What is Confirmation Bias?
One of the most common behavioral biases, confirmation bias is when you determine your conclusion and then gather evidence to back it up. Mindful investors gather evidence first and then make decisions based on the weight of that evidence.
The Chart to Watch For Market Tops
The S&P 500 has been making higher highs through the month of April. I was taught that it's best to develop an emergency plan when things are going well! Here are five key indicators to track the resilient uptrend in stocks, and prepare for the eventual downturn.
Peloton Threatens Head and Shoulders Top
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.
Improving Relative Strength for Homebuilders
Relative strength is one of the most important parts of my technical toolkit. Basically, the idea is to lean into stocks that are working and lean away from stocks that are not working.
Bearish Trigger for Financials
Here we’ll review how a bearish momentum divergence signals a potential trend exhaustion, and how to validate and confirm these signals using traditional support and resistance levels.
Fibonacci Retracements and Bullish Gold
Gold has had a rough six months, with the gold ETF (GLD) dropping 20% since peaking in August 2020. While many consider gold to be an inflation hedge, concerns about increased inflation have not manifested themselves in higher gold prices.
Improving New Highs Would Validate Further Upside
The S&P 500 wrapped a rather volatile week by settling in at the upper end of the 3200-3600 range. One key breadth indicator shows clear similarities to the bull run in early October, and also provides a prescription for bulls looking for validation of further upside.
Looking for Strength? Look to Utilities!
While reviewing the 11 S&P 500 sectors and identifying stronger charts in the pile, it’s hard to find a better setup than the Utilities sector. The XLU chart also provides a textbook example of big base breaking on improving relative strength.
Emerging Markets Overextended
Ratio analysis is a critical piece in my macro technical approach, as it helps to differentiate different sectors, styles, regions, and themes by gauging their relative performance to one another.
Three Takes on the Presidential Cycle
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.
Hi I’m Dave! Thanks so much for checking out the blog. Check out our free behavioral investing course and don’t miss an episode of Dave’s daily market recap show!
“Those who can not remember the past are condemned to repeat it.”