Observations on
Psychology and the Markets
The term "head and shoulders top" is often thrown around when a stock starts to show signs of distribution. As the work-from-home stocks have struggled recently, charts like Peloton Interactive (PTON) have transitioned from accumulation to distribution phase causing investors to question their long-term prospects.
This past Monday, I asked three experts on the Presidential Cycle - Bruce Fraser, Jeff Hirsch, and Tom McClellan - to share their take on market trends around the election season. They delivered in a big way, and the result was a masterclass in how to learn from market history.
As I paged through the S&P 500 charts during my normal weekend review, I started to identify some consistent patterns in the leadership sectors of Consumer Discretionary and Technology. Today I’ll share with you how I bucket these charts by their patterns, and why the Consumer Discretionary Sector SPDR (XLY) is likely the most important chart to watch.
