1. Graham & Dodd meet Edwards & Magee MTA Education Seminar May 20 th 2005 Larry M. Berman CFA, CMT Combining Fundamental & Technical Analysis to Maximize Portfolio Returns

2. Graham & Dodd meet Edwards & Magee Goal beat Mr. Market Screen fund & quant. Trade technically

3. Beat Mr. Market Understand bogey Timeframe Investor/Trader Develop toolbox

4. Characteristics of Market P/E high low? Earnings momentum Economy Inflation/Interest rates Geopolitical Monetary/fiscal policy Bull or Bear? Oversold/Overbought Seasonality Sentiment Accumulation Distribution Breadth

5. Characteristics of Stock BETA 50-25-25 rule S&P 500 (60%) of stocks have beta above 0.9 S&P 400 (66%) of stocks have beta above 0.9 S&P 600 (83%) of stocks have beta above 0.9 V or U tops-bottoms Volatility Normal vs. today False breakouts Support/resistance Volume patterns

6. Growth Characteristics & Tools Momentum Trend Relative strength Multiple expansion PEG GARP

7. Value Characteristics & Tools Sentiment Chart patterns (bottoms & bases) Oversold Under owned Market to book value Extremeness

8. Market Cycle Seasonal patterns Business cycle

9. Characteristics of Market:Trend Timeframe 38.2-61.8% Higher highs? Higher lows? Support holding? Res. breaking?

10. Characteristics of Market:Momentum Timeframe Quantify OS/OB m/m 5% q/q 10% Divergence

11. Characteristics of Market:Volume 10-Day Arms 55-Day Arms Imbalances Relative

12. Characteristics of Market:Volume Imbalances Accumulation Distribution Intensity Relative Extreme

13. Characteristics of Market:Breadth Adv-Dec Line Trend Momentum Extreme Relative

14. Characteristics of Market:Breadth % > 200-day avg Trend Momentum Extreme 20-80% Relative

15. Characteristics of Market:Breadth Net 52W Hi-Lo Trend Momentum Extreme 2Sig –400+800 Relative

16. Characteristics of Market:Breadth Index specific %MC Adv/Dec Wkly 52W Hi-Lo Wkly Accumulation Wkly Distribution

17. Characteristics of Market:Breadth %MC > 50-Day Avg %MC > 200-Day Avg %MC < RSI 30 %MC > RSI 70

18. Characteristics of Market:Sentiment VIX-VXN Trend Momentum Relative Extremes Characteristics

19. Characteristics of Market:Sentiment Put/Call volume Trend Momentum Relative Extremes Characteristics

20. Characteristics of Market:Sentiment AAII Cons, II, MV Relative Extremes Characteristics

21. Characteristics of Market: Summary P/E = modestly high Fwd earn mom. <10% Economy = softer Inflation = rising Interest rates = rising Geopolitical = neg Fiscal policy = neg Late stage bull/early bear Oversold Seasonality = pos Sentiment = pos Accumulation = weak Distribution = strong Breadth = weak Volume = weak

22. Growth Characteristics & Tools Momentum Trend Relative strength Multiple expansion PEG GARP

23. Growth Tools: Momentum ROC MACD Relative strength

24. Growth Tools: Momentum ROC MACD Relative strength

25. Growth Tools: Momentum ROC MACD Relative strength

26. Growth Tools: Trend Sup/Res holds? Higher/highs Lower/lows Time frame

27. Value Characteristics & Tools Sentiment Chart patterns (bottoms & bases) Oversold Under owned Market to book value Extremeness

28. Value Tools: Bottom Patterns (Bases) Double bottom Ascending H & S bottom

29. Value Tools: Sentiment Insiders IPO/Buyback % Inst Own

30. Value Tools: OB/OS Buy 13Wk OS OB poor entry

31. Trading Cycles Price movements are a series of cycles. Accumulation phase Distribution phase

32. Trading Cycles ACCUMULATION DISTRIBUTION BEARBASE BULLCONS

33. Trading Cycles ACCUMULATION DISTRIBUTION BEARBASE BULL CONS

34. Trading Cycles OVERBOUGHT OVERSOLD

35. Trading Cycles Quantify Extremes Accumulation Distribution Relative rank

36. Trading Cycles: S&P 500 Financials

37. Trading Cycles: S&P 500 Technology

38. Value: Basing

39. MSFT breaking out of base pattern

40. Growth: Momentum

42. GLW strong momentum, but OB

43. Graham & Dodd meet Edwards & Magee Goal beat Mr. Market Screen fund & quant. Trade technically Timeframe Investor/Trader Develop toolbox

44. Roll The Dice