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Technical Analysis: An Introduction

Technical analysis is not another way of doing fundamental analysis. It is not another way of getting the same information. A fundamental analyst studies the various physical supply and demand factors in order to gain insight into the physical pressures that drive price trends. Technical analysis gives insight into the forces of human nature that drive price trends in the markets.

ICAP-TA Special Energy Webcast – Today, Tuesday 21 April 4 PM EST

Some of Topics I will be covering:

WTI – An expiration postmortem
Looking Forward – The looming Brent, Product and NatGas Expirations
Spot and Time Spreads
Short, Medium, and Long Term Structural Updates
Options for the Longer Term Perspective

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Aramco versus Tesla: an exercise in valuation

There is over-valued, and then there is over-valued. This report is an exercise in valuations that compares the Aramco IPO and Tesla. Aramco and Tesla are arguably at the two opposite extremes of the technology spectrum, and are from the two opposite extremes of culture.

Two Opposite Trajectories?

Two very different back to back covers from the 7th to 13th July 2018 issue of ‘The Economist’ raise some serious and profound questions about what might be on tap for the markets

A Tale of Two Bubbles

This report contrasts the collective perception of Bitcoin and the US Equity markets. As such it is the logical next step from several previous reports that looked at the cases for a Bitcoin bubble and an equity market bubble separately.

French Election, Fibonacci, and the CAC40

Elections do not change the destiny of a nation. Elections display the nature of the collective consciousness of a nation. It is this collective mood that decides the destiny of a nation. And the collective mood pivots around .618 to .382 extremes.

08 Feb 2017 – A Market Based Theory of Government

This webcast explores a market based theory of government in the light of current events and recent market moves. We explore the implications of this theory for a few markets:
· The Dow Jones Industrial Average and the Nasdaq
· Crude Oil and the WTI minus Brent spread
· The US Dollar Index

12 Jan 2017 – How ‘Doctor Who’ Explains Brexit

These ‘observations’ reports employ insights from technical analysis to explore the nexus of current events, popular culture, history, and geo-politics. This report employs insights from technical analysis to explore how the British ‘Doctor Who’ science fiction series might help explain the Brexit vote and its repercussions. The popular entertainment of a nation always reveals the collective mood of that nation. And science fiction by its very nature has a relatively free rein to more accurately explore and reflect the collective mood. This report explores why a closer look at the popularity of the ‘Doctor Who’ series might have made the Brexit vote a bit less of a shock. And a deeper understanding of the vein of collective mood that ‘Doctor Who’ is mining might also help better prepare us for what lies ahead.

24 Oct 2016 – AT&T and Time Warner – Peaking Action?

In January 2000 as AOL and Time-Warner were getting togther, not a single analyst saw anything that could possibly go wrong. Yet that marriage quickly gained the status of the worst merger of all time. Now as AT&T buys Time-Warner we are hearing the same rosy rheotric we heard back in January 2000. If there are problems ahead, we will only be able to detect them in the price action. Forget the analysts. They tend to instantly like any buy-out. Let us employ this opportunity as a technical tutroial and look to the price charts.

20 July 2016 – World Energy Usage

This is not a work of technical analysis. This is an observations piece. And the observations here involve the deeper significance of certain price relationships in energy trends that have much greater importance than mere short term economics.

24 June 2016 – EU Zero, Cultural Integrity 1

This post is the sequel to and elaboration of my last observations piece. It should be glaring obvious to everyone by now that the Brexit vote to leave was a decision that was motivated by neither financial nor economic considerations. However it is a big mistake to chalk it up to low brow and uninformed populism.

23 June 2016 – A New Perspective on the Brexit

Technical analysis can help reveal a deeper understanding of the markets, and of collective human behavior in general. In this piece I employ what we have learned from technical analysis to generate a new perspective on the Brexit situation.

Dilma versus Angela and the magazine cover story syndrome

The dramatic juxta-position of recent cover stories on Dilma Rousseff and Angela Merkel does not align with the underlying reality. This report suggests that the ‘magazine cover story syndrome’ strikes again – that recent cover stories in “Time” magazine and “The Economist” have the situation upside down. As usual.

How Wall Street Misses

When it comes to forecasting crude oil prices Wall Street analysts have an abysmal track record. What are they doing that is so wrong? This situation provides an excellent perspective on the critical differences differences between fundamental and technical analysis

OPEC and the 15 Year Commodity Cycle

The superficial exogenous view of market price action is that OPEC news causes price trends. A closer look reveals compelling evidence for an endogenous view of market price action. In the endogenous price trends arise from the dynamic nature of the markets themselves. No external stimulus is needed to induce price trends, and the price trends are cyclical in nature. This brief piece looks at this exogenous versus endogenous issue in terms of OPEC and the 15 year commodity cycle.

