That’s what happened to me when I took a graduate-level class with one of my mentors in technical analysis, Dr. Hank Pruden.

For those of you who are unfamiliar with the term “technical analysis,” it refers to analyzing a market or an individual asset using charts.

I was expecting to learn about trend lines, bullish and bearish patterns, cycle analysis, etc., in this class. But instead, we dove deep into the psychology of the markets, trying to understand what motivates investors and traders to act the way they do.

Today, there are many institutions that teach behavioral finance, but at the time, it was groundbreaking stuff.

One of the most important concepts is that investors’ behaviors repeat time and time again. There are no guarantees, of course, and every situation will be a little different, but humans can be fairly predictable.

We typically fear the worst just before things get better… and we expect things will always be this good just before they get worse.

This course taught me a number of key ideas that I still use nearly three decades later. Here are a few of the most impactful ones.

Confirmation Bias

Confirmation bias occurs when you focus only on the information that confirms your beliefs. People do this with their political beliefs all the time, and the media plays into it by exclusively giving them information that aligns with their point of view.

In the markets, an investor may believe that a stock is a great buy because they see the company’s products everywhere… which may cause them to ignore the fact that the stock has been in a downtrend all year. Despite the market signaling that things are not great for the company, the investor buys the stock anyway.

Overconfidence

I’d bet almost everyone reading this believes they’re a better-than-average driver. In college, I had an argument with a friend about what a horrible driver he was. “How many cars have you totaled?” I asked. (The number was three in the previous four years.) “Yeah, but they were all somebody else’s fault!” he exclaimed.

Enough said.

When things are going well in the markets, investors often confuse a bull market with their own genius and think they’ll know when to get out. Of course, it doesn’t work out that way.

The Herd Effect

How many times have you been looking for a place to eat and walked past an empty restaurant to wait at a crowded one?

We’ve seen this time and again in investing, like when people piled into dot-com stocks, crypto, cannabis stocks, and meme stocks because that’s what everyone else was doing.

Being aware of these concepts can help you question your own decision making and ensure that you’re thinking critically about each buy and sell.

You can also use stock charts to test your opinion.

For example, in early 2021, AMC Entertainment Holdings (NYSE: AMC), the poster child for meme stocks, took off. The stock moved from the $20s (split-adjusted) to over $600 in a few months.

And keep in mind, this was not some new tech company or a biotech that had a cure for cancer. AMC is a movie theater chain. And you’ll recall that in 2021, no one was going to the movies. So it made no sense that everyone was piling into the stock.

Let’s say you were on Reddit or some other message board reading about AMC and all the reasons it should go higher. One look at the parabolic move on the chart would tell you to be very careful… because when the stock stopped going higher, it was likely going to reverse quickly.

Technical analysis is simply the visual representation of investors’ emotions. The more aware you are of those emotions and behaviors and how to interpret them, the better a trader and investor you’re going to be.

The post 3 Lessons Every Investor Should Know appeared first on Wealthy Retirement.

If you’ve been reading the recent headlines in the financial media, you might think the sky is falling:

“We will have a crash”

“Of course it’s a bubble”

‘Absolutely’ a market bubble: Wall Street sounds the alarm on AI-driven boom as investors go all in

Stocks have literally never been this expensive

But here at The Oxford Club, our strategists, researchers, and Members don’t just blindly follow the crowd. We stay grounded, think for ourselves, and come to our own conclusions.

That’s why we invited Chief Income Strategist Marc Lichtenfeld into The Oxford Clubroom on Thursday to share what he’s been seeing in the markets lately and break down some of the strategies and tools he uses on a daily basis.

Here’s just some of what he covered during the session:

• Why he’s not too worried about an AI bubble (despite all the fearmongers in the media)
• Some surprising data about buying at market highs and market lows
• The average length of bull markets and bear markets
• Why technical analysis can be so simple that a 5-year-old can understand it
• Three momentum indicators that reveal whether a stock is “overbought” or “oversold”
• His thoughts on the technology sector and how long the uptrend could continue
• A few sectors he’d avoid right now
• The chart pattern that has led to the strongest historical performance
• His latest thoughts on gold
• The one chart that EVERY investor should be paying attention to right now.

