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

Building a Rules-Based Trend Following Model - 5

by Greg Morris

The significant components of my Weight of the Evidence are Price Measures and Breadth Measures.  All of my Price Measures use the Nasdaq Composite Index which I have written about many times.  If using the same price, then the difference between most price indicators is to offer varying time periods; short, medium, and long.  Breadth on the other hand, can offer many different indicators of trend.  Price is just price; but breadth is advances, declines, advancing volume, declining volume, new highs, and new lows.   Those are what I call internal market Read More 

Dancing with the Trend

Thoughts on the Current Market

by Greg Morris

I rarely, if ever, discuss the current market or offer any market analysis.  StockCharts.com has many expert technical analysts that already do a bang up job on this.  However, since I am writing a series on Building a Rules-Based Trend Following Model, I thought I would tell you how the model has worked over the past week or so.  At this point in the series I cannot detail everything that you will see in these charts for this article.  I will keep it fairly simple as we will dive into more detail as the series evolves.  As I cover Chart A and Chart B below Read More 

Dancing with the Trend

Building a Rules-Based Trend Following Model - 4

by Greg Morris

We have covered most of the preliminary issues such as digital measures and compound measures.  This article will discuss the concept of Weight of the Evidence.  I have been fond of a weight of the evidence approach for over 30 years.  The concept of “weight of the evidence” came from Stan Weinstein who published the newsletter, “The Professional Tape Reader,” and author of “Secrets for Profiting in Bull and Bear Markets.”  Back in the early 1980s, most analysis was done manually.  We did not have computers, internet, or email.  Our data came from Read More 

Dancing with the Trend

Building a Rules-Based Trend Following Model - 3

by Greg Morris

We are still in the preliminary stages of defining tools that will be used in the rules-based trend following model. Here I want to explain a unique concept I call Compound Digital Measures.  They are an advanced form of the Digital Measures discussed in the BaR-BTFM – 2 (Building a Rules-Based Trend Following Model). Chart A will help you understand how a compound measure works.  First, you need to know that this is not a complex system, as the signals work whenever two of the three indicators are in agreement, the compound measure moves in Read More 

Dancing with the Trend

Did 2017 Meet Your Expectations?

by Greg Morris

Welcome to 2018!  I was born in the 1940s and am delighted to be here.  If you were a trend follower with reasonable stop placement, 2017 was a fabulous year.  If you were a buy and hold investor in most stocks, then 2017 was a fabulous year.  If you were a market timer and always trying to guess the top, 2017 probably wasn’t so great.  I realize there are many other successful categories of investors, but hopefully my message is succinct.  Chart A shows the Nasdaq Composite (red), the Dow Industrials (orange), the S&P 500 (blue), and the Russell Read More 

Dancing with the Trend

Building a Rules-Based Trend Following Model - 2

by Greg Morris

In my first article of this series I outlined the concepts that would be discussed in this series. See HERE.  In this article we need to discuss some of the building blocks that will be used and how to interpret them. Description of Binary and Analog Measures I actually prefer to call them digital measures because they can yield more than two signals.  Binary means that it only gives two signals; it is either on or off similar to a simple digital signal.  Hence, going forward we will call them digital measures as I have a technique of using multiple digital signals that Read More 

Dancing with the Trend

Building a Rules-Based Trend Following Model

by Greg Morris

I’m going to start a new series of articles on building a rules-based trend following model.  For a host of reasons, I cannot provide readers complete details of the trend following model I currently use, but I can simulate most of the concepts in various examples, so you will have a good feel for how it works and what is required.  This article will lay out some of the concepts I plan on covering over the next few months.  I’m quite sure this series will be interspersed with articles on other topics, so I’ll use my normal article titling by adding 2, 3, etc. to the above Read More 

Dancing with the Trend

Article Summaries: 7/2017 - 11/2017

by Greg Morris

Periodically I write an article that reviews the past few months of articles.  Why on Earth would I do this?  Primarily for two reasons.  One is that many new readers are involved and often they do not go back and look at the past articles.  Two is that my articles are rarely tied to anything that is happening in the markets.  Generally, they are about experiences I have had as a technical analyst for 45 years; the good, the bad, and the ugly.  You can click on the headers for a link to the article. Top 5 Investing Mistakes When Read More 

Dancing with the Trend

The Deception of Average

by Greg Morris

I mentioned in the last article I would discuss ‘average’ soon; so here it is, sooner than I thought. The “World of Finance” is fraught with misleading information.  The use of average is one that needs a discussion.  Chart A is a chart showing the compounded rates of return for a variety of asset classes.  If I were selling you a buy and hold strategy, or an index fund, I would love this chart.  From this chart showing 85 years of data, I could say that if you had invested in small cap stocks you would have averaged 11.93% a year, and if you had invested in large cap Read More 

Dancing with the Trend

WHY do Most Investors do so Poorly?

by Greg Morris

There are a number of companies that track performance for various asset classes, including the performance of investors.  Table A, from J.P. Morgan, shows the Average Investor’s 20-year annualized returns of only 2.3%.  I have reproduced the small print below the table because it explains the process used.  And I cannot read the small print. Source: J.P. Morgan Asset Management; (Top) Barclays, FactSet, Standard & Poor’s; (Bottom) Dalbar Inc. Indexes used are as follows: REITS: NAREIT Equity REIT Index, EAFE: MSCI EAFE, Oil: WTI Index Read More 

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