As hoped for, the period of peak volatility has passed ( for now) and stock prices have bounced off their panic lows. We witnessed some genuine capitulation as some daily price bars showed extreme intraday fluctuations, falling to new lows only to close near the opening prices. As we've discussed, such price bars are a … Continue reading Leaders And Laggards
The Big Picture
Possible Scenarios
One of the most infamous sentiments in the investment arena is, "this time it's different." Every major sell off in the history of publicly traded stock markets have elicited those sentiments from observers both amateur and professional. While normal ebbs and flows can be reasonably explained in real time, when a big sigma selloff occurs, … Continue reading Possible Scenarios
The Crossroads
Following a few weeks of high volatility, the downside trajectory of the markets seems to have subsided. The objective measure of this is the volatility index or VIX. The chart below shows the explosion of this index in the middle of February, ascending to levels not seen since late 2008 during the banking panic that … Continue reading The Crossroads
Early Signs
I've written quite a few times about divergences in momentum and how they can give good clues as to an imminent trend change. The theory is that acceleration will slow down before the actual price change occurs, much like taking the foot off the gas while driving. There are numerous popular indicators which can be … Continue reading Early Signs
The Madness of Crowds
Anyone who has actively participated in stock markets over the decades has observed a multitude of manic, euphoric advancing phases but also periods of steep, devastating declines as well. The ebbs and flows of the market, while varied in their intensity and duration have always managed to eventually move higher. When things are good, there's … Continue reading The Madness of Crowds
Are We There Yet?
Measuring human behavior is not the same as measuring balance sheet items. People as a group will move from euphoric optimism to dire pessimism at the extremes. Group behavior is the underlying premise of technical analysis. As an aside, the mass hysteria surrounding Covid 19 and which has played a large role in market action, … Continue reading Are We There Yet?
The Secret
I've discussed a number of techniques and approaches to making sense of market gyrations over the years. Some of these approaches can be esoteric and confusing, but for the most part, the best approaches should be framed in strategies that embrace logic. Lines crossing and thresholds broken are fine, but there should be a logical … Continue reading The Secret
