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Level 3 Irrational Exuberance, Candlesticks, Homework

Level 3 Irrational Exuberance, Candlesticks, Homework. Irrational Exuberance Robert J Schiller. The Stock Market Level in Historical Perspective Part one – Structural Factors Precipitating Factors: The Internet, Baby Boom, and Other Events

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Level 3 Irrational Exuberance, Candlesticks, Homework

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  1. Level 3Irrational Exuberance,Candlesticks, Homework

  2. Irrational ExuberanceRobert J Schiller • The Stock Market Level in Historical Perspective Part one – Structural Factors • Precipitating Factors: The Internet, Baby Boom, and Other Events • Amplification Mechanisms: Naturally Occurring Ponzi Processes Part two – Cultural Factors • The News Media • New Era Economic Thinking • New Eras and Bubbles around the World Part three – Psychological Factors • Psychological Anchors for the Market • Herd Behavior and Epidemics Part four – Attempts to Rationalize Exuberance • Efficient Markets, Random Walks, and Bubbles • Investor Learning – and Unlearning Part five – A call to action 11. Speculative Volatility in a Free Society

  3. Irrational Exuberance • Memorization is key • The Memory Bookby Harry Lorayne • Break down the information in pieces • Precipitating Factors • CCI • BEG • GOD • IEG

  4. Irrational Exuberance • CCI • Capitalist Explosion • Erosion of worker solidarity • Compensation with stock price • Labor turning into a commodity • Cultural and Political Changes • Upward pressure felt on stocks due to tax, materialism, wealth affect • Information Technology • The public perception that the revolution creates

  5. Irrational Exuberance • Amplification Mechanism • How the effect of the 12 preceding factors is amplified by • Investor confidence • Investor expectations • Influences on investor demand

  6. Irrational Exuberance Investor confidence • The belief in the resilience of the market seems to stem from a generalized feeling of optimism and assurance. • The upward bias of the market will surely never fail • Note Nikkei 225

  7. Irrational Exuberance • Investor Expectations • The rise in materialistic sentiment and individualism is amplified by the psychological impact of the strong up trend in the market

  8. Irrational Exuberance • Influence on Investor Demand • Public Attention • Fast Money • CNBC • Investment Clubs • Feedback Loops • Ponzi Schemes

  9. Candles • KNOW the formations and UNDERSTAND their meaning • Either name the formation, if not discuss the meaning… • “the bearish candle formation developing underneath the intersection of the 50/100 MVA’s is signaling a potential continued move in the direction of the trend…” • “the shooting star underneath the intersection of the….”

  10. Psychology • Bodies • Large bodies are powerful moves • Smaller bodies are less powerful • Dojis are indecision or pause • Shadows • Short shadows give body credibility • Long shadows can reveal strong support or resistance

  11. Psychology (cont’d) • Shaven Head • Bullish close, powerful move up • Bearish close, strong resistance • Shaven Bottom • Bullish close, strong support • Bearish close, powerful move down

  12. Homework

  13. Candles

  14. Candles

  15. Candles

  16. Inter-market

  17. Inter-market

  18. Inter-market

  19. Inter-market

  20. Elliott Wave analysis

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