Dancing with the Trend

Greg Morris
About the author: has been a technical market analyst for over 40 years and is the author of several popular financial analysis books including Candlestick Charting Explained, Investing with the Trend and The Complete Guide to Market Breadth Indicators. Before retiring, he served as the Chief Technical Analyst and Chairman of the Investment Committee for a technical-based money management company with over $5.5 billion under management. Greg has appeared on CNBC, Fox Business, and Bloomberg Television and has also spoken at numerous financial conferences around the world.

Latest Posts

Dancing with the Trend

Building a Rules-Based Trend Following Model - 12

by Greg Morris

I’m going to return to discuss the final part of my Weight of the Evidence.  As a reminder this is a collection of price and breadth measures designed to tell me if the Nasdaq Composite is in an uptrend or not. You might want to review some of the past articles in this series as I’m going to try to not repeat unless necessary for clarity. The model uses a basket of technical measures to determine the overall risk levels in the market as defined by the Nasdaq Composite Index. The model has been constructed so that each technical measure carries a specified weight based upon extensive Read More 

Dancing with the Trend

Fear and Greed

by Greg Morris

I cannot tell you the number of times an investor has asked, “Considering the difficulties of the past few months, do you still believe in your investment process?”  These questions always concerned me because I never once considered not believing in my process for managing money just because of short-term whipsaws and volatility.  I have written often, maybe too often, that the single most important trait to have for the long-term success of my process was discipline.  You must have discipline to stick with your strategy during the inevitable periods when the results are Read More 

Dancing with the Trend

Markets do Trend!

by Greg Morris

For the last couple of decades, I have classified myself as a trend follower.  Mind you, this is not market timing.  Market timing involves guessing at tops and bottoms.  A trend follower will NEVER get in at the bottom or out at the top.  It depends on how quickly his/her trend measures identify a trend that determines when to go long after a bottom and exit after a top.  I need to quickly clarify that I do not participate in the downside, only long positions, with cash being such a position in down markets.  Why double the risk of whipsaws? Read More 

Dancing with the Trend

Building a Rules-Based Trend Following Model - 11

by Greg Morris

I’m going to continue discussing the ranking and selection of issues for trading.  I cannot possibly go into great deal on each of the ranking measures I have used over the years, but future articles will discuss some of the more important ones. Mandatory Measures Once you have your collection of ranking measures, you need to determine which are to be used along with the rules and guidelines (future article) as mandatory ranking measures.  This means that you predefine the value range that they must be in before you can purchase that ETF.  This is necessary to keep the Read More 

Dancing with the Trend

Pullback Rally Analysis

by Greg Morris

The Pullback Rally Analysis is not a ranking measure but a technique for determining the relative strength of issues by looking at the most recent rally from a previous pullback.  Measure the amount of the pullback in percent, then measure the current rally up to the current date in percent.  The concept is fairly simple, those issues which dropped the least in the pullback, will probably outperform in the following rally.  This concept measures the percentage move during the pullback, the percentage to date of the current rally, and the percentage to date from the beginning Read More 

Dancing with the Trend

Distribution

by Greg Morris

Distribution is the term often referred to as the topping process in the stock market.  Before we go any further I want to say this loud and clear:  I am not calling a top in the market.  As you hopefully know by now I am just a humble trend follower.  Calling tops and bottoms in the market is generally left to the market timers and those who never trade; only analyze.  Distribution got its name from the fact that stocks are being distributed from the smart hands to the not-so-smart hands; or so I have heard.  These are nasty periods in the market; very Read More 

Dancing with the Trend

Building a Rules-Based Trend Following Model - 10

by Greg Morris

I’m going to change the focus for a while; for my own sanity and probably for yours.  We have talked about a weight of the evidence approach and some of the indicators used in that approach.  This approach tells us when to invest in the market and how much; it also tells us what stop loss percentages to use.  We will cover the weight of the evidence levels and how the stops are determined along with buy rules later.   So now we know when to invest and how much, but we haven’t talked about what to buy or how much.  For the past 15 years I have only bought Read More 

Dancing with the Trend

Building a Rules-Based Trend Following Model - 9

by Greg Morris

One of my trend following indicators was created because I felt that there were some issues with market breadth that needed attention.  For example, the Friday after Thanksgiving.  The market is only open a few hours and trading volume is very light.  There are price changes but nothing exceptional.  However, there is always a full complement of breadth data no matter how long the market is open.  It was my feeling that it would be nice to be able to ignore breadth data when daily volume is down, and/or the market wasn’t open for a full day.  Hence, a breadth Read More 

Dancing with the Trend

Article Summaries: 12/2017 - 4/2018

by Greg Morris

Periodically I write an article that reviews the past few months of articles.  Why on Earth would I do this?  Primarily for two reasons.  One is that many new readers are involved and often they do not go back and look at the past articles.  Two is that my articles are rarely tied to anything that is happening in the markets.  Generally, they are about experiences I have had as a technical analyst for 45 years; the good, the bad, and the ugly.  Hence, they have shelf life (well, certainly in my mind they do).  You can click on the headers for a link Read More 

Dancing with the Trend

Building a Rules-Based Trend Following Model - 8

by Greg Morris

Another price-based measure I use in my weight of the evidence is called Adaptive Trend.  This was modeled after an indicator from the Bloomberg service called Trender.  Adaptive Trend identifies price swings based on the daily trading range.  It uses Average True Range (ATR), exponential smoothing, and standard deviation as inputs. The resulting indicator is a trend-following approach not unlike some Parabolic Studies.  In an uptrend, a support line will appear below the price. A sell signal is generated when price closes below the support line. In a downtrend, a Read More 

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