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 - 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 

Dancing with the Trend

Zahorchak Revisited

by Greg Morris

A couple of years ago I introduced a trend following technique which I first learned in the late 1970s.  I thought this would be a good time to review it; especially since this technique is now available in StockCharts.com’s symbol catalog. A trend follower’s lament: “Only the market itself can tell you what to do.  Everything else is irrelevant.  While the irrelevant items tell you what the market ought to be doing, this may or may not be what it actually is doing.”  To determine what the market is doing compute the following: Read More 

Dancing with the Trend

The Wisdom of Montier

by Greg Morris

I honestly do not know when or where I first heard of James Montier but believe it was a turning point in my investing and money management.  Behavioral Finance / Investing is a relative newcomer to the world of investing, or at least the identification and writing about it.  The human frailties have always been here, we just didn’t have a word to describe them.  Plus, I have more than once mentioned James Montier’s latest book, “The Little Book of Behavioral Investing” in articles with the comment that you MUST read it and then plan on reading it once a year.  I first Read More 

Dancing with the Trend

Maintain a Proper Perspective

by Greg Morris

Watching the evening news can give you a misleading and often wrong perspective on the stock market.  Most commentators mention whether the Dow Jones Industrial Average was up or down and by how much, and that is just about the complete financial report, even though the Dow Jones’ 30 large blue-chip stocks do not give a good representation of the overall stock market.  It is a misguided focus. The Dow Jones Industrial Average was created by Charles Dow in 1896, originally 12 stocks, but currently consists of 30 stocks.  Because the evening news has focused on the Read More 

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