Our approach to technical analysis is based on our belief that humans are fundamentally herd animals. We seek the comfort of validation of our decisions and actions by doing largely what the herd does.
We also believe that history has demonstrated overwhelmingly that those who can identify patterns and trends in crowd psychology can use this knowledge to anticipate likely changes in the crowd mood that leads to potentially significant and highly profitable turning points and new trends.
There is perhaps no other place or market in the world that best displays our primate need to herd than the stock market.
Given this belief, we look to take advantage of possible impending changes in trend by looking at:
- Technical market trends and measuring the strength of these trends.
- Market sentiment indicators.
- Price action indicators.
- Market cycles.
We then apply these indicators systematically to our tactical asset allocation strategy to determine when we should be increasing or decreasing our investment in a particular market, hedging our exposure to a market and even looking to move portfolios into a net short position to profit from anticipated market declines.