Louise Yamada: Massive Six Year Base Will Lead to Higher Move in Gold
Louise became involved with technical analysis in a round-about-way. She received some professional advice from her broker, which led her to take an advanced course on the topic taught by Alan Shaw. She found it fascinating and was hired right out of the class by Smith Barney. A lot of her education was hands-on from the job itself. She says, “To a certain degree, that approach allowed me to think outside of the box.”
Twenty years ago there were more stocks on the market than today. This is due primarily to companies buying back shares. Recently companies have cut back on buying back shares but that is a significant reason for the market moves over the past decade.
Gold has had a tremendous six-year base, and the recent breakout reached the support level of the 2011-2012 period. It makes sense for a pause and a possible pullback at this level. The next resistance level is 1600 and than 1800. It could equal or surpass the previous high. The potential is there in terms of a technical profile.
In technical analysis, the observations are the same across all price patterns, whether it’s a stock, commodity, or an index. They look for confirmations from various indicators which provides evidence of potential success or weakness in the future price action. She discusses the momentum indicators that they use and how there has been some weakness in the current stock markets.
She recommends several books related to technical analysis. It’s good to know where you are trading in the overall relative strength for a sector. That information can protect you in determining when the more extended declines will come.
Time Stamp References:
0:40 – What made her interest in tech analysis.
2:45 – T.A. still works in spite of algos and quants.
5:00 – How far will the gold breakout go?
7:30 – T.A. works across all markets and indexes.
10:00 – Usefulness of momentum indicators.
11:30 – Good books on technical analysis.
15:10 – T.A. should be important to the investor.
Talking Points From This Week’s Episode
• What led her to become interested in markets and T.A.
• Stock buybacks have boosted the equity markets.
• Volume in T.A. has had less meaning in recent years.
• Overall markets could be at a tipping point.
• Gold has an excellent base and potential for new highs.
Louise Yamada is the Managing Director of Louise Yamada Technical Research Advisors (LYA) founded in October 2005. Previously Louise was Managing Director and Head of Technical Research for Smith Barney (Citigroup). While there, she was a perennial leader in the Institutional Investor poll and the top-ranked market technician in 2001, 2002, 2003 and 2004. At Smith Barney for 25 years, in her years as head of Technical Research, Louise authored a weekly flagship report “Market Interpretations.”
Louise is a Chartered Market Technician (CMT) and a member of the Charted Market Technicians Association, the American Association of Professional Technical Analysts and the Financial Women’s Association. Louise appeared as a special guest on “Louis Rukeyser’s Wall Street” and frequently appears on Bloomberg TV and Radio, CNBC and BNN TV as well as in print and online media including Barron’s, the Wall Street Journal, the New York Times, Yahoo Finance and the Financial Times. She has been a frequent guest speaker at conferences and organizations, including the 2009 Fall Conference of the National Organization of Investment Professionals and the 2010 FEI NYSE forum.
Louise received a B.A. from Vassar College and an M.S. from Bank Street College of Education.