Gloomy technical analysts get press coverage
Earlier this year – mid-February to be precise – the Weekend FT’s Money section printed an article by John Dizard. Considered one of their more serious commentators, the piece was entitled ‘Technical analysts have a pretty gloomy outlook for risk capital’. Instead of the negative drivel the Lex Column sometimes puts out, he did have a good stab – in just a very few words – to introduce the subject to the layman. Please us the link here to read the whole article.
What caught my eye were the comments he attributed to Martin Pring, his use of charts relative to one another, say for example junk bond yields versus US Treasuries or high tech equities versus shares on consumer durable companies. On the former he (Pring) says, ‘it has been a great indicator for the past 10-15 years, much more than it was before then. It depends on whether you have a stable or unstable financial system. Now I would say that credit players tend to be smarter than stock players’ – which will no doubt raise stockbrokers’ hackles.
Sorting through my chaotically filed notes I managed to find jottings made when Mr Pring addressed us at July 2012’s STA monthly meeting. A talk entitled ‘Investing in the Second Lost Decade’ parallels with Japan spring to mind. In his view a long term trend is 15-20 years (in line with his bond yields idea), while a cyclical move lasts 9 months to 3 years. Predicting another 6 years of recession some may beg to differ though probably not the man on the proverbial omnibus on Main Street, USA.
He also stressed the importance of commodity prices on those of equities, noting that since 1830 stock markets rally in tandem with those of raw materials. For this reason he likes to deflate indices by the Consumer Price Index. Asset prices are sensitive to inflation, and now deflation, plus the ratio between these two.
A video of his presentation is available in the member’s are of the STA web site (www.technicalanalysts.com). He has too many books to list here but perhaps his ‘Technical Analysis Explained’ is his best all-rounder while ‘Martin Pring on Momentum’ focuses on his forte.
Tags: inflation, long term trends, Martin Pring, Relative charts
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