It’s not often that I include full Clubroom sessions in Wealthy Retirement, but since Marc covered so much ground, I thought it would be extremely useful to his readers.

To watch the full session, click the image above!

The post Are Stocks in a Bubble Right Now? appeared first on Wealthy Retirement.

That didn’t end up happening, but it turned out that in my career, I’ve “majored” in market psychology.

As Liam Neeson might say, I have “a very particular set of skills.” For several decades, I have studied and used technical analysis.

Technical analysts use charts to measure investor psychology – and, most importantly, identify the times when that psychology changes. Those are the best points to enter and exit positions.

For example, in April of last year, I recommended Samsara (NYSE: IOT) to my readers.

The stock had taken a nasty fall from $40 to nearly $30. However, it was still in a longer-term uptrend and inside of what is known as an upward channel, which is my favorite chart pattern to trade.

The reason it’s my favorite is we’re buying the stock low, after it has come down. If we’re wrong and the stock falls below the bottom line of the channel, we know that the psychology of the market has changed, and we get out quickly with a small loss.

In this chart, since December of 2022, whenever the stock fell back to the trendline, the bulls took over and pushed the stock back to the top of the channel.

In April, I bet on that occurring again.

Look what happened.

We made a quick 31% in the stock in just over three weeks and a whopping 301% on the call options that we added at the same time.

Also, when stocks are falling like they are now, you can trade the downside. When you follow chart patterns and investor psychology, you always have the opportunity to make money.

You’ll recall that stocks rose immediately after the election in November, but then they began to decline about a week later.

Shortly after that, I added a bearish position in Schlumberger (NYSE: SLB).

The stock had been falling, making lower highs and lower lows and trading in a downward channel. With the stock near the top of the channel, I shorted the stock and bought put options, expecting Schlumberger to continue to drop toward the bottom of the channel.

Just over a month later, with the stock near the bottom of the channel (just as I’d expected), I closed out the position for a 15% winner on the short of the stock and 246% on the puts.

More recently, I helped my readers more than double their money on a long position despite a tanking market.

Just last week, on March 6, I recommended readers buy CNH Industrial (NYSE: CNH) because it was at the bottom of its channel. It was a low-risk, high-reward trade.

Four days later, we cashed out with a quick 12% winner on the stock and a 140% gain on our options – despite a miserable market.

I trade quite a few different chart patterns, but the channel is my favorite. It’s easy to understand, we get to buy low, and the risk-reward ratio is excellent.

I don’t have to know the theories of Freud, Maslow, and Skinner to know what investors and traders are thinking. All I have to do is look at a chart, and I get a visual representation of their behavior and a better understanding of what is likely to happen next.

The post How I Helped Readers Make 140% During a Market Decline appeared first on Wealthy Retirement.

For traders and investors, it helps to have a way to make sense of it all.

Early in my career, I was floundering. I read every book I could find on how to analyze companies, and I read Investor’s Business Daily and The Wall Street Journal every day. I thought I knew what should happen in the market and in individual stocks… but often, that wasn’t what would happen.

It was maddening having all of this new knowledge but not being able to apply it successfully.

Then I caught a lucky break: I took a course on technical analysis and how to spot patterns in the stock market.

And it changed everything.

“I See Patterns”

Like Haley Joel Osment hesitating to admit he could see dead people in The Sixth Sense, it took me a little while to acknowledge the patterns I was noticing. After all, I had spent a lot of time learning about fundamentals like price-to-earnings ratio and operating margin, and I’d been told they were the true way to make money in the market.

But once I saw how effective patterns could be in helping me time my entries and exits, I embraced them quickly.

There are several different types of patterns.

One of the most common is a formation on a stock chart, like a head and shoulders pattern.

This is a very bearish pattern. It occurs when a stock falls to the same level (the neckline) after three successive peaks, with the middle peak (the head) being higher than the first and third peaks (the shoulders).

In the example above, fundamental analysis might’ve told you in late June that this stock was a good value, that the company was likely to grow its earnings, and that the stock would be a strong buy.

