support. In 0:23:34.600 --> 0:23:37.840 other words, the level that had held before now failed 0:23:37.880 --> 0:23:41.080 to put in place a higher low and actually broke 0:23:41.160 --> 0:23:43.840 the prior low, which is a big sign to us 0:23:44.040 --> 0:23:47.639 that something is about to change. And since it was 0:23:47.720 --> 0:23:51.120 six years, it's an important thing to watch. And if 0:23:51.160 --> 0:23:55.360 you had gotten out of the financials in two thousand 0:23:55.400 --> 0:23:57.720 and seven when we got that signal, you would have 0:23:57.760 --> 0:24:02.200 preserved about of the de line. And the financials really 0:24:02.280 --> 0:24:06.760 got whacked in that period. They they fell, yeah, they 0:24:06.880 --> 0:24:09.240 they In fact, that's a big number. We saw the 0:24:09.320 --> 0:24:13.119 NASDAC drop almost eight percent. We saw the twenty nine crash. 0:24:15.119 --> 0:24:19.000 It's amazing how something falls eight percent a broad sector. 0:24:19.119 --> 0:24:20.760