Tom welcomes David Keller back to the show; David is Chief Market Strategist at StockCharts.com.

David discusses his fairly broad interests and why taking advantage of different disciplines can help with investing. Systems and practices can reduce emotional decision making. He recommends several books that can help investors avoid emotion and help them discover useful patterns. Investing is not easy and learning from your mistakes is vital.

David’s blogs are called “Market Misbehavior” and “Mindful Investor” and he gives some practical advice on how to become a better investor. Being mindful means learning techniques like meditation to reduce stress and help handle multiple events around you while increasing awareness.

He believes that the number one consideration for an investor should be price followed by regularly watching trends of many asset classes. He says, “Price tells you where capital is moving towards, while breadth shows you what bets are being made, and sentiment reveals what people are saying.” David gives some examples of breadth trends and why they provide a sneak peek into the markets’ operation.

The FAANG trade of mega-stocks has had an incredible run with staggering performance. However, most institutions are forced to acquire these stocks by their clients to maintain their relative performance. This results in additional upward pressure, but eventually, there will be a massive unwind. These markets are currently experiencing immense euphoria, but the breadth indicators hint at a coming rollover.

He discusses this year’s parabolic move in gold and why pullbacks are good for a healthy market. He says, “We are now consolidating and building momentum for the next leg higher.”

Lastly, he explains when and how to define an exit strategy for a trade and why you should have a routine for reviewing the charts.

Time Stamp References:
0:40 – Reading suggestions for investing.
4:30 – Quantifying investor behavior.
6:50 – Oversimplifying your thesis.
8:55 – Being mindful as an investor.
11:10 – Key parts of his thesis.
14:15 – Breadth indicators.
18:10 – The end of the FAANG trade.
22:30 – S&P 500 Chart and analysis.
25:20 – Why the gold chart is bullish.
29:30 – Timing entry points and exits.

Talking Points From This Episode

• Discipline and structure with investing.
• Mindfulness and broadening your awareness.
• Monitor the trends of multiple asset classes.
• FAANG performance and euphoric markets.
• Planning an exit strategy.

Guest Links:
Website & Articles: https://stockcharts.com
Twitter: https://twitter.com/DKellerCMT
BookList: https://www.marketmisbehavior.com/reading-list
Blog: https://www.marketmisbehavior.com

David Keller, CMT, is Chief Market Strategist at StockCharts.com, where he helps investors minimize behavioral biases through technical analysis. He is a frequent host on StockCharts TV, and he relates mindfulness techniques to investor decision making in his blog, The Mindful Investor.

David is also President and Chief Strategist at Sierra Alpha Research LLC. A boutique investment research firm focused on managing risk through market awareness. He combines the strengths of technical analysis, behavioral finance, and data visualization to identify investment opportunities and enrich relationships between advisors and clients. David’s blog, Market Misbehavior, explores the intersection between behavioral psychology and the financial markets.

David was previously a Managing Director of Research for Fidelity Investments in Boston, where he managed the Technical Research Department and the legendary Fidelity Chart Room. He also co-managed the Business Associate Program, a rotational program for recent undergraduates.

A Past President of the Chartered Market Technician (CMT) Association, David most recently served as a Subject Matter Expert for Behavioral Finance. He is also a member of the Technical Securities Analysts Association, San Francisco, and the International Federation of Technical Analysts. He has lectured on technical analysis and behavioral finance as an Adjunct Professor at the Brandeis University International Business School in Waltham, Mass.

David was formerly a Technical Analysis Application Specialist with Bloomberg LP in New York and was a regular contributor to Bloomberg Markets magazine. He is editor of the book Breakthroughs in Technical Analysis: New Thinking from the World’s Top Minds, published in 2007 by Bloomberg Press.

David is a classically trained musician and student pilot. He resides in Duvall, Washington with his wife and two children. He has received degrees in Music and Psychology from The Ohio State University.