Category Archives: Technical Analysis

Software for Quantitative Systematic and Discretionary Trading

Trying to discover an edge by randomly backtesting ideas is equivalent to looking for a needle in a haystack. More than 25 years have passed since backtesting software became available to retail traders and the difficulty in finding an edge persists … Continue reading

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SPY: After a Dance with Fibonacci the Real Test is Coming

After getting trapped for two days inside a channel defined by the 38.2% and 50% Fibonacci retracement levels of the rally that started last February, SPY is now getting ready to face the challenge: Resumption of the uptrend or start of a downtrend? If you … Continue reading

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When Does a Downtrend Begin?

By the time that a downtrend is identified in the context of technical analysis, losses may be substantial. An important issue is not when a market can be declared to be on a downtrend, but when a downtrend begins. This depends on subjective … Continue reading

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Bears Should Keep Low Expectations For A Trend Reversal

Yesterday’s rally was fueled by promises of low rates and more quantitative easing. As long as, one way or the other, inflation is kept low, bears should have low expectations for a trend reversal. In the best case, the correction … Continue reading

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Technical Analysts Who Have Their Cake and Eat it Too

These are technical analysts who draw a trendline, indicator or support/resistance level on a chart and claim that if it holds prices will rise and if it does not hold, price will fall. One basic problem with such naive analysis is that … Continue reading

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Interest Rates May Rise Soon

The 10-Year Note yield has been in a 21 bps range during that last 45 days. Analysis of yield action since the 1960s shows that when yields were on an uptrend, similar sideways action has failed only once to signal a rise of … Continue reading

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A Very Bullish Pattern in S&P 500 Index

SPY closed yesterday at a new all-time high price but still $0.14 below the high of March 21, based on a non-adjusted chart, although a new all-time high price at $189.13 was recorded. This occurred despite massive calls for an immediate correction, which the market … Continue reading

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The Backfire Effect and Technical Analysis

Backfire effect is the tendency to even more strongly hold a position when presented with evidence that contradicts it. This is a known behavioral bias that is prevalent in the financial blogosphere, especially amongst those who use technical analysis to confirm their views … Continue reading

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