Mar

18

Yes it certainly can be trained – from a note I wrote on intuition a couple of weeks ago:

One of the biggest mental shifts that your work has given me is how I understand intuition. It stopped feeling mystical or vague and became a real internal compass. I really started to see intuition as lived experience, emotional 'data', pattern recognition, and self-awareness integrating in real time. Paradoxically…this has made me calmer rather than more impulsive. I tend to trust myself more, take better risks, and stay aligned with my process more consistently.

- Toby Donovan, CITI, Director, Commodities Trading

His experience exemplifies what the founder of a large hedge fund said on Thursday. “Your brain is picking something up. Are you in touch with that internal conversation?"

Academic researchers also describe the value of intuition. Valerie Reyna, Professor of Human Development and Psychology at Cornell University, the Director of the Human Neuroscience Institute, and the co-director of the Center for Behavioral Economics and Decision Research, directly links intuition to probability, and risk judgment, saying that “intuitive reasoning contributes to performance in hard, fast-paced probability tasks.”

In her fuzzy trace theory, gist-based intuition provides an advanced form of cognition that often outperforms verbatim, analytical processing. She shows how reliance on intuition can grow and yield better decisions than strict adherence to probability calculus, especially when the key is extracting the bottom-line meaning.

Feb

4

Yale Hirsch and his son Jeff have shown that a positive change, from the last trading day of the year to the 5th trading day of the new year, portends a bullish year (positive first 5-day percent change).*

Consider this … in the last 76 years of trading, the S&P 500 has declined for the year 20 times or 26% of the time. In other words, 74% of the time, there has been a yearly gain.

Jeff’s numbers show that in those last 76 years, 49 years showed a positive first 5-day percent change. Only 8 of those years went on to close down for the year. That’s an 84% bias for the year to close higher when we have a positive first 5-day percent change.

My add-on to Yale’s and Jeff’s work was to look at the years that gained 1.2% or more in the first 5 days of trading. There were 28 such years. Of those years, only 2 were down for the year. That’s a 93% bias for the year to close higher. What an improvement from the average 74%!

In 2026, the first 5-day** change for the Dow Jones 30 was +3%.

In 2026, the first 5-day** change for the S&P 500 was +1.6%.

Those 28 years had an average annual return of 14%. The remaining years had an annual gain of 5.3%. I see this as excellent confirmation of the bullishness of my Forecast 2026 Report.

Cagdas Tuna writes:

There is no need for a statistical analysis to assume any given year will be positive for US indices. It is almost guaranteed to be positive every year. No offense to any list member.

Larry Williams responds:

Wrong 24% of time we close down for the year.

Michael Brush is surprised:

Wow did not know it was that high.

Larry Williams agrees:

I was taken back by it as well.

Asindu Drileba asks:

2026 is bullish? But Senator, you said you expect a recession in 2026 with 100% certainty. Is this a contradiction? Or maybe its possible for the market to be bullish even during a recession?

Larry Williams answers:

Yes, there was a projection made a year ago for a 2026 sell off —in the last 12 months data changed—large improvements in fundamentals and hopefully I got a little better understanding of long term cycles. New Data matters.

Nils Poertner writes:

Asindu- there would be simply too many variables out to make that statement with such a certainty in advance. Just impossible. It remains a probability game. Used to subscribe to some cycle research that claimed to have things figured out yrs in advance. quite pricey subscription. it was HOOK, LINE and SINKER (for me).

Denise Shull comments:

New Data matters.

Indeed it does. Wonder why it’s challenging for many to incorporate?

Nils Poertner responds:

Good question. On this note… (Pure) data analysts believe pattern matching on large datasets will solve our problems. But what if the really vital information isn't being collected? What if it's invisible to our trained systems?

Jul

20

For most of my investing career, which goes back to the mid-1940s, I have been attracted to technical analysis. It also helps that my degree is in engineering and much of my aerospace engineering career has been associated with the solution of engineering problems. So it was natural that I was attracted to technical analysis. Through my investing experience I have become a skeptic of all the magic powers TA is suppose to have.

I recently got a query from a friend who wanted to discuss Fibonacci levels as they applied to the current market. He was upset when I gave my opinion that Fibonacci numbers, although relevant to the physical world, were an illusion when applied to the markets. He responded that financial prices almost always followed Fib levels.

After our discussion, which ended in agreeing to disagree, I recalled the first UFO Arnold reported seeing boomerang-shaped objects that flew like speedboats in rough water or saucers skipped across the water. A junior news reporter trying to squeeze his article into the newspaper reported flying saucers were spotted.

From that point forward, there were thousands of flying saucers sighted but no flying boomerangs. Why? Believing that strange sightings are saucers gives reports of saucers. Believing prices must fall to the third Fib line before recovering to the second level (or whatever) is reinforced by the imagined view of looking at the charts. Believing is seeing.

Denise Shull writes:

The human mind reacting to the ebb and flow of prices is always entertaining. Becoming objective about the tricks that our minds play on us presents the true eternal challenge of successful speculating. 

Stefan Jovanovich remarks:

A now-gone wise man, who was a cop for 30 years in my Dad's hometown of Denver, once explained the problem of auto theft thusly: "People steal cars because they are out there on the street. If people left their bathtubs outside at night, all of us cops would have to become experts on what American Standard sells and faucets would have VIN numbers."

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