Posts filed under “Technical Analysis”
Click to enlarge
Source: The Chart Store via All Star Charts
Regardless, it is something that people often fail to contextualize correctly: What the chart above shows is the historical average of the 4 year presidential cycle.
The caveats about these are they reveal a form of soft probability, and not forecasts. If second years have often been historically weak, that is not the same as saying second years are ALWAYS historically weak. At best, it might reveal a tendency.
The causation element is usually described thusly: Presidents want to get re-elected (or see their party keep he White House). So they do all of the unpleasant things which might hurt over the short term but should lead to positive economic gains by the next presidential election year.
click for larger table Source: Merrill Lynch Global Research, Interesting look at bull markets that have gone on without a 20% correction (note this is within the context of a 20%+ cyclical rally). Merrill Lynch’s Global Research team note that 2 prior cyclical bull markets marked a transition from a secular bear market…Read More
Yesterday, I showed Merrill’s most active A/D line, which had broken out to new highs.
One reader took exception with this, suggesting that its a case of bullish confirmation bias. I disagreed for 2 simple reasons:
-Merrill’s “Chart Talk” has been running the most active A/D chart for years;
-Any index or major technical analytical measure making a new high is newsworthy
I appreciate the insidious nature of various biases in our wetware — and I want readers to keep pushing back on anything that remotely looks like bullish or bearish bias in action.
Ironically, the day after that discussion, Merrill’s Technical Analysis group noted the break out in the A/D line of the Nasdaq 100 — itself at 13 year highs.
To paraphrase Stephen Colbert, sometimes Reality just has a bullish bias . . .
Text from Merrill’s wonks after the jump
Category: Technical Analysis
Click to enlarge From Merrill Lynch’s technical team: The Most Active A-D line breaks to new highs The Most Active Advance-Decline (A-D) line is a market breadth indicator of the daily top 15 most active stocks by share volume in the US. These stocks are generally more liquid with larger market caps where the…Read More
Category: Technical Analysis
Click to enlarge Merrill Lynch continues to point out that the Street remains unenthusiastic about stocks: Sentiment ticks up to highest in 13mos, but still far from bullish The Sell Side Indicator — our measure of Wall Street’s bullishness on stocks — ticked up just slightly in June to 49.8 from 49.6. The…Read More
Back in my days as a trader, I would peruse the lists of 52 week lows looking for reversal candidates. The key was finding an intelligent entry that had a very tight stop, so it presented a good risk reward. I am happy to risk one dollar to make three. Slowly build the position over…Read More
Click to enlarge Yesterday, in response to our post on how wrong the public was back in this 2011 Gallup poll, the following suggestion was made: Which asset performed best is dependent on your definition of “long term”. 2011-2013 is at best medium term. Long term to most people means decades, 20 years or…Read More
Click to enlarge Major U.S. indices such as the S&P 500 and the NASDAQ Composite have both recently stabilized and bounced for the second time off their respective 50 day moving averages. Though historically June tends to be a negative month for stocks, with only 9 trading days left in the quarter we wonder aloud…Read More