It's funny, but not ha, ha. You see a number of new posts claiming to have hit / predicted the bottom. But all these technical traders look at the turn, a number of days after the actual turn; - not before. So it's not therefore a prediction. That's the problem with technical analysis. Technical trading signals are generally ones that require movements in the action to have already shown up in the charts.
As an example, see Avi Gilbert’s Market Watch article: Published: July 9, 2018 11:37 a.m. ET
Opinion: Technical charts point to S&P 2,800 — and then a pullback
“So, this week (as of Monday July 9), as long as we don’t see a major S&P reversal below 2,730, my expectation is that we can rally back up toward the 2,800 region to complete the a-wave of this rally off the 2,700 support region.” How reassuring!
Fundamental's indeed precede technical's.
It's not trivial. All boom / busts, since 1942 were both predictable and preventable. And the most critical information has been discontinued. This information could be used for the on-line, real-time, immediate streaming of economic activity (absent the laborious and ”amalgamated” or chained-market value composition (economic time lagged, *batch*-processing, of an “advance estimate”, a “preliminary estimate, and a “final estimate”, and subsequent revisions), of the final output of goods and services.
So any deviation to the actual path of the inflation adjusted economic trajectory can be literally fine-tuned. The FRB_NY’s “trading desk” can hit whatever target is set (but not by its current transmission mechanism).
The G.6 Debit and Demand Deposit Turnover Release was discontinued in Sept. 1996 for spurious reasons. I, and some others, William G. Bretz of “Juncture Recognition in the Stock Market”, “The Bank Credit Analyst”, etc., understood how to use the Fed’s figures (then, the longest running time series published).
No one at the Board of Governors understood how to use the #s (but the BOG discontinued it regardless). That included Paul Spindt’ debit weighted indices (who tried and failed). I once helped with the 4 year review, the justification for its continued use. I faxed several examples to Ed Fry, its manager.
See: New Measures Used to Gauge Money supply WSJ 6/28/83. Neither Barnett nor Spindt, nor the St. Louis Fed's technical staff: “Although the evidence is mixed, the MSI (monetary services index), overall suggest that monetary policy *WAS ACCOMMODATIVE* before the financial crisis when judged in terms of liquidity. — use accurate money flow metrics reflecting changes to AD.
See: Fed Points
“Following the introduction of NOW accounts nationally in 1981, however, the relationship between M1 growth and measures of economic activity, such as Gross Domestic Product, broke down. Depositors moved funds from savings accounts—which are included in M2 but not in M1—into NOW accounts, which are part of M1. As a result, M1 growth exceeded the Fed's target range in 1982, even though the economy experienced its worst recession in decades. The Fed de-emphasized M1 as a guide for monetary policy in late 1982, and it stopped announcing growth ranges for M1 in 1987.”
The plateau in money velocity, the transactions velocity of recirculation, occurred because of the saturation in bank deposit classification in the 1-2 quarters of 1981 (the widespread introduction of ATS, NOW, SuperNOW, and MMDA bank accounts).
Stephen Goldfeld labeled this type of disparity: “instability in the demand for money function” (Keynes’ liquidity preference curve) as a “case of the missing money”, whereas it was simply related to, e.g., the “monetization” of commercial bank time deposits (ending gate-keeping restrictions), the daily compounding of interest, etc., all of which occurred within the payment’s system. It supposedly “presented a serious challenge to the usefulness of the money demand function as a tool for understanding how monetary policy affects aggregate economic activity.”
This misdirection charged that “advances in computer technology caused the payments mechanism and cash management techniques to undergo rapid changes after 1974. In addition, many new financial instruments (e.g., proliferation in the use of repurchase agreements) emerged and have grown in importance. This has led some researchers to suspect that the rapid pace of financial innovation since 1974 has meant that the conventional definitions of the money supply no longer apply. They searched for a stable money demand function by actually looking directly for the *missing money*; that is, they looked for financial instruments that have been incorrectly left out of the definition of money used in the money demand function.”
“Conventional” money demand functions over-predicted money demand in the middle and late 1970s; and under-predicted velocity since 1981, and not just (PY/M), or income velocity, Vi. Thereby M2 was substituted for M1. However, “broad money” substitute measures (vs. “narrow money” or “near money”), or highly liquid assets, “additional variables which do not accurately measure the opportunity cost of holding money”, conflate American Yale Professor Irving Fisher’s:“flows with funds”.
“The recent instability of the money demand function calls into question whether our theories and empirical analyses are adequate. It also has important implications for the way monetary policy should be conducted because it casts doubt on the usefulness of the money demand function as a tool to provide guidance to policymakers. In particular, because the money demand function has become unstable, velocity is now harder to predict, setting rigid money supply targets in order to control aggregate spending in the economy may not be an effective way to conduct monetary policy.”
In other words, no money stock figure standing alone is adequate as a guide post for monetary policy.
The G.6 was discontinued, according to the Federal Register, because:
“The usefulness of the FR 2573 data in understanding the behavior of the monetary aggregates has diminished in recent years as the distinction between transaction accounts and savings accounts has become increasingly blurred (And that’s also what Chairman Alan Greenspan said about M1). Further, the emphasis on monetary aggregates as policy targets has decreased. In addition, respondent participation has declined over the last several years. For these reasons, the Federal Reserve proposes to discontinue the survey and the related statistical release.”
And funny again, we knew this already. In 1931 a commission was established on Member Bank Reserve Requirements. The commission completed their recommendations after a 7 year inquiry on Feb. 5, 1938. The study was entitled "Member Bank Reserve Requirements -- Analysis of Committee Proposal" Its 2nd