The market rally continues with equities putting on a good show around the world. By just about any short-term measure the market is very overbought. It looks well primed for any adverse news to trigger a pull-back. But on the flipside, there is such a cacophony telling us this is the year of the equity and for moving down the risk curve that many players may just buy into any weakness in fear of being left out. Because we know we can't really see the future and that forecasting is a mug's game, we resort to all kinds of techniques to help us decide which way to turn. Still very popular, despite scorn from some in the investment community, is technical analysis. And there is no shortage of different versions. As one of my earliest teachers taught, "The beauty of technical analysis is in the eye of the beholder." In other words you have to find your own way, there is no magic potion. But it does have value. Technical experts are feverishly rolling out their Bollinger bands and Coppock indicators, trend reversals, point-and-figure upside targets and the like. Coppocks measure long-term trends. You can use data going back 50 years and only find a dozen or so buy signals, so they can seem pretty persuasive. The problem is that when you look at a 50-year chart on a single page it doesn't give you a sense of how much pain you might have to take while you're waiting for it to work. Tiny little blips on the chart could be twisting your stomach upside down from day to day. Edwin Coppock developed the curve in 1962 for the Episcopal Church in San Antonio basing his calculations on bereavement and mourning periods. It's useful if you apply it in your own way but can cause its own kind of bereavement as well! The QSL is from WOAI San Antonio, TX, a clear channel station heard in Morgan Bay, South Africa in 1987.
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