A pragmatic approach to the markets and to making money

Pragmatism was a philosophy that began to gain recognition in the late 19th century. Its focus was to consider thoughts as a means to predict and solve problems. It is about practicality not abstract theory about reality. Neoclassical technical analysis is a pragmatic approach to the markets. It’s is focused on supply and demand as seen on the charts and the use of that knowledge to predict near term price direction in a probabilistic manner. It seeks to solve the problem of how to make money without significant risk.

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Quit Worrying about a 1987 Style Crash

More and more I am hearing and reading about the coming of a 1987 style crash. There are interviews airing about how we have to prepare for it. Articles are published telling us that this year’s percentage gains rival those of 1987 with the clear implication being that another crash is coming.

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Ugly stock-market action may result in attractive buy opportunity

It used to be said that if the U.S. markets caught a cold the rest of the world would catch pneumonia. In today's world, the U.S. remains the big dog but more and more, the world effects on our internal economics grows greater and greater. In Wednesday's "Silent Crash" article the hypothesis was that the U.S. markets were likely to be enveloped in the selling that was already well underway around the world. Last week's "Stock market breakdown article also outline the heightened and immediate risks we faced. That was the bad. Yesterday was the beginning of the ugly.

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Do not worry about a crash until it’s time

Last week I decided to address the recent onslaught of market crash stories by stating that they don’t happen in a vacuum and then demonstrating what I meant by that from a neoclassical technician’s perspective. There is a structure to large market declines for, after all, humans push the sell buttons and program the computers that do the same and we are all creatures of habit.

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Three steps to staying on the right side of the market

Roughly fifteen months ago my investment stance was unequivocal - you stay bullish until there is a reason not to (see Quit Worrying About a 1987-style crash and Do not worry about a crash until it's time). Those two articles outlined a fundamental axiom of neoclassical technical analysis thought - that there is a structure to market declines. Given this fact, rather than live in fear of a crash, informed investors and traders should instead focus on identifying the potentially devastating structure that must manifest before taking significant steps to protect their portfolios. Those thoughts were ridiculed by some - embraced by others. In the end, the theory has proved to be true keeping us bullish most of the past fifteen months while most other commentators had long since given up on the bullish trend.

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