It’s often been said that we stand on the shoulders of giants. Unfortunately, this week we lost one of the early practitioners and founders of the Market Technicians Association, Tony Tabell.
Tony comes from a lineage of great technical analysts, as his father was an accomplished technician as well. His work was profiled in Andrew Lo’s great book, The Heretics of Finance, which profiled some of the great technical analysts who practiced in the 1960s, 1970s, and 1980s. Technical analysis was transitioning during this time from a pariah approach to becoming a little more mainstream. And now we find technical analysis, and especially behavioral finance which I would argue is closely related, are prolific both in financial media and in the markets.
Tony is actually related to Richard Wyckoff. For those of you familiar with Wyckoff analysis, especially my friends Roman Bogomazov and Bruce Fraser who teach this method, Richard Wyckoff is Tony Tabell’s great uncle.
Tony was one of the first presidents of the Market Technicians Association, serving from 1975-1976. This was the period just after the MTA was founded in 1973. I was president from 2010-2014 and really enjoyed learning more about the history of the organization. Part of this process was reading a lot about Tony Tabell’s work and learning about his contributions to technical analysis.
Tony was the one who came up with the idea of the MTA Annual Conference. The first one was held in 1976 with a small gathering of sell-side technical analysts. It grew broader each year and eventually evolved into the MTA Annual Symposium, or the CMT Annual Symposium as we now call it. This is one of my favorite events, and I look forward to it every year.
Tony won the MTA Annual Award in 2009, which recognizes great contribution to the field of technical analysis. This actually made him one of the few father-son recipients. His father, Edmund Tabell, was one of the first recipients of this same award, winning it about 30 years earlier in 1980.
Tony Tabell’s work in his and his father’s letters are captured at www.tabellmarketletter.com. This website presents the writings of these two great technical analysts from 1944-1992, almost a 50-year run. These letters take us through an incredible period in market history, including the recovery after World War II, the Go-Go Years of the 1960s, the 1974 and 1982 market lows, and the 1983 breakout when the Dow broke above 1000. It’s a great history lesson on the staying power of technical analysis.
What follows is a snippet from one of Tony’s notes from mid-1974, when the markets eventually bottomed out. He wrote:
It is possible to find some solace, also, in the developing patterns of individual stocks, and it is the area in which improving patterns are being seen which is to us, as technicians, of interest. Every once in a while the market will begin to show action which flies in the face of generally-accepted conventional wisdom. In early 1968, for example, the Vietnam War was at its height, with absolutely no prospect of withdrawal in sight. Yet throughout the first quarter of that year, the technical action of “peace stocks”, those companies which would be beneficiaries of the end of the war and increased consumer spending, was consistently superior to that of companies presumably benefiting from the level of war activity. At the end of March, it will be recalled, President Johnson made his momentous decision not to run for reelection that fall and to seek a cessation of the Vietnam hostilities. The result was the famous “April Fool’s Day rally,” which touched off what was ultimately to be a 170-point advance in the Dow, with the so-called “peace” stocks leading the way. It is perhaps worth noting that only the prospect of Vietnam peace was enough to set the rally off. Peace itself did not occur until four years later.
Again in 1974, the stock market patterns that seem to be developing fly in the face of current conventional wisdom. We are assured on all sides that the outlook for consumer spending is bleak, and that it is likely to turn down sharply in the second half of the year. Yet a careful inspection of stock patterns suggests that among the better ones are those belonging to a whole group of companies that would benefit from increased consumer spending.
Now decades later, the market structure, participants, and the way we analyze stocks using computing power are totally different than when Tony wrote this in 1974. However, the universality of human behavior and human psychology as a driver of stock prices is consistent. The market moves not on news and fundamentals, it moves on the expectations of these factors. It’s all about the mindset of investors and what they are expecting to see. This was the goal of the technical analyst as Tony was writing the above in 1974, and it remains the goal for the technical analyst today.
Tony Tabell’s contributions to the field of technical analysis are immense, and he will be missed. From the entire technical analysis community, rest in peace Tony.
RR#6,
Dave
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