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BEHAVIOR ANALYSIS
Presented at theCIFPs 9th National Conference
June 6, 2011by Ron Meisels
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• Behavior analysis is the study of thebalance between demand and supply(Buyers and Sellers).
• Imbalances are the result of eagerness by one side or the other; and create(rightly or wrongly) fundamental trends (cycles).
• Trends persist as long as there is animbalance between these two forces.
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Imbalances betweenSupply and Demand
Create EMOTIONS (Fear and Greed);
Fear and Greed create Cycles;
Cycles create Price Patterns.
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History repeats, but do not duplicate itself:earthquakes, wars, bankruptcies
Cycles are history, not magic!
Physical cycles are regular:planets, sunspots, climate
Commodity cycles are irregular:wheat, energy, materials
Human cycles can be both:Sleep; fear - greed
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BEHAVIOR ANALYSISis the study of
• Cycles• Sentiment
• Price patterns (Charts)
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The 4-year (Dunbar)and 10-year (Juglar) cycle
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The Decennial (10-year) Stock Market Cycle
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Secular (40-year) Stock Cycle
**
1010
1789 to 1984
1806-1813
1835-1857 1889-1896
1929-1938
1968-1974
1111
S&P 500 (1927-1938)
20
10
5
-89%
1927 1938
In 2 ½ years
1212
S&P 500 (1968-1974)
19741972
+77% in 32 months
19701968
-35%In 1 ½ years
100
80
90
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S&P 500 (1996-2010)
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The 40-week (200-day)Moving Average
Falling MA is bad
S&P 500
1515
Citigroup (2007-09)Falling MA is bad
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I B MMajor break-out
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TECHNICAL ANALYSISis the study of
• Cycles• Sentiment
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The cycle of emotion
Optimism
Enthusiasm
Contentment
EuphoriaAnxiety
Denial
Worry
Hopelessness
Panic
Discouragement
CapitulationDepression
Disbelief
Hesitation
Optimism
Highest point of financial risk.
Temporary reversal – I am
saving in the long run.
Lowest point of financial risk.
Wait for a reaction to
buy.
This market is going to the dogs.
I am very satisfied with my current position.
Buy before it’s too late.
This is just another rally.
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Bulls vs. Bears
Intermediateand
longer-termforecasts.
2222
S&P 500
S&P/TSX
40wMA
40wMA
S H S
SH
S
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S&P 500
S&P/TSX
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TECHNICAL ANALYSISis the study of
• Cycles• Sentiment
• Price patterns (Charts)
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Markets and stocksare ultimately based on
human psychology.
By charting these,we are converting
human psychologyinto graphic representations.
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Simple Stock Pattern
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Subdivided Stock Pattern
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Stock Pattern with MA
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The 40-week Moving Average
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Real life example
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Major uptrend
Imperial Oil (IMO)
Huge double base
Viterra (VT)
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16, 40
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AT&T (T)
Major Break-out35,39
Major upside targets90, 150
Potash (POT)
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Major Break-out
Denbury Res. (DNR)
Oil & Gas
27, 36
Brinker Intl. (EAT)
HS S
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mfst
C
Publications
• Market Comments,• Buy and Sell Reports,• Trade and Investment Ideas,• Weekly Updates (we never ever drop a
stock),
• Caldwell Meisels Canada Fund,• TOP 100® Portfolio.
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Questions?