The Power of Price Action: Making Sense of the Rally

Published on
June 15th, 2020
Duration
41 minutes

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75

The Power of Price Action: Making Sense of the Rally

Danielle DiMartino Booth ·
Featuring Katie Stockton and Danielle DiMartino Booth

Published on: June 15th, 2020 • Duration: 41 minutes

Since the lows in late March, equities have turned around at a blistering pace, leaving many fundamental and macro focused investors in the dust as soaring asset prices seemed disconnected from the grim economic realities on the ground. Sometimes in moments like these, all the information is in the price action. In this interview with Danielle DiMartino Booth, Katie Stockton of Fairlead Strategies LLC helps viewers think about how to extract vital information from the only indicator that seems to matter and gives her outlook for equities, bonds, gold, and the dollar. DiMartino Booth and Stockton also discuss how factors like the Fed, retail mania, and systematic vol strategies can affect technical indicators over time. Filmed on June 11, 2020.

Comments

Transcript

  • MD
    Maezel D.
    20 June 2020 @ 22:32
    1 0
    I hope we can have Mish Schneider and Katie Stockton next time =)
  • TS
    Tim S.
    18 June 2020 @ 20:21
    0 0
    Hey DDB- Slight disagreement on the gold is separate from equities. It is true except for when people need to cover margin calls they sold gold for the liquidity, March was painful, glad I bought in 2016.
    • AM
      Abigail M.
      20 June 2020 @ 12:43
      0 0
      Physical gold can’t go to zero. Paper gold can.
  • SS
    Steven S.
    20 June 2020 @ 08:14
    0 0
    Great interview. Thank you. I've always been a bit confused about technical analysis. The central problem is one of predictive modeling. Price is, to put it in machine learning terms, one of several features that can be used to develop a predictor. Price and price-derived measures may be highly informative, but adding additional features with orthogonal signal for the purpose of predicting security trajectories seems like an obvious approach to improve the performance of a predictive model. That is, take the well-trodden path in other fields modeling the stochastic behavior of complex systems by feature selection followed by an established method like convolutional neural networks or similar approach in either test/training sets or cross validation to establish robustness of the model. Clearly, many folks are doing this. I'd be surprised if adding additional features to a technical analysis model doesn't both decrease variance and bias in the prediction. In practice, does this appear to be the situation?
    • SS
      Steven S.
      20 June 2020 @ 08:21
      0 0
      BTW, I use a machine learning approach to develop a predictive model for the VIX, then take positions in TVIX and VXX and sell at VIX spikes. I enjoy purchasing stocks in companies where I understand their businesses, but the vol prediction is the best method that I've found for generating returns.
  • AP
    Adam P.
    17 June 2020 @ 14:12
    2 1
    I didn't see any analysis. ??
  • IP
    IDA P.
    17 June 2020 @ 13:50
    0 0
    this interview was pretty good, but the analysis Ms. Stockton sells is really excellent , clear and concise without useless noise
  • TG
    Terry G.
    17 June 2020 @ 12:03
    1 1
    If there's no mention of bitcoin which Raoul Pal has been raving on like a broken player, this is a 100% recommend.
  • SS
    S S.
    15 June 2020 @ 17:36
    11 19
    I am shocked Danielle said ''What is an RSI'' Seriously? Why on earth would you ask someone who has no knowledge on Technical Analysis to interview someone about Technical Analysis? Its kind of like asking Mr. Bean to interview Warren Buffett about Stocks.
    • SS
      S S.
      15 June 2020 @ 17:37
      4 3
      Love Danielle by the way, not a knock on her. I blame whoever booked the two to get together.
    • AM
      Alexander M.
      15 June 2020 @ 19:39
      24 3
      Steve S It is gracious of an interviewer to ask questions on behalf of individuals who may require explanations on the clarification of " initials. " Even though they themselves are perfectly aware of there meaning. Duh.
    • AM
      Alexander M.
      15 June 2020 @ 19:41
      2 0
      Their
    • DM
      Dominic M.
      15 June 2020 @ 21:25
      8 1
      Booth obviously knows what RSI is ...
    • PD
      Peter D.
      15 June 2020 @ 23:24
      4 0
