Editor’s note: This information is adapted from Kirkpatrick’s Investment and Trading Strategies (Upper Saddle River, NJ: FT Press, 2014). It is copyrighted by the owner and is reprinted here with permission.

In recognition of my receipt of two Dow Awards, the MTA’s Mike Carr, CMT and Emily Meyer asked if I would provide information on recent research of interest to technical analysts. They specifically requested information on what I call the “Forward Line” – its basis, how it is calculated, and how it is used. In that regard, I found that the easiest way to describe this phenomenon, without extraordinary effort, was to provide an abbreviated version of Chapter 8 (“Cycles and the Forward Line”) in my book Kirkpatrick’s Investment and Trading Strategies.[1]

When I was first involved in technical analysis in the 1960s, looking for patterns in the price charts was the basic means of analyzing stocks or any other, freely-traded

The winner of the 1994 and 2001 Charles H. Dow Award, Charles D. Kirkpatrick II, CMT, is the only individual to win the award twice. Throughout his 45 years in the investment field, the national media and his peers have recognized Charles D. Kirkpatrick II. He has been featured on Wall $treet Week, CNBC, and in the magazine Technical Analysis of Stocks and Commodities, has been quoted in such publications as The Wall Street Journal, BusinessWeek, Forbes, Futures magazine, Money magazine and The New York Times, and has written articles for Barron’s and the Market Technicians Journal. He is the only person to win the annual Charles H. Dow Award twice, for articles on technical analysis in 1993 and 2001. In 2008, he won the Market Technicians Association Annual Award for “outstanding contributions to the field of technical analysis.”

He has been

How would you describe your job?

We help clients with research, development and trading strategy creation. We also reduce the manual workload needed for development and implementation of a strategy. We develop strategies, backtest and optimize them, and get a full understanding on the character of the strategy. We know when it has failed vs. when it is in a drawdown (or too high profit zone).

For implementation, a client might have 5 big strategies with 20 sub strategies. They are end of day strategies and need to be updated daily. A report needs to be sent out as well to some signal generating service distributor. We develop the tools to make this possible with as few clicks as necessary. The data gets updated, the strategies update, the report gets generated with just a few clicks.

Everything is quantified and developed in-house. Our main workhorse is Amibroker which we might extend with various

Editor’s note: this was originally posted at Asbury Research on June 4, 2014 and is reposted here with permission.

One of several investor asset-flow based investor sentiment metrics that we track is the weekly Commitments of Traders (CoT) data.

The CoT data, compiled and published by the Commodity Futures Trading Commission (CFTC), breaks down futures open interest to determine and disclose how several different types of investor are positioned in the marketplace.

One COT data series that has caught our attention recently is the current positioning of the Commercial Hedger and Large Speculator categories in crude oil futures.

First, a little background information. Commercial hedgers are large traders who also deal in the commodity on a cash basis, which in this case would include oil producers. These entities typically accumulate a net position against the trend, to hedge their physical interest in the commodity. Think of them as value barometers. More specifically, this group