Category Archives: Technical Analysis

Is the Bulk of Technical Analysis “Thinking in Words”?

Until now I thought that the main problem of technical analysis is bias of all kinds. A tweet from N. N. Taleb yesterday got me thinking. Maybe there is a more serious problem than bias: thinking in words.

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Ominous Correlation

The 60-day correlation between SPY and QQQ ETFs has plunged near pre-dotcom crash and below pre-2007 top levels. Caveat lector included.

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Eight Signs To Help You Identify Technical Analysis Trolls

Modern technology offers the opportunity to trolls to pose as technical analysts. How do you recognize a technical analysis troll? Eight signs provide clues.

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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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