Category Archives: Technical Analysis

The Post-Hoc Chartist

Why do some chartists turn ad hominen when their practice is challenged? The plausible answer is that they are frustrated by continuous failures and are acting under the influence of backfire effect cognitive bias. In essence, there are people who … Continue reading

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Dow Jones Industrial Average Longest Overbought Period In 31 Years

The Dow Jones Industrial Average has stayed overbought for 21 days, which is the longest period this technical condition has persisted in 31 years. As the analysis below shows, the index has moved higher in the following 60 days with … Continue reading

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Short-Term Bearish Signal

The P-Dow indicator has generated the first bearish signal for stocks in about two months. Details and backtests are included below.

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Strong Momentum Is Not A Leading Indicator Of Corrections

Strong momentum is neither necessary, nor sufficient for major market corrections. Corrections usually occur due to fundamental developments and are not related to technical indicator performance.

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Despite The Strong Rally, Price Action Noise Level Remains High

Although in the last 22 trading days the S&P 500 has gained nearly 8%, the level of noise remains high due to erratic and random price action in the past. As the chart below shows, recent noise reached levels registered … Continue reading

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RSI Indicator Levels Are Irrelevant For Timeframes Longer Than A Couple Of Days

Changes in Relative Strength Index (RSI) have low correlation with changes in price for timeframes longer than two days. This relationship is highly robust for four major ETFs. The conclusion is that only very short-term traders should look at the … Continue reading

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Despite Recent Hype, Stock Market Price Action Is Still Normal

Price action in the stock market indicates normal conditions and away from critical levels, according to an indicator based on absolute daily returns.

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The Nine-Day Losing Streak In S&P 500 Is A Random Pattern

While we are preparing our weekly premium report, we thought it is a good idea to share an excerpt about the nine-day losing streak in S&P 500. We are surprised by the large number of professionals who have paid attention … Continue reading

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