Dancing with the Trend

Wake Up so You Can Sleep!


Why is it that many will believe almost anything they hear or read?  You need to learn to only pay attention to the facts.  Let me offer a recent real-time event and some of the wild imagination used by the experts about what happened.  Malaysia Airlines Flight 370, a scheduled international flight operated by Malaysia Airlines, disappeared on 8 March 2014 while flying from Kuala Lumpur International Airport, Malaysia, to Beijing International Airport in China. The aircraft last made voice contact with air traffic control at 01:19 MYT, 8 March when it was over the South China Sea, less than an hour after takeoff. It disappeared from air traffic controllers' radar screens at 01:22 MYT. Malaysian military radar continued to track the aircraft as it deviated westwards from its planned flight path and crossed the Malay Peninsula. It left the range of Malaysian military radar at 02:22 while over the Andaman Sea, 200 nautical miles north-west of Penang in north-western Malaysia. The aircraft, a Boeing 777-200ER, was carrying 12 Malaysian crew members and 227 passengers.

I’m not going to reproduce the flurry of expert opinions that populated all the media, both print and cable.  They would have someone who claimed to be a pilot giving his/her explanations as to what had happened.  And then find out later that this ‘pilot’ had a whopping 350 hours in a small Cessna.  Wow, expert indeed.  With 21,000 hours, myself, in all types of aircraft; civilian, military, commercial; I still would never comment on this other than just identify what we actually know.  What do we know for certain?  We know two things:

1 – equipment that communicated with the ground became inactive (off) at various times.  These are things like the VHF radios, the transponder, the equipment used to communicate the operational status of equipment, all became inoperative.  But not all at once.

2 – the airplane made a sharp turn to the left to an almost 180-degree change in direction.

And that folks, is about all we really know as facts; everything else is speculation.  Hijacking was at the top of the list by many, saying they turned off the equipment.  They, in some cases were the crew (2 pilots) and in others, outsiders.  They showed pictures of the Captain’s computer flight simulator he built in his home, thinking that he planned this all along.  Some claimed the airplane was in a remote hangar in Pakistan. My, how they guessed and guessed.  Sounded just like when the market does something big, and all the experts come crawling out from under their rocks to expound their hypotheses.  Almost never right!

I was asked many times by friends what I thought.  Of course, I had thought about it a lot.  When you are flying an MD-11 across the north Pacific in the middle of the night from Tokyo to Atlanta and hundreds of miles from any land (Midway and Hawaii), you have time to think about scenarios that might kill you.  We (pilots) didn’t sleep all of the time.  So, what scenario fit well with the Malaysia 370 situation based upon the two facts we know?  My GUESS is fire or heavy smoke in the cockpit which led to crew incapacitation.  All the systems’ circuit breakers are accessible from the cockpit so if there was an electrical fire, that would account for the various air-to-ground systems failing at different times.  The immediate left turn was probably the crew knowing of the problem wanting to return to where they took off – a very natural pilot reaction.  However, fire and heavy smoke in the cockpit probably overwhelmed them.  There are smoke goggles and masks they can don, but sometimes putting them on seems secondary compared to controlling the airplane.  Trust me, all simulator training for the airlines has donning the mask and goggles in the immediate action items that must be memorized.  Well, at least in the USA it does.

Why didn’t the airplane, with the crew incapacitated, crash soon thereafter.  I don’t know.  However, an airplane is inherently stable.  I used to tell young pilots in single-engine airplanes if they found themselves all messed up and seemed to be losing control of the airplane, just turn loose of the yoke/stick, and maintain a medium power setting.  The airplane would descend initially until the speed increased thereby increasing the lift on the wings causing it reduce its descent or even climb slightly, once it slowed down the descent would begin again and this evolution would start over again until it reached the ground.  Kind of like a leaf falling from a tree, without all the turning though.  It just might make a nice landing.  In the Malaysia incident, it wouldn’t be unbelievable that the pilot switched on the autopilot when things were going to hell in a handbasket.  We’ll probably never know.

By now you are wondering where all this flying stuff is headed, especially in a blog about investing and technical analysis.  I’ve been interviewed often and asked about being a pilot and how it helped me as an investor.  You already know the answer as I have pounded on it in many previous articles.  DISCIPLINE and RULES.  You need them to stay alive in aviation and you need them to stay alive in investing.  Just deal with the facts, ignore the constant barrage of crap coming from the experts.  So, what are the facts?  You already know this – it is Price.  If you know the rules and have discipline you can sleep quite well even when the market is not cooperating.  And lastly and repeatedly, try to only work with facts; ignore the rest.

Here are some previous articles/interviews that pounded home this message:

Interview with Chip Anderson on January 17, 2015.  My part comes on at about 26:38.

News Is Noise – April 23, 2015

Blinded by the Noise – February 3, 2016

WHY Technical Analysis Works – June 1, 2016

WHY Price is so Important – June 15, 2016

WHY I Have Faith in Technical Analysis – June 29, 2016

Information – Actionable or Observable? – September 5, 2016

WHY Support and Resistance Works – October 17, 2016

Dancing with the One That Brung Ya! – November 21, 2016

This will be my last article for 2016.  I keep wondering if the well will run dry since my articles are not tied to market action.  I would greatly appreciate it if you would use the Comments (below each article) to suggest topics, indicators, ideas, concepts, whatever, that you would like me to write about.  No guarantees but I could sure use some help.  Thank you in advance.  Off to Texas to spoil the kids and grandkids.

I hope you have a Merry Christmas and a Happy New Year.

Wake up so you can sleep,

Greg Morris

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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. Learn More
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