Louise Yamada on the Market's Direction

Watch the video below to see what the patterns in the stock market charts suggest to technical analyst Louise Yamada.

Source: CNBC, November 5, 2009.

Comments

[David Van K...:]

Pretty wishy-washy. And that's more likely to make her right than she has been through most of this rally, throughout which she's been dead wrong. Or as it's put in the interview, "confusing." That's analyst-speak for "wrong."

Nov 10 10:30 AM

[Bruce Pile:]

Her problem is that she is a brilliant, logical, smart thinker: and the market has seemingly "had it in" for that kind for awhile now - tending to do the opposite of what it should do by all the oscillator and formation norms not to mention fundamentals. She's not the only one who is confused.

The market this year has been trampling all over direction predictors based on comparison to past extremes (usually reliable), valuation, and about everything except leader groups. Cramer has been calling the market right because he has been looking at his 3 leader groups (tri-pyramid or something he calls it) of financials, oil, and tech. I've been ignoring the financials, but watching tech, retail, and the Baltic Dry Index as the leader groups that telegraph what the broad market does. That's been pretty reliable. Everything else but leader groups seems to lead you astray.

Right now those leader groups are not looking too bad (check RLX, QQQQ, $BDI). But all that could be trumped by an Israel/Iran war coming up soon. I've been a bit preoccupied with this possible development and how to invest around it at my blog, but it's important. If that happens, I don't think you'd need Louise to tell you the direction of the stock market.

Nov 10 01:43 PM

[David Van K...:]

Bruce, You make good points. But if you simply look at past recessions, rallies like the current one are not unusual. This one has been steeper and longer than average, but all of the criticism of the rally for all these months (and it has been derided from the beginning) has ignored or refused to accept the fact that it's a garden-variety recession rally.

Look at the article I wrote in May about it (seekingalpha.com/artic...). It contains charts of the previous 9 recessions, and in 8 of them, there were rallies similar to this one. So it's wrong to say this rally has been unpredictable or illogical. Its historical precedents are right there on the charts...not charts from the depression, but charts of the last 9 recessions.

Nov 10 11:09 PM