With all the bubble chatter and talks of over-valued stock markets, I thought it was time to have a discussion with someone is the expert on the subject. In this case, that person would be Paul Desmond, chief strategist and President of Lowry’s Research.

Desmond has spent the past five decades analyzing markets; his research is widely regarded as both unique and insightful, winning numerous awards from various Technicians groups. If you want additional background into his thinking process, have a read of this long interview I did with him in 2006 (Part I and Part II)

What I really love about his work is how empirically driven it is.

I spoke with him recently, chatting about his work in identifying market tops. Rather than focus on the usual noise Desmond, suggests anyone concerned about a top should be watching for very specific warning signs. He notes the health of a bull market can be observed by watching internal indicators that provide insight into the overall appetite for equity accumulation.

These four include:  (Continues here)

Category: Markets, Technical Analysis, Trading

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

3 Responses to “How Market Tops Get Made”

  1. emrah says:

    Thank you for the informative post Barry. Personally, I don’t know how long can the bull run can continue or if there will be a correction. To me a more relevant question is about the potential upside versus potential downside. I think one should ask what could ruin markets’ bull run? What are the main risks? Be it economical or geopolitical. Are these risks priced in? And if these risks actually do happen where is the most potential? Upside or downside? As I said I don’t know what will the future bring but with downside protection relatively cheap, I think it makes sense to buy some protection.
    Regards,
    Emrah

  2. VennData says:

    I like #4. Recessions occur when en masse production does not meet what consumers and businesses want to buy. With techological change comes extremely rapid, relative turnover.

    People used to complain about “planned obsolesence” but there’s no time for that. Your competitor is already doing that to you (or some PHP programmers in a garage.)

    Like Chris Christie stopping Tesla’s business model in New Jersey yesterday (more “cone positioning”, slowing the choke points for the average Joe) the Car Dealers can’t change their model, so they pay government lobbyists to stop change, money that would be better invested in new techologies advancing consumer choice.

  3. LeftCoastIndependent says:

    Good read. Us “amateurs” appreciate good advice like this. But got to add, the other unique factor that has not been experienced before, the QE tapering. We will just have to wait-n-see how it all plays out, but I am getting a bit nervous.