      Danielle, who is an expert in Monetary Policy, is every RV subscriber in most other respects. In other works, she is the perfect person to do these types on interviews. On a bad day, or it the acronym came by fast, most of us would not know what an RSI is either.
    • TZ
      Tibor Z.
      15 June 2020 @ 23:48
      7 0
      She might asked it for the less experienced audience!
    • JK
      John K.
      16 June 2020 @ 00:20
      7 1
      Interviewers do not ask questions for things they don't know. They ask it for their audience. You need to read up on her background, maybe read her book.
    • JG
      Jesse G.
      16 June 2020 @ 05:29
      0 1
      You seem like an "it's just the flu" kind of guy. You failed to realize a lot of the audience has no idea what RSI means. You also failed to notice they have a personal relationship. This added a dimension to the interview that you clearly failed to appreciate.
    • TR
      Tadej R.
      17 June 2020 @ 09:51
      0 0
      I also paused the video at that point... :/
  • MM
    Melissa M.
    15 June 2020 @ 14:44
    16 4
    Thanks Danielle and Katie, great interview! Agree with the commenter who recommends that those criticizing this interview as too basic upgrade to Pro or Blacklist where they will surely access advanced level information more compatible with their highly advanced level of expertise.
    • lD
      lance D.
      15 June 2020 @ 15:47
      8 0
      well said pal - it may sound basic but looking at what that lady looks at then interprets what she looks at with speed she does it and turn that to real money is far from basic .
    • BS
      Bevyn S.
      15 June 2020 @ 16:54
      15 1
      Unfortunately RV has adopted a legion of trolls. Good foundational knowledge is important, and I applaud bringing some technicians in
    • IA
      Ibrahim A.
      16 June 2020 @ 05:50
      0 0
      How long have you been a subscriber to RV? RV has always had rich content which is not “beginner” as part of its core offering since the very beginning. Professional and Black are different products. Our expectations come from what RV has been for years.
    • SJ
      Sean J.
      16 June 2020 @ 13:01
      1 0
      I am a Pro subscriber and I agree that there is not yet enough TA content, but this is a solid addition, basic though it is.
  • AM
    Alastair M.
    16 June 2020 @ 09:03
    1 0
    Katie is absolute best in class amongst the TA's and doesn't hide behind "long term" views. Her timeframe is ultra commercial and would love to dig deeper into some of her more recent views and perhaps get a more nuanced perspective of her craft. I suspect there is a decent amount of art and judgement in her process.
  • MD
    Matt D.
    16 June 2020 @ 05:48
    1 0
    Nice conversation ladies. It would be nice to hear more from you in more detail - you covered a lot of ground with respect to the macro but the TA was kept a bit light - yet that is not a reflection (I sense) of Katie's depth of knowledge or expertise. I think any analysis, and especially TA (seeing as there are so many bogus courses out there, or "experts" ) need real-life trades and future or live positions. TA is 100% correct in hindsight, and remarkably so as you would know. I think someone has bought up bots/algos and Medallion (for example) - that sets an interesting context for the philosophical discussion on the value or viability of the average schmo and TA. ? Thank you Danielle and Katie.
  • JG
    Jesse G.
    16 June 2020 @ 05:17
    1 1
    Excellent, thank you! Why would anyone click on the "thumbs down"? Maybe because bitcoin was mentioned only a couple of times.
  • AA
    Aymman A.
    15 June 2020 @ 12:54
    9 15
    Very basic. No value added.
    • AB
      Amir B.
      15 June 2020 @ 13:34
      26 3
      what if you're a beginner in this space? Everyone has to start somewhere, therefore its priceless value. Perhaps you should subscribe the plus package to get the value you're looking for.
    • TS
      Tom S.
      15 June 2020 @ 16:37
      6 0
      I agree with @Aymman A. As to the "up your subscription level" argument, I absolutely disagree. We've come to expect, and indeed receive, outstanding input on a diversity of subjects, requiring at least modest comprehension of the subjects discussed on our parts. Why then is Ms. Stockton submitted to a format imposing a dumbing down to TA 101 when she is clearly capable of so much more?
    • MH
      Michael H.
      16 June 2020 @ 03:09
      0 0
      You mean, kind of like your comment?
  • WB
    William B.
    16 June 2020 @ 02:32
    1 0
    Two greats in their respective fields... just need to remember/learn from Marisa Tomei in “My Cousin Vinny” when she said, “You blend.” Gotta watch that movie again.
