«In Praise of Research»
Coach Tyler here. Harry S Truman said, “There’s nothing new in the world except the history you do not know.” Winston Churchill gave it a different spin, “The longer you can look back, the farther you can look forward.” Finally, George Santayana said, “Those who cannot remember the past are condemned to repeat.”
Each speaks to the importance of studying the past and the reality that humans do the same things again and again. This truth plays out in the financial markets all the time.
Why does technical analysis focus so much on pattern recognition? Because patterns reflect crowd behavior, and crowd behavior repeats.
If you want to gain context and experience, look backward. Study long-term charts of the S&P 500. Look at what it did during past bear markets, recessionary scares, and battles with inflation. It won’t give you an exact roadmap to the future, but it will allow you to place modern movements in context. You’ll be able to better anticipate and respond to different scenarios.
Coach Mark does a superb job of this in his Cash Flow Vikings trading lab. Why, just last night he churned out four new chapters of his Hitchhiker’s Guide to Imploding Markets, looking at previous instances where the S&P 500 ran headlong into the declining 50-weekly moving average. I found it enlightening.
Trading for Beginners: Gino’s Gems
Check out yesterday’s Gino Gems!
Chart of the Day: Battle of the 50 Weekly (SPY)
The S&P 500 is testing the 50-weekly moving averages. It’s a battle whose resolution could spell the market’s next move.
Today’s line up
Traders Lounge 11 AM EST
Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.
The Coaches Show 8:30 PM EST
This is our weekly MasterMind group. Join the coaches tonight, 8:30 PM EST to discuss the markets and help you prepare for the week.
Halftime Report 12:30 PM EST
The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day, and fun in a way that only the coaches at Tackle Trading can deliver.
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