Dawn Bolton-Smith – Market Master
Dawn Bolton-Smith has been a technical analyst for almost 40 years. Now, in her early 70s, and although retired, she remains one of the most respected analysts in the world.
Dawn’s Amazing Career
Dawn Bolton-Smith originally trained as an accountant. She had always had an interest in finance, making her first investments in 1960.
In 1962 she enrolled in a pilot course that was being conducted at the Mosman Evening College in Sydney. Her instructor was none other than Ian Notley, who was the keynote speaker at the Australian Technical Analysts’ Association (ATAA) conference in 2002. Ian has since become a leading analyst in Canada and the United States.
The text book used at the Mosman Evening College course was ‘Technical Analysis of Stock Trends’ by Edwards and Magee. It remains Dawn’s favourite technical analysis book to this day.
In 1964, Dawn was working for John Valder, a partner in J. and J. North stockbrokers. She was the first technical analyst to be employed in the Australian stock market. This was an amazing achievement for a woman at the time, given the extremely high proportion of males employed in the finance industry. She later became a licenced investor advisor.
Valder went on to become Chairman of the Australian Stock Exchange and President of the Liberal Party in N.S.W. It was at this time that Dawn experienced the oil boom and later the Poseidon boom.
There can be little doubt that both Ian Notley and John Valder helped to fire Dawn’s legendary determination and drive.
Dawn’s reputation is based on her consistency in calling the markets correctly. One of her best calls was made in 1973 when she predicted the 1974 share market crash. She nominated the bottom within four points.
Dawn has always been keen to share her vast knowledge and experience, and her passion for technical analysis, with others. She wrote a regular column for The Sunday Telegraph newspaper in Sydney called ‘Market Trends With Dawn Bolton-Smith’, and was the first chartist for The Bulletin magazine. She was also the editor of the respected investment newsletter, Trendex from 1976 to 1978.
Dawn Bolton-Smith has given presentations to eager analysts and traders at ATAA conferences and meetings throughout Australia. She has also given presentations to a group of traders on an ocean liner cruising the Pacific. Dawn was a founding member and former vice president of the ATAA.
In 1979 Dawn established the technical department for Clive Hall and his team. Clive helped establish the futures markets in Australia. Dawn’s first year in futures saw the price of gold rise from US$249 to US$850 by the end of the year. Dawn recalls selling gold futures at US$840 and the very next day they opened US$220 lower. National Mutual Royal Bank later employed Dawn in their foreign exchange section.
Dawn’s interest in helping others is as strong today as it has ever been. At the ago of 72 she still writes a regular column and articles for Your Trading Edge magazine, and had written a regular column for the Iris Report from 1994 until 2002. She enthralled participants at the 2002 ATAA Conference in the Hunter Valley, demonstrating yet again her total grasp of her subject.
Dawn’s 5/15/30 Moving Averages
Dawn’s most famous analysis and trading tool is the 5/15/30 day harmonic moving averages that she popularized after learning their power from the late Phylis Khan, a United States Gann expert, in 1985. Dawn describes their use as follows:
The 5/15/30 period [simple] moving averages will bring excellent results from almost all markets including the smallest time period practical on 24-hour ranges.
The predictive value with even stacking signals and price clusters present some powerhouse trades.
Moving averages should be plotted on the same price scale as your currency/commodity/stock chart and the colour combination should be consistent.
[Dawn uses 5 = green; 15 = red; 30 = blue]
The trend is extremely definite. The action of the averages once the trend starts to change will be first reflected in the five period average. Other characteristics are clustering at the same price level which provides a signal for a powerful momentum move.
Even Stacking Signals
After a long run up (or down) the distance between the averages is evenly spaced. When this configuration occurs, it is an indication that a reversal is imminent.
The market can move higher or lower as the case may be and it is by watching for a reversal signal (other indicators help here too) that you can be ready to take action for a potential move back to the 30 period time increment. These become strong support in an up market where shorts can be covered when the average is reached. Similarly, rules apply to a down market. The 30 period time increment becomes resistance and long positions covered and reversed if justifiable.
The averages act as a "net of support or resistance" in up and down markets and are like a magnet drawing prices to them. Sometimes, in an extremely strong trend, the initial pullback is to the 15 period average but overall the 30 period is generally the objective achieved. This effect works on all time increments but when it occurs on a daily or weekly chart, it can be used as a position trade for multi day or multi week charts.
The even stacking signal often only appears for one day, or whatever time increment you are using. The averages should move correctly in their natural progression with price above the five-day period in up markets and below in downmarkets. After a market bottoms the first major indication of a trend change is the five-day crossing the 15 day.
The confirming signal is the 15 day crossing the 30 day. The latter can be likened to a 1x1 angle line or 45 degree angle line used in Gann techniques. The trend reversal is confirmed when the five day and the 15 day cross the 30 day.
(Bolton-Smith, D., quoted in ‘Iron Lady’, Your Trading Edge, September/October, 1998, pages 25.)
The above Market Analyst chart shows Dawn’s 5/15/30-day moving averages on BHP Billiton Limited. Note how between July and September the averages follow their ‘natural’ sequence, as we look vertically upwards, with the price, then the 5-day, then the 15-day, then the 30-day moving average. A ‘cluster’ indicates a big move may follow. The 30-day moving average can be seen to be acting as resistance, much as a 1x1 Gann angle would.
Dawn’s Other Favourite Indicators
In addition to her harmonic moving averages, Dawn uses J. Welles Wilder’s Directional Movement to define upward or downward market movement. She uses the Parabolic Stop and Reverse to help lock in profits and the Relative Strength Index (RSI) as a momentum indicator.
She finds the Moving Average Convergence/Divergence (MACD) and MACD Histogram to be "brilliant for trend following".
The above Market Analyst chart shows a Parabolic S&R, and an MACD Histogram, on BHP Billiton Limited.
Conclusion
Dawn Bolton-Smith’s is a true pioneer of technical analysis in Australia. Even though ‘retired’ from her amazing and inspirational career, her passion for technical analysis is as strong as it ever was. Dawn Bolton-Smith is a true market master.
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