David is Chief Market Strategist at StockCharts.com.
Time Stamp References:0:40 - Reading suggestions for investing.4:30 - Quantifying investor behavior.6:50 - Oversimplifying your thesis.8:55 - Being mindful as an investor.11:10 - Key parts of his thesis.14:15 - Breadth indicators.18:10 - The end of the FAANG trade.22:30 - S&P 500 Chart and analysis.25:20 - Why the gold chart is bullish.29:30 - Timing entry points and exits.
David discusses his fairly broad interests and why taking advantage of different disciplines can help with investing. Systems and practices can reduce emotional decision making. He recommends several books that can help investors avoid emotion and help them discover useful patterns. Investing is not easy and learning from your mistakes is vital.
David's blogs are called "Market Misbehavior" and "Mindful Investor" where he gives some practical advice on how to become a better investor. Being mindful means learning techniques like meditation to reduce stress and help handle multiple events around you while increasing awareness.
He believes that the number one consideration for an investor should be price followed by regularly watching trends of many asset classes. He says, "Price tells you where capital is moving towards, while breadth shows you what bets are being made, and sentiment reveals what people are saying." David gives some examples of breadth trends and why they provide a sneak peek into the markets' operation.
The FAANG trade of mega-stocks has had an incredible run with staggering performance. However, most institutions are forced to acquire these stocks by their clients to maintain their relative performance. This results in additional upward pressure, but eventually, there will be a massive unwind. These markets are currently experiencing immense euphoria, but the breadth indicators hint at a coming rollover.
He discusses this year's parabolic move in gold and why pullbacks are good for a healthy market. He says, "We are now consolidating and building momentum for the next leg higher."
Lastly, he explains when and how to define an exit strategy for a trade and why you should have a routine for reviewing the charts.