September 25, 2021


Technical Analysis of Financial Markets

When stars align ………..

When stars align ………..

In a way, market analysis is very much like astrology. It is not a precise science but rather one of probabilities but that is enough to get a good tool and be strategic about life / trading. It takes a lot of time to conduct properly and there is no real substitute for experience. It requires alignment of more than one component to derive a truly useful and meaningful conclusion. And, yes, to a great extent they both measure something that is influenced by planetary cycles but no rising your head, closing your eyes and saying a prayer to the Lord – which is an otherwise very positive thing to do – will not cut it.

The chart above is the first one we ever used / published in our Elite service. Since we started the Elite service a couple of months ago we’ve tried to strike a tone of caution regarding the mid and long-term setups in the markets. This is not a politely rephrased version of the idiotic “we told you so”, we are merely stating facts :). We’ve shown the discrepancy between rising yields and stalling bank stock prices, we’ve shown the implied inversion in interest rate futures a year out, we’ve shown the fatigued relative strength uptrend in growth versus defensive sectors and in growth vs value styles. We’ve even touched upon the rather bearish configuration in real estate stocks. These things, individually, matter a lot but what matters even more is their alignment and simultaneous appearance. In our view there is a price adjustment in the making here and what happened thus far in October is probably the beginning and not the end of it. Intervening bounces will provide opportunities to go both long and short at times, but what you are to keep in mind is that the path of least resistance for some time will be down or at best sideways. You can be stubborn, deny the setups and subsequently suffer or you can accept reality join the bull market in market timing and thrive. Those are your only two options at the moment, ‘cos stars are simply all aligned………