  • IA
    Ibrahim A.
    15 June 2020 @ 10:56
    5 12
    Danielle DiMartino Booth ruined that interview. What a waste to have Katie Stockton on and have her go through the basics of TA rather than discuss more charts.
    • MM
      Melissa M.
      15 June 2020 @ 14:39
      17 1
      RUINED the interview? She brought Katie Stockton to RV and established in the first minutes the approach would be basic. Learn to manage your own time better.
    • IA
      Ibrahim A.
      16 June 2020 @ 00:30
      3 0
      Katie Stockton has been on RV before and shared much better insights when given the room to do so. This was TA 101 which can be found on YouTube for free.
    • IA
      Ibrahim A.
      16 June 2020 @ 00:38
      2 0
      Sharing disappointment with content on a paid service doesn’t have to be attacked. We all have different expectations. If you like the content good for you doesn’t mean I have to agree with you.
  • TZ
    Tibor Z.
    16 June 2020 @ 00:33
    0 0
    New all-time highs around the end of the year? Am gonna eat my hat if that happens!
  • JB
    JANET B.
    16 June 2020 @ 00:10
    2 0
    Excellent perspective from Danielle and Katie regarding the importance of technical analysis as it relates to current market conditions - They provided us some great tools as an introduction to assessing these markets. I've been operating my own business for many years - so not afraid to put it out there that I requested fundamental information regarding the technical analysis of these markets and would like to thank the Real Vision team for making it happen! Happy to keep learning!
  • LF
    Liam F.
    16 June 2020 @ 00:05
    17 0
    Wow! Some women. Nice that you guys finally break up the sausage fest.
  • GC
    Gino C.
    15 June 2020 @ 22:26
    1 0
    Great discussion ladies!
  • js
    jeffrey s.
    15 June 2020 @ 21:49
    5 0
    Technical entries, on a fundamental bias, have served me better than anything I ever learned on the CFA exams. Great refresher i/v on a Technician's mindset.
  • DS
    David S.
    15 June 2020 @ 19:33
    5 0
    Markets today are crazy places, especially for anyone with a fundamental bent. Why not let technical analysis help if you really want to be a professional trader - FOMO? Ms. Stockton is smart and experienced in short to mid-term technical analysis but likes fundamental confirmations. In a market with little fundamental knowledge of future profits, what else is there than riding the chaotic waves of the current market – or finding inefficiencies like Mr. Green? With the amount of time one must put into technical analysis, I would have no life left to live. I enjoyed Ms. Stockton presentation very much and thank her for her time and perspectives. DLS
  • MT
    Mark T.
    15 June 2020 @ 19:19
    20 1
    Danielle DiMartino Booth is awesome. One of the great voices of reason out there today.
  • KJ
    Karl J.
    15 June 2020 @ 13:53
    2 19
    Another deluded chartist - before she's even made her morning coffee, RenTech's AI bot army has analysed billions of data points and dynamically adjusted their positions.. Coming soon on Real Vision: the amazing power of Runestones to time market moves 🤣
    • DL
      Dan L.
      15 June 2020 @ 16:09
      8 1
      Isn't Renaissance down 20% for the year, Karl?
    • KJ
      Karl J.
      15 June 2020 @ 19:03
      0 1
      Dan L: not the Medallion fund, no, that's where they invest their own money with the super AI progs.
    • KJ
      Karl J.
      15 June 2020 @ 19:13
      1 5
      She doesn't even run money, she just sells advice. If her her market insights were of value, she'd be actually using them for profit, not working as an advisor. On Rentech/Medallion: "The Medallion fund is considered to be the most successful hedge funds ever. It has averaged a 71.8% annual return, before fees, from 1994 through mid-2014. The fund has been closed to outside investors since and is available only to current and past employees and their families." https://en.wikipedia.org/wiki/Renaissance_Technologies You want to bet against them, be my guest ;)
  • JL
    Julien L.
    15 June 2020 @ 13:17
    5 0
    Technical analysis never proved it's performance when used alone
    • AA
      Aymman A.
      15 June 2020 @ 17:16
      2 0
      What is fundamental analysis but the technical analysis of fundamental data? Isn’t an earnings surprise just the second derivative of the earnings trend. Is that technical or fundamental information? What about the technical breakdown of the 10 yr yield chart. Isn’t that fundamental information about what the bond market thinks about the growth and inflation expectations? Technical vs Fundamental is a false dichotomy.
