While price movements are the ultimate determinant of market health, assessing relationships between key fundamental measures will give clues as to underlying strength, or weakness. There can be no healthy equities market without an underlying healthy consumer market. Consumption drives demand, which drives production which drives raw materials, which translates into economic growth. During these … Continue reading Relationships Matter
Just over 5 months ago, the overall US stock markets began a decline which has continued up to this writing. Of course it would have been difficult to predict the ensuing course of prices other than to use the simple gauges of support and resistance levels. What was observable were momentum indicators hinting at a … Continue reading Are We There Yet?
For the other half of market analysis is not just what, but as importantly, it's when.
One of the most common misconceptions about the interpretation of price movements of charts is the expectation that pattern recognition equals precise predictability. While one aspect of using technical analysis is to make sense of price movements, there is no certainty that what has worked in the past will work in exactly the same way … Continue reading It’s What As Well As When
Supply and Demand. The dynamic expressed by this phrase is the cornerstone of Capitalism: In fact, this concept drives most of the things that we experience in life and is not confined just to issues of money. But for our purposes, the supply demand dynamic is played out daily in the public stock markets and … Continue reading Why Rotation?
Classical models of market activity hold that there are predictable cyclic rotations in the equity markets. We are familiar with the overlapping sine waves of market segments as they progress through their stages of growth and decline. In broad brushstrokes, as leading industries such as financials mature, we would expect to see robust economic activity … Continue reading Cycles And Rotation
Experienced market participants know that stocks spend most of their time in seemingly random ranges. It is only for a short time that they will actively trend up or break down. This is logical since companies will go about their business in a somewhat predictable and systematic way. When something unusual or extraordinary happens, or … Continue reading The Significance Of Ranges
One of the comments I often address is whether only buying stocks that are making new highs is the best methodology. If you are an active trader, this makes sense because you want to go where the momentum is. While stocks do ebb and flow, it makes sense to be invested in the strongest stocks … Continue reading Cyclical Strategies
It's been almost 4 months since the initial shock to the stock markets ostensibly caused by the panicked entreaties of health officials. A number of factors contributed to the massive selloff which ensued over the following months based on the sudden introduction of unknowns. The lack of substantiated facts was one factor but also the … Continue reading The Significance Of Trend
On March 22, almost a month ago, we discussed scenarios for the direction of the market, specifically the Dow Jones in the weeks to follow. At the time, the market was at maximum fear and volatility measures were spiking to all time highs. Because of the climatic nature of the sell off at the time, … Continue reading Market Update May 14