One of the biggest problems that new traders face is the avalanche of mate- rial on technical analysis that they feel compelled to read and understand. The average trader finds one or two technical disciplines that they feel give them the best read on the market. There are many different ways to chart the market. There are the Gann methodology, the Elliott Wave Theory, and countless other proven strategies. Every one of these technical forms has had books written and rewritten about the credibility of the discipline. You can create a point-and-figure chart that takes only price action into account. There are time charts that give the observer an idea of the movement of the market at various times in the trading session. You can look at the relative strength of the market by finding moving averages that guide traders along the path of least resistance. Finding the proper form of technical analysis as a trader is much like finding the right pair of shoes—what looks good to you might not be right for everyone.
Often when I sit on a panel discussing technical analysis, I am amazed by the lack of depth on the part of the participants. One memorable day, I found myself between an “expert” on Japanese candlestick charting methods and a new astrological technician who called the market by the placement of the stars. I thought it rather ironic considering that I couldn’t care less about astrology and have always considered the candlestick method of charting to be more artistic than practical. After hearing the two experienced speakers talk about their respective strategies, it was my turn to tell the 200 audience members the truth they so desperately came to hear.
I began my talk by asking the audience to forget everything they had just heard. A stunned crowd looked at me as if they couldn’t believe what I had just said. As I looked around me, I could see that my fellow panelists
were also a bit perturbed at the comment. I thought it was important for someone to give the audience a sense of the fundamental aspect of the markets. I asked if anyone in the crowd had ever done any fundamental research on the markets they were presently trading. To my surprise, only a handful of those in attendance claimed that they did any type of fundamental analysis on the markets before making a trading or an investment decision. The main point of my presentation was to give technical traders a feel for the fundamental side of the market. In fact, many seasoned veterans will confess that they look at both sides of market analysis before making a de- cision. One good example is my old friend and customer Vince McLaughlin. Vinny would talk about the fundamentals of the market and his expertise, and avoid any discussion on the technical levels of the day. Whenever I brought up an area of support or resistance, Vinny would respond, “Don’t talk to me about voodoo!” He would laugh and call it hocus-pocus—until he found himself stuck on an arb.
As an arbitrageur, it was up to Vinny to make sure there was no exposure when putting on the trade—after all, the concept of arbitrage is to buy and sell a like product, simultaneously making a small profit on the discrepancy and inefficiency created in the market. As soon as he was stuck, Vinny would become a technical trader, asking me where the support or resistance was in the day’s session.
One of the first jobs I had in the futures industry was as a runner for a small, local grain company called Chicago Grain. Still a student at Loy- ola University, I used the analytical training that was instilled in me by the Jesuits and became a sponge for information. I asked every question imaginable, looking for those I felt knew the market structure well enough that they could explain it to me in simple terms. One of the first people who caught my attention was an eclectic individual named Ted Lee Fisher, whom we would affectionately refer to as “Doc.”
Doc was a product of the 1960s, taking the lessons learned by his gen- eration and incorporated them into the daily routine of work and life. As a clerk servicing his accounts, Doc would come into contact with me only if there was a problem with a customer or if I had a question regarding the positions acquired. What really stood out about Doc was that he was sincere in teaching those who asked anything that he knew about markets and trading. I became fascinated with the way Doc approached the market. He had a way of incorporating the technical world with the fundamentals around him. For a novice in the markets such as me, being able to make sense of the chaos that exists in the marketplace is important. Looking at the fundamentals of the market doesn’t necessarily show traders and in- vestors the true nature of the market condition unless they can look at the price action and time factors that guide them.
Doc was the biggest producer at Chicago Grain when I was a runner. In fact, the first business dinner I was ever invited to came at his expense,
when he treated the floor crew for helping him generate a record month in commissions. At that dinner I realized that if I were to ask him the right questions, the knowledge base that I could tap into was enormous. During the drive to and from dinner I must have asked over 20 questions, ranging from his background to his methodology for trading.
I came to understand that he was an original rebel, having taken a year off from school at Ann Arbor to ride his motorcycle across the country. He was a real Easy Rider! Not only was he a wealth of information when it came to futures trading, but it seemed that he had an educated opinion about many of the world’s thorniest issues. Much of the technical analysis that guides his trading has roots in the observations he made as a youth in the turbulent decade of the 1960s.
I have met thousands of so-called technicians who claim that their work on the markets is the definitive work when it comes to technical analysis. Out of the thousands, there is only a handful that merits any attention what- soever. Out of the handful, Doc is the only one I would consider unique in his approach. For decades, he has refused interview requests and has avoided market reporters, until now. For the first time, Doc has agreed to share his ideas and insights into market structure and trading.