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October 3, 2012 / redman59

Breaking Down An Interview Between Technicians

I’ve been enjoying a 3-part interview that J.C. Parets (@allstarcharts) has been conducting with technical analysis pioneer Ralph Acampora.  I especially enjoyed the last interview, which was Part 2 of 3.  I wanted to share some of his thoughts on the market as I believe it can open one’s eyes when discounting news and current sentiment.

Part 2 starts out with Ralph talking about the Dow Jones.  Here are some of his thoughts and findings:

  • 50% of the Dow stocks (a time of interview) are about to make all-time highs
  • Then asks what was the sentiment on the street & in the public was when going back to 2007 (prior high); answering that it was bullish and exciting.
  • States that now people aren’t buying and the public is in bonds and cash.
  • Only people investing today are some portfolio managers and hedge funds, to which they are underperforming for the most part.

Ralph then mentions the German DAX, which is the European bellwhether.  He states than many are not talking about its performance but at the time of interview it was only 1% from making all time new highs.  He considers this extremely bullish.  Below I have included a chart of the German DAX.

Ralph then goes on to talk about the 80’s.  He stated that during the 60’s & 70’s we were in a sideways market and many were in disbelief and shocked when it took off in 1982.  I found this interesting as this seems to be the exact sentiment as we have now.  We have essentially been in a 12 year range.  J.C. adds that the consensus seems to be that secular bear markets last longer than 12 years; to which Ralph answers that we have had 12 years and believes that we made a generational bottom in 2009.

Ralph believes that we will start to see money come back into the stock market as it is making new all time highs and the money shifts out of bonds.  He also states that he does believe we are topping out in bonds, but we are closer to a top than a bottom.  He also states that people are in gems, gold, and cash and it is difficult to get people to buy equities.  He believes we will see a major shift from fixed income and when this happens “that will be a tsunami of money”.

There is some interesting talk about gold and oil to which I will skip over in order to keep this short.  It is good information though and would suggest taking the 5 minutes to read it and the interview altogether.  I just found this talk about the markets interesting as it really lines up to what the sentiment seems to be right now and where we are currently trading.  It is hard not to agree in that we will see a boom in equities leaving people chasing if/when we see a shift out of fixed income.  It seems many will be in disbelief and shocked again just like Ralph mentioned during the 80’s market move.

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