But you might have changed your mind if you’d looked at the chart and spotted the head and shoulders pattern. That would’ve indicated that it’d be smart to wait and see if the stock was going to fall, allowing you to buy it cheaper.

Perhaps your fundamental analysis would have been proven right in the long term. But by knowing this pattern, you could have saved yourself some money and heartache by not being in the stock while it was falling.

There are other important patterns that can’t necessarily be seen on a stock chart. One common pattern is described by the adage “sell in May and go away.”

The saying refers to the fact that stocks tend to perform much better from November to April than they do from May to October.

In the 20th century, the average monthly return of the S&P 500 from November to April was 1.05%, versus just 0.27% from May to October.

More recently, since 1990, stocks have returned an average of 7% from November to April but just 2% from May through October.

There are lots of other patterns that have repeated over time, such as how stocks perform during the presidential cycle, how they perform based on which day of the week or month they’re purchased, etc.

Now, none of these patterns are crystal balls… but history does repeat itself. Stocks and markets often repeat past moves because they are pushed and pulled by human emotion, and that does not change over the years. Using these patterns will increase your odds of success.

If you’re not using patterns in your trading, start educating yourself. Your broker’s website is a good place to start, as it likely has lots of good, free information.

Learning how to recognize various patterns in the market changed the game for me. It made order out of chaos and made me a much more profitable trader and investor.

The post Master the Ebbs and Flows of the Market appeared first on Wealthy Retirement.

The world is full of potential as I view the various setups and consider how I’m going to approach my trading for the day.

I use technical analysis – the study of stock charts – to make sense of all the price data that bombards traders and analysts every second of the trading day.

Analysts can make technical analysis incredibly complicated, and they often do. There are endless ways of analyzing price data.

But the truth is, I don’t use 90% of it. What I find most useful when analyzing stock charts is pattern recognition.

Today, I’ll review three of the patterns that I use regularly in my VIP Trading Research Service Technical Pattern Profits to help generate profits no matter which direction the market – or individual stocks I’m trading – is headed.

The “World Record Pattern”

The first is the World Record Pattern, or the bull flag pattern.

It occurs when a stock makes a sharp move higher (also known as the “flagpole”) and then consolidates for a short period. Once the stock breaks out of that consolidation, it typically moves higher by the same height as the flagpole.

Here’s a chart of Doximity (NYSE: DOCS) to show you what I mean. In August of this year, the stock jumped from about $26 to $37 in one day, creating a flagpole that was about $11 high. It took a breather for a few days, forming the flag, and then continued higher.

To figure out a price target, you take the height of the flagpole and add it to the breakout point. In this case, we’d expect the stock to reach $48 ($37 + $11). About two months after Doximity broke out, it reached $45.

On October 23, I recommended closing the position for a 45% options gain in just 40 days.

Without a doubt, the breakout of the World Record Pattern is one of the clearest indicators of when a trader should buy…

But what about when to sell?

“Old Reliable”

Old Reliable, or the head and shoulders pattern, is bearish. It’s valuable for taking the emotion out of the decision to sell.

Old Reliable has been ranked the most consistent chart pattern – and for good reason. This chart pattern is 83% accurate in predicting a stock’s downward slide.

It gives you a clear warning sign before your stock begins its dive.

The head and shoulders pattern features three high points. The second, or the head, is higher than the first, or the left shoulder. But then the third, or the right shoulder, fails to reach the head, and the stock’s trading volume decreases. This suggests that buying interest is drying up.

Once the stock breaks the “neckline” (the line drawn from the bottom of the left shoulder to the bottom of the right shoulder), it usually slides lower. That means it’s time to sell.

Here’s this pattern in action on Viatris’ (Nasdaq: VTRS) stock chart. This was a rare occasion in that there were actually two right shoulders, but you can clearly see that the stock continued falling after it broke the neckline.

“Power Channels”

To understand Power Channels – also called ascending channels – it’s important to understand resistance and support lines.

These are terms that traders use to describe price levels that act as barriers, preventing the price of the stock from moving outside of a specific trading range.

The resistance line is generally the price that the stock won’t push above. You can think of it as the “ceiling” for the stock. The support line is the floor of the stock’s trading range. It’s the price where traders feel the stock is too cheap, so they start buying again.