The Allure of Negative Interest Rates

Negative Interest rates on government bonds and central bank deposits can strike one as an ‘Alice in Wonderland’ through the looking glass degree tear in the financial space-time continuum. It appears to stand 5,000 years of interest rate history on its head. So why the tremendous investor demand for negative rates? This report places negative interest rates in the context of long term historical trends – and the post 1999 golden age of the speculative bubble. I employ Adrian Brody’s role in the 2010 film ‘Wrecked’ as a parable to help flesh out the issues.

Is Deflation the Fed’s Self Created Stay Puff Monster

Great enough fear creates the thing being feared. This is an age old truth of human nature. And it is a reality alive and well in today’s financial markets. In this piece I explore the metaphysical basis of central bank intervention. And this leads me to explore the case for deflation as the Fed’s own self created monster.

15 Year Commodity Cycle and a Preview of the Year 2016

This webcast is a preview of 2016 in terms of the 15 year commodity cycle. The start of this webcast makes the case for a long standing 15 year commodity cycle. As this will be my third 15 year cycle low as a technical analyst, I then go on to apply what I have learned from previous cycle lows to a technical outlook of the risks and opportunities ahead for 2016.

The Snake and the Rope

A man goes into a dimly lit shed and in his fear he mistakes a coil of rope for a giant snake. He runs out of the shed screaming and quickly panics the entire village. Out of fear or mere carelessness, one mistakenly perceives something in the present for something seen in the past – a mistake with consequences.

Five Bulls-Eyes

This is the sister report to my 15 Jan 2015 report “How Wall Street Misses.” In that report I updated the long standing inability of Wall Street to forecast crude oil prices. The tools of fundamental analysis have yielded notoriously bad energy price forecasts since Wall Street began coveringpetroleum prices. This is an on-going scandal that has been hiding in plain view. In this report I summarize some of my recent multi-year price forecasts in the petroleum complex, using the tools of technical analysis. THe results have been dramatically different than the laughable results out of fundamental analysis.

Scotland and the ‘Status Quo’ Bias

Fans of the status quo should take no solace from the recent “no” vote out of Scotland. The long term trend in the number of sovereign states is still very much pointing up.

The Great Disconnect

Since early 2012 I have been tracking a major disconnect in the global financial markets that has made less and less sense over time. Over time it has grown from an annoyance to a very serious problem. I refer to the disconnect between price trends in commodities and equities. This report offers a fresh perspective on this historic divergence.

Russia and the Oil Weapon

The press is fond of citing ‘the oil weapon’ as something Putin may wield against the west if he does not get his way with the Ukraine. Here we discover that the reverse is true. The real ‘oil weapon’ is something that US can exercise against Putin’s Russia.

Putin: Villain or Scapegoat?

This report reviews the current vulnerable technical condition of a few critical world markets from the perspective of Vladimir Putin’s recent tactics and larger strategy. I explore the issue of endogenous versus exogenous dynamics in the bursting of a speculative bubble in the light of current events. I also delve into the related issue of why ‘bad things happen in bear markets.’

National Pride and Hosting the World Cup

Since nuclear weapons made wars unfashionable nation-states have been forced to explore over avenues to display their national pride. High on the list of national pride PR ventures are hosting the Olympics and the World Cup. However hosting such an event does not improve national characer traits. It only reveals those traits.

Diplomacy versus Technical Analysis

This brief update is a follow up to my 3rd May 2014 Observations report “Vladimir Putin is a Thug.”That report traced the timeline of the transformation of Russia under Putin from communism to fascism.

The Grave Misfortune of Ukraine

Here we survey the events in the Ukraine from the perspectives of behavioral economics, European and Ukrainian history, and the role of a collective mood of fear and hopelessness as the fountainhead of both acts of aggression and of major bear markets.

Emerging Market Crisis as QE Blowback

In a 16 January 2014 report I explored the law of adverse consequences, or blowback, in the context of the QE program of the Federal Reserve. Just a few weeks later we have been gifted with a perfect example of how QE creates blowback.

QE: the blowback to come

The sheer magnitude and unrelenting insistence of the Quantitative Easing program of the Federal Reserve strongly suggests that we should view it as yet another attempt to force the world to improve. History shows us that the more forceful the efforts to make the world a better place, the more dramatic and harmful the blowback. In this report we explore QE from the perspective of the law of adverse consequences.

The Federal Reserve at 100

The Federal Reserve Act passed on 23rd December of 1913. Comparing the stated goals of the Federal Reserve with the actual history it is not too difficult to spot 100 years of failure.

An Analysis of the Bitcoin Critiques

When a truly disruptive technology comes along objective and cool-headed analysis of the pros and cons are often crowded out by deeply emotional reactions and by strident defenses of the status quo. In this analysis of the main categories of Bitcoin critiques I attempt to filter out the unjust judgements from the valid criticisms.

Fibonacci in the NFL

In our tutorial on Fibonacci aspects of consensus we show that polling results typically yield the Fibonacci 62% to 38% result. That is why Fibonacci retracements are common in the markets. The markets are a voting both where you cast your ballots with buy and sell orders. Today I revisit this issue with the daily SportsNation polls.