The Monday Morning Playbook: Week of February 19, 2024

Technicals vs. Trends

Good morning,

This week we’re talking technicals vs. trends.

To me, all good technical analysis is rooted in trend following. Line go up, good. Line go down, bad. And that really should be the basis for everything we do here. Markets trend and we know that because the momentum factor has been exhaustively studied and is one of the most pervasive factors across asset classes and history.

But. Technicals are important too.

And by that I mean all the other stuff. Divergences, relative strength, market internals, seasonality, inter-market analysis, sentiment, flows. You get the idea.

The best market for an active investor is when all that secondary stuff confirms the primary trend. But when it doesn’t, it can be time to tread cautiously and dial back the active bets.

This is all top of mind because the best “trends” are showing some signs of exhaustion.

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Brown Technical Insights
Brown Technical Insights
Scott Brown, CMT