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

Bear Market Preparedness

by Greg Morris

Here is the scenario: You believe we are near a top in the market.  I won’t bother to discuss what makes you think that, but if you do, then here is a sampling of things to consider.  I was originally going to do this in an enumerated list, but decided my rambling would be better. I know you have stops on all of your holdings, so I won’t spend much time on that.  However, just in case you don’t; this would be the time to do so.  Personally, I use a moving stop that is a percentage below a previous high price.  For example, if my model has me fully invested, that Read More 

Dancing with the Trend

What Will You do When the Bear Arrives?

by Greg Morris

I would imagine there are many readers that are fairly new to market analysis and in particular, technical analysis.  We have had 10 bear markets in the S&P 500 Index since 12/30/1927 and 15 bear markets in the Dow Jones Industrial Average since 2/17/1885.  A bear market is defined as a drop of over 20% from the previous high.  Not sure who said or claimed this, but I’m accepting it.  Our last bear market lasted from 10/9/2007 until 3/9/2009 (top to bottom).  If you have not been an investor or trader during a bear market (last 8+ years), then you have missed Read More 

Dancing with the Trend

WHY Standard Deviation is a Poor Measure of Risk

by Greg Morris

I will attempt to show that high sigma is a much more frequent event than modern finance thinks it is.  A few examples using the Dow Industrials back to 1885 on a daily basis are shown.  Each begins with determining a look-back period to determine the average daily return and the standard deviation, and then a look-forward period is determined to see if the look-back data continues into the look-forward data.  Figure A is an attempt to help visualize this process.   A look-back period is determined (in-sample data) and a look-forward period is also determined Read More 

Dancing with the Trend

Article Summaries - 3-2017 to 6-2017

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 almost 45 years; the good, the bad, and the ugly.  Click on the article title for a link to it. Wall of Worry – March 13, 2017 Read More 

Dancing with the Trend

Top Five Investing Mistakes Made Preparing for Retirement

by Greg Morris

After 20 years in the money management business I saw these mistakes all too often.  Fortunately, this time, I’m not reciting the mistakes I have made in the past.  I certainly made some, but not these.  I’ll share those another time.   1 – The biggest and probably most common mistake is not beginning the process soon enough.  That doesn’t really sound like a pre-retirement mistake, but sadly when most folks start, it is too late.  It is difficult when young to think 40+ years down the road, but you must.  Prior to age 40 Read More 

Dancing with the Trend

Top 5 Investing Mistakes You Make When Young

by Greg Morris

I am not young anymore, so am going to reveal mistakes I made in the first half of my investing lifetime; about 1972 – 1990.  Sadly, I did not learn lessons quickly so repeated some of them.  These are not in any particular order.  A better title might be True Confessions.   1. Believing that I was right and the market was wrong.  I don’t know whether this is ignorance, arrogance, or what.  More than likely it is just lack of experience.  I would spend hours looking at charts and convincing myself what was going to happen; place a small trade, and Read More 

Dancing with the Trend

Will You Know When the Market Peaks?

by Greg Morris

The first thing you must realize is that you won’t know it is peaking until the decline is well underway.  Market tops are extremely difficult to identify.  That might seem hard to believe if you watch the financial media as those 'experts' are calling the top multiple times a day; like they have been doing for years.  And yes, they keep getting invited back.  With the art of hindsight, I have charted the past two bear market tops.  We can refer to them as bear market tops now, but back then you could not.  In Chart A, the March 2000 top is shown with data Read More 

Dancing with the Trend

A Reading List

by Greg Morris

In the 1970s there were very few books on technical analysis.  Now there a many great books available in the field of technical analysis and finance.  However, I’m going to keep these lists short and focused.  These lists contains many other wonderful books on technical analysis, finance, and behavioral analysis, but if I had to pick a library of only four books, this is it – Getting Started List. Getting Started List Kirkpatrick, Charles D. and Dahlquist, Julie R., 2016, Technical Analysis, Pearson Education, Upper Saddle River, NJ.  Read More 

Dancing with the Trend

You Need to Understand What Market Breadth Offers

by Greg Morris

Early in writing these articles I talked a lot about market internals or market breadth.  As a refresher, I’ll review the basics and then offer an opinion on why breadth is so important. Breadth Components Breadth components are readily available from newspapers, online sources, etc. and consist of daily and weekly statistics.  They are: Advances, Declines, Unchanged, Total Issues, Up Volume, Down Volume, Total Volume (V), New Highs, and New Lows.  From one day to the next, any issue can advance in price, decline in price, or remain unchanged.  Also any issue can Read More 

Dancing with the Trend

Know Thyself IV

by Greg Morris

This is the fourth article dealing with cognitive biases that totally screw up your decision making.  The first article, Know Thyself, covered anchoring, confirmation bias, herding, hindsight bias, overconfidence, and recency.  The second article, Know Thyself II, covered availability, calendar effects, cognitive dissonance, disposition effect, and loss aversion/risk aversion.  The third article, Know Thyself III, covered Communal Reinforcement, Endowment Effect, Halo Effect, Overreaction, Prospect Theory, Self-Attribution, and Self-Deception. Most of my education on Read More 

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