    • SD
      Scott D.
      15 June 2020 @ 19:09
      2 1
      said no day trader ever.
  • ML
    Mehdi L.
    15 June 2020 @ 18:51
    11 0
    Technical Analysis is important in the short term, especially with current volatility and probably less important for long term investors. Yet, given the context, there is a lot to unpack with this interview. I had to watch it twice with a tradingview chart to understand each answer. I must also admit that when I listened to it at first, without concentrating, I felt that it was just market talk. So I recommend being more focused if you are new to TA. Thank you to both of you!
  • MI
    Mitchell I.
    15 June 2020 @ 18:09
    2 0
    $NDX is exactly where she's describing.. Stock RSI coming back above 20, momentum picking up again.
  • LP
    Lauri P.
    15 June 2020 @ 18:03
    2 0
    Somewhat basic stuff, but still some good insights into TA based investment process.
  • BS
    Bevyn S.
    15 June 2020 @ 17:20
    12 2
    Great interview. RV should bring in more technicians. So many styles out there, could definitely explore it some. Unfortunately the classic reaction of "fundamental" analysts is to look down on technicians. Reality is that someone's perception of fundamentals can be wrong (incorrect thesis), or not realized by the price yet (early). Technical analysis should be a tool on all investor / trader belts. It helps keep you in check and is a good way to systematically reduce risk / losses
  • AB
    Amir B.
    15 June 2020 @ 13:30
    15 4
    I want to know who are these weirdos who are clicking thumbs down...
    • AA
      Aymman A.
      15 June 2020 @ 17:05
      5 4
      Amir it is NOT appropriate to call people who disagree with you “weirdos”. I disagree with you. RV is NOT supposed to be a classroom for TA 101. There is definitely no harm in discussing basic concepts. All great ideas are elegantly simple to start with. But you don’t need to stay at that basic level. You can develop the ideas and go far with them. I love Ms. Booth. She has great insights into the Fed. I subscribe to her service. But she did not do a good job here. The discussion could have been magnificent. It was not.
  • GV
    Gabriel V.
    15 June 2020 @ 14:09
    9 0
    Katie should have discussed volatility and volume more often; price and time are not enough to make an investing decision. Vol is an important indicator for trading any of the asset classes she mentioned
  • wj
    wiktor j.
    15 June 2020 @ 13:52
    3 8
    For the beginners. Go watch No Nonsense Forex on youtube. He really teaches you what you need to know! A more informative video then this video! Then you can take that knowledge and use the macro data which you get here and invest. He teaches FX but theori can be used anywhere.
  • DG
    Dave G.
    15 June 2020 @ 11:52
    1 0
    Well there is your bullish piece for the week. Definitely driven by the feds got your back and FOMO.
    • DG
      Dave G.
      15 June 2020 @ 11:57
      8 0
      Definitely a bit of contradiction when you state "ultimately S&P is driven by earnings" then say we are going to have new highs by year end when S&P earnings are now below 100 from 160 in January. Also 40% of S&P companies are not giving guidance.
  • JB
    Jamie B.
    15 June 2020 @ 11:16
    5 0
    Katie should be applauded not only for her obvious TA ability and her ability to express it but for being able to redirect the interview back to the subject matter she was there to chat about. Thank you Katie.
  • VG
    Viktor G.
    15 June 2020 @ 09:37
    9 7
    Unfortunately the moderator hasn't had enough experience on the topic to make it more interesting to people who understand what technical analysis is.
    • tc
      thomas c.
      15 June 2020 @ 10:16
      5 1
      should have gotten the Mish to do this one

Chapters

  1. 00:00:53
    The Power of Price
  2. 00:08:08
    How Have Market Structure Changes Affected Your Indicators?
  3. 00:11:16
    Favorite Indicators for Buy/Sell Signals
  4. 00:17:12
    The VIX as a Sentiment Indicator
  5. 00:18:57
    Sector Rotation, Growth vs. Value, and Early Cycle vs. Late Cycle
  6. 00:22:35
    Outlook for the 10-Year Treasury
  7. 00:25:15
    Oil and Water: Valuations and Technicals Don't Mix
  8. 00:28:08
    A Technician's Take on the COVID Correction and Other Famous Sell-offs
  9. 00:31:04
    Using Technical Analysis in Other Markets
  10. 00:32:47
    Outlook for Gold, Oil, and the Dollar
  11. 00:35:44
    U.S. Equity Outlook