What's The Alternative | Season 2 | Episode 3 | Market Psychology and Technical Analysis with Katie Stockton
- Shana Sissel
- Dec 3, 2024
- 1 min read
Updated: Aug 4
This episode gets into the intricacies of technical analysis with Katie Stockton, founder of Fairlead Strategies, and offers a deeper understanding of how it intertwines with market psychology and investment strategies.
Stockton’s path in technical analysis began during her college days and was further solidified through a pivotal internship at Dorsey Wright, known for its point and figure charting expertise. Her career path highlights the evolution of charting tools, from traditional paper-based methods to the advanced digital tools used today. This transition not only reflects the technological advancement but also a shift in how investors approach market analysis.
Technical analysis should be a complementary discipline to fundamental and macro analysis. While often overshadowed, technical analysis focuses on price trends and market sentiment, providing investors with tools to manage risks and capitalize on market opportunities. By examining historical events such as the 2008 financial crisis and the 2022 bear market, Katie highlights how technical tools like moving averages can be instrumental in timing the market effectively.
Tools including MACD, overbought/oversold indicators such as the stochastic oscillator, and relative performance indicators help investors assess trend maturity and identify opportunities, offering a systematic approach to asset allocation.
One of the strategies that adapts to market cycles is TAG sector rotation strategy which optimizes asset allocation. TAG moves from full equity positions in strong markets to cautious risk-off stances in weaker environments, showcasing its resilience and adaptability. This strategy highlights the evolving nature of active investment strategies and the challenges of classifying such products within traditional financial frameworks.
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