Here’s an example with Taylor Morrison Home Corp. (NYSE: TMHC)…

On October 24, I sent a notice to my subscribers saying, “The stock is bouncing off of the bottom of its channel. … Let’s jump on the stock, expecting it to rise to the top of the channel in the short term.” And then I recommended an option play to go with it.

This Tuesday, less than three weeks after I recommended the stock, I sent another alert that said, “[The shares have] reached the top of the upward channel… That’s a good signal to grab our profits and move on.”

Technical Pattern Profits subscribers had a chance to land a 49% gain in just 19 days on the options.

Do you see now? Technical analysis isn’t so hard when you know what patterns to look for and you can recognize them when they pop up on a trading screen.

They’ll help you remove the emotion from investing and give you a better chance to profit regardless of where the market – or a stock – is headed.

The post 3 Chart Patterns That Cut Through the Market’s Chaos appeared first on Wealthy Retirement.

Hello and happy earnings season!

On Tuesday, I joined Oxford Club CEO Todd Skousen in The Oxford Clubroom (our interactive video platform) for an hour-long chat about my five keys to playing earnings.

For time’s sake, I created a shortened version that focuses on the most important parts of the session. You can watch it by clicking the thumbnail above. (Todd recaps all five of my earnings tips near the end of the video.)

As you’ll see, I even discussed a bonus sixth tip that’s based on a shockingly consistent market anomaly my team and I just uncovered.

I think you’ll find it especially useful (and timely!).

Just click the image above to tune in.

The post Research Reveals Shockingly Consistent Market Anomaly appeared first on Wealthy Retirement.

In a November episode of State of the Market, Chief Income Strategist Marc Lichtenfeld confessed that he hadn’t met his goal of learning Italian during the pandemic.

However, he ended up using that time for something far more useful: studying and passing his third and final Chartered Market Technician exam. (In case you aren’t familiar with the CMT Program, that’s a huge accomplishment – there are only around 5,000 CMTs in the world!)

Six months later, Marc still isn’t fluent in Italian. But all of his studying has clearly paid off.

Since that episode of State of the Market aired, Marc has banked an incredible TEN triple-digit gains in his research service Technical Pattern Profits, including a 301% win in 22 days that he just closed out yesterday morning!

Click the image above to hear more about Marc’s approach to technical analysis.

And to learn about how to get involved with Technical Pattern Profits, click here.

The post Maximize Your Profit Potential With Technical Analysis appeared first on Wealthy Retirement.

Many of you likely know that Marc is a big believer in the power of chart patterns. But what you may not realize is that they aren’t just for day traders. As Marc explains with examples below, even the most conservative, long-term investors (including those who are in or nearing retirement) could benefit from learning how to read a stock chart.

And there’s only one pattern that owns the prestigious title of the best-performing chart pattern of all time…

Go here to let Marc tell you all about it.

– Rachel Gearhart, Publisher

Early in my career, I was smart enough to know what I didn’t know (which was practically everything). So I tried to absorb all that I could from books, classes, websites and people.

To find a way to make sense of the market action I observed every day, I set out to learn technical analysis, the study of stock charts.

Then I caught a lucky break.

I was sitting in my cubicle one day when I got an email from a headhunter about an analyst position. The recruiter told me the job was with Avalon Research Group, which was the most contrarian firm on Wall Street.

“You have to get me in the door for an interview,” I told her. I knew that learning fundamental research from the company’s research director would take my skills to another level.

She did end up getting me an interview, and I got the job.

After several months of soaking up all the knowledge I could, my research director asked me to create a chart product for our customers, which allowed me to combine my technical and fundamental research skills.

Often, technical analysts believe you can tell everything you need to know about a stock by looking at its chart. Fundamental analysts, on the other hand, typically believe charts are voodoo and that everything you need to know about a stock can be found in its financial statements, sector news, valuation, etc.

I see the value of both practices, and depending on what kind of action I’m taking, I weigh one more heavily than the other.

The Long and Short of It

If I’m making a short-term trade, all I care about is the flow of money into and out of the stock, which is what a stock chart shows. The stock’s price-to-earnings ratio, profit margins and balance sheet are meaningless (unless there’s a catalyst coming up like earnings, in which case traders need to be aware that the catalyst could affect the stock).

If there is more buying activity than selling, the chart will reflect that, as the stock’s price will rise. If there’s more selling activity, it will lead to a lower price for the stock and a downward-pointing chart.

Most importantly, I use support and resistance levels – areas where a stock stops going down or up, respectively – to determine my entry and exit points. We don’t know why it stops moving at these price levels, and we don’t really care. We just know that buying or selling increases at these levels, and we use that to our advantage.

Here’s an example in the chart of Playa Hotels & Resorts (Nasdaq: PLYA).

You can see that the stock’s lows are rising and that we can draw a line of support connecting them. This is called an uptrend line.

Based on this trend line, if the stock drops, we would expect it to stop dropping at around $7.50. That would be a great spot to buy because we know the stock will likely have support at $7.50 – and if it goes below $7.50, we’ll know that the trend has been broken, so we could get out quickly with a small loss.

You likely also notice that each time the stock hit about $9.75, it failed to go higher. We can use that price point to our advantage as well.

If we were to buy the stock after a drop to $7.50, we would already know what price we’d expect it to rise to. So we’d have a predetermined price target, and we would know that we’re taking on just a little bit of risk in order to capture a decent-sized profit.

Alternatively, instead of buying after a drop to $7.50, we could wait until the stock breaks through the $9.75 resistance level. In that case, we certainly wouldn’t be buying at the lows, but we’d have a lot more confidence that the stock would continue higher, because it would’ve finally broken through after many failed attempts.

Now, you might think technical analysis is only useful for short-term trades. But it can also be an invaluable timing tool for your longer-term investing.

If you’re looking for stocks to own for a while, I strongly recommend you use fundamentals to understand companies’ businesses, financial strength, ability to grow their earnings and cash flow, etc., before you buy.

Then, once you find a stock whose fundamentals you like, you can use technicals to get in at a good price and make sure you’re not sitting on dead money.

If you’d liked Playa Hotels as a long-term investment a year ago, buying it at $9.75 would not have been a wise choice. You would’ve watched it fall, then climb, then fall again… and you would’ve made no money.

But if you’d identified the stock ahead of time and paid attention to its chart, you would’ve known that you had a good chance of getting it cheaper in the future as it drifted back down to its trend line. If you like the stock at $9.75, you’ll love it at $7.50!

Nearly all of the world’s best traders use technical analysis for their short-term trading. And the smart long-term investors do as well, because it helps them get the best prices possible and ensure their money is working for them.

What good is a great business if it takes the stock three years to make you money? Learn to use the charts to fine-tune your entries and exits, and you will be a much better investor – with a much better chance of securing a wealthy (or wealthier) retirement.

Good investing,

Marc

P.S. If you haven’t taken a few minutes to watch my video on the World Record Pattern yet, I highly recommend doing so as soon as you can. I’ve used this pattern time and time again to help my readers book exceptional triple-digit gains.

Go here to learn how to put the World Record Pattern to work for your portfolio.

The post How to Use Chart Patterns to Bolster Your Retirement appeared first on Wealthy Retirement.

But if you’re newer to Wealthy Retirement, the concept of studying stock charts may be unfamiliar to you.

Either way, in today’s column, Marc will share with you two of his favorite chart patterns – one of which he just used yesterday to close out a nearly 300% win in his VIP service Technical Pattern Profits!

If you’d like to learn even more about how to use chart patterns to supercharge your nest egg, keep an eye out for Marc’s column next Tuesday. He’ll also be teaching you about his No. 1 favorite pattern. (Hint: It was once used to set a world record!)

– James Ogletree, Managing Editor

In the fall of 1999, I excitedly walked into a classroom. It had been a long time since I’d sat in one of those chairs with the little attached desks while a professor dispersed knowledge.

My career in finance was just getting started, but I was fascinated to learn how traders use technical analysis to try to make sense of why stocks and markets move in the directions they do.

Sure, a company that grows its earnings over the long term will see its stock rise. But what about all of those short- and intermediate-term moves that didn’t seem to align with the news? And even for long-term investments, how do you ensure you’re not putting money to work just before a stock slides?

Technical analysis has many ways of looking at the markets. You can use cycle analysis, sector rotation, all kinds of complicated signals. But for me, what made the most sense – and still does 25 years later – is simple pattern recognition.

A chart pattern is just a visual representation of human emotions in the market – namely fear and greed.

These patterns tend to repeat, which tells us that humans often react in predictable ways.

And we can clearly see that on this stock chart:

This pattern is called an upward channel, but I call it a “Power Channel” in my VIP service Technical Pattern Profits. It’s marked by the stock rising along the lower trend line (also called an uptrend line) but getting capped at the higher channel line.

If you were looking at this stock in late January, when the stock was trading at over $140, you might’ve noticed that every time the stock had hit that upper channel line, there was a better buying opportunity shortly after. In fact, just a week or two later, you could have bought the stock at $135.

We don’t necessarily know (or care) why the stock sells off every time it hits the top line or why it rebounds when it hits the lower line. We just know that it does and that it’s repeatable – and we can use that to our advantage.

We also know that when the pattern changes, we ought to pay attention. If this stock had fallen below the lower trend line to $130 in February, that would’ve suggested that the pattern was broken and that we couldn’t rely on the stock rebounding back toward the upper channel line.

Another reliable pattern is the head and shoulders pattern. This is a very bearish signal that suggests demand for the stock is drying up.

A head and shoulders pattern occurs when a stock or market is rising and hits three peaks. After making the first peak (or left shoulder), the price declines a bit and then rises to a higher second peak, often on lower volume than it had for the first high. This second peak is known as the head. The price then drops again before climbing to a third peak that is lower than the second. Volume on this peak, the right shoulder, is lower than it was for the left shoulder or the head.

If all of these conditions are met, a head and shoulders pattern has formed. This is a strong sign that buying power is evaporating and that the bulls don’t have enough firepower to get the stock to a new high.

In his renowned Encyclopedia of Chart Patterns, Thomas Bulkowski looked at various chart patterns and quantified how successful they are at predicting stock moves. After studying 2,800 trades that displayed the head and shoulders pattern, he found that the average decline was 16% and the stock dropped 68% of the time when the pattern appeared.

That’s good information to know, because it tells you that if you notice a head and shoulders pattern in a stock’s chart, you’d be better off waiting and letting the price come back down. Or, if you’re an active trader, a stock in a head and shoulders formation would be a potential short candidate.

Whenever I discuss technical analysis, I always mention that stock charts and chart patterns are not crystal balls. But by understanding how human behavior repeats itself and how we can identify when those behaviors are occurring, we can greatly tip the odds of successful investing and trading in our favor.

All the best traders use charts and patterns. If you’re not using them, you’re leaving a lot of money on the table. Walking into that classroom (and several others after that) was one of the best decisions I ever made for both my career and my personal finances.

Good investing,

Marc

P.S. If you thought Power Channels and head and shoulders patterns were impressive…

Just wait until next week, when I tell you about my all-time favorite chart pattern.

In the Encyclopedia of Chart Patterns, Tom Bulkowski studied 307 instances of this pattern appearing in a stock’s chart…

And the stock moved higher every single time.

Plus, he wrote that this record-setting pattern “was the best-performing chart pattern in both bull and bear markets.”

Be sure to check out my column next Tuesday to learn more!

The post Don’t Trade Without These 2 Chart Patterns appeared first on Wealthy Retirement.

Happy holidays from all of us at Wealthy Retirement!

We hope 2023 has been full of laughter, love and light.

To help kick off 2024 in a similar manner, we’re doing something a little different this week.

We take our mission of helping you build your wealth very seriously. But that doesn’t mean we don’t like to have a little fun from time to time.

In today’s State of the Market, you’ll see the “best” side of Chief Income Strategist Marc Lichtenfeld.

Happy holidays to you and yours,

Rachel

P.S. We won’t have a typical weekly recap on Monday since it’s New Year’s Day. But don’t worry – we’ll be back to our normal schedule starting on Tuesday, January 2. Stay tuned!

The post The “Best” of Marc Lichtenfeld appeared first on Wealthy Retirement.