Dancing with the Trend

Greg Morris
About the author: has been a technical market analyst for over 40 years and is the author of several popular financial analysis books including Candlestick Charting Explained, Investing with the Trend and The Complete Guide to Market Breadth Indicators. Before retiring, he served as the Chief Technical Analyst and Chairman of the Investment Committee for a technical-based money management company with over $5.5 billion under management. Greg has appeared on CNBC, Fox Business, and Bloomberg Television and has also spoken at numerous financial conferences around the world.

Latest Posts

Dancing with the Trend

Things That Can Screw Up Your Investing!

by Greg Morris

I’ve written before about heuristics and cognitive biases in my Know Thyself series from a couple of years ago.  Here I put together a list of them with short definitions and explanations.  That space between your ears is generally a horrible investment decision maker. Anchoring Bias – Too often investors base decisions on the first piece of information they hear or see.  With the stock market, this is usually the price at which they bought a stock.  It is from that price most future decisions about what to do with it are based.  This helps explain why I prefer Read More 

Dancing with the Trend

Friends Don't Let Friends Buy and Hold

by Greg Morris

The timing of this article is appropriate. Part of this was written by Tim Chapman who was a founder of PMFM, the company I worked with and later became Stadion.  I liked its message so am updating it with this article.  I remember back when I was managing money, I had an interesting conversation with a longtime client. He was appreciative that I was able to protect his retirement account and produce a positive return over the past three years (2007-2009 bear), but he almost felt guilty mentioning it to friends who've lost 50% or more of their money. He had a great line when he Read More 

Dancing with the Trend

Junk Science; Junk Analysis!

by Greg Morris

I don’t think I have offended anyone in quite a while and feel I’m not doing my job if I don't try to periodically; so here goes! Often a simple mathematical series of numbers can sometimes get misinterpreted (promoted) to be something magical.  My personal favorite sequence is 6, 28, 496, 2520, 8128, and 24601.  I’ll explain them at the end of this article.  Personally, I see no value in the actual numbers that make up the Fibonacci series; a series developed by an Italian mathematician (Fibonacci) in the thirteenth century to help understand the propagation of Read More 

Dancing with the Trend

Volatility and The World's Greatest Investor

by Greg Morris

I've written before about the cost of volatility, both financially and emotionally, and in light of the volatility we saw in 2018, now is a good time to revisit that issue (while it is not an issue).  In 2018, after many sizable down moves, then prices bounced up and then the spin from the investment world was that everything was okay. But let's look at the real world for a moment.  This is part of two pieces I wrote many years ago BS (Before Stockcharts.com) and is somewhat appropriate for today. First of all, consider the market mavens and Read More 

Dancing with the Trend

RISK

by Greg Morris

Dictionary.com says:  Risk is the exposure to the chance of injury or loss; a hazard or dangerous chance.  American Heritage Dictionary says: Risk is the possibility of suffering harm or loss; danger.  These are just two of the many entries and these were just for the noun.  Risk in the world of investments and finance is more succinct.  Risk is the uncertainty of outcome; however, risk can be quantified whereas uncertainty cannot.  Many use risk as a quantitative measure and uncertainty for measuring the non-quantitative type.  This article will attempt Read More 

Dancing with the Trend

Relative Performance

by Greg Morris

First of all, you cannot retire on relative performance.  Relative performance is often a valuable tool, but is also a marketing concept dreamed up by financial pundits who rarely outperform the market.  Table A is a table of various asset classes and their relative performance since 2009, with the last 3 columns being the last 3 months.  Keep in mind that each column (year) is totally independent of the other columns, and the assets classes at the top performed better than those at the bottom of each column.  You do not know if they both lost money, both made money Read More 

Dancing with the Trend

Dollar Cost Averaging

by Greg Morris

Dollar cost averaging is simply the act of making like dollar investments on a periodic basis, say every month or every quarter.  It is sold as a technique because they want you to believe that no one can outperform the market.  There are many papers written on this subject and I don’t want to dwell on it.  Dollar cost averaging is very dependent upon when you start the process.  If you start the process at the top of the market, just prior to a large bear market, you will be buying all the way down and this process could last a couple of years.  Your average Read More 

Dancing with the Trend

The Enemy in the Mirror

by Greg Morris

I am a retired money manager and want to share some thoughts on that profession and investors in general.  Portfolio management is as much about managing emotions as it is about correlations, standard deviations and Sharpe ratios.  Over the decades much has been written about the “math” of portfolio management but the emotional aspect of the investment decision making process does not receive nearly the attention or research.  However, Behavioral Finance is a relatively new field that seeks to combine behavioral and cognitive psychology theory with conventional economics and Read More 

Dancing with the Trend

Reliability of Pattern Recognition

by Greg Morris

I developed this method primarily for candle pattern identification when I wrote my book, Candlestick Charting Explained (the book was first published in 1992 and now is in its third edition).  The reliability concept equally applies to any type of pattern, including the many chart patterns widely used in technical analysis.  My argument and complaint about most technical analysts, is that for a reversal or continuation pattern to be identified, you MUST first identify the trend.  How can you have a reversal pattern if you do not know what the trend is?  What is it Read More 

Dancing with the Trend

Pair Analysis - 4

by Greg Morris

This will wrap up the Pair Analysis series.  In this article I will show: Some basic statistics on the pairs I used in the analysis. The top 50 pairs based on performance. The bottom 50 pairs based on performance. The Sharpe Ratio is a measure of return and risk, with risk being standard deviation.  If you have read much of what I write, I think standard deviation is a inadequate measure for risk because it assumes random and normalized data, of which, most stock market data is not.  The modified Sharpe is an attempt to make a slight improvement.  I have no opinion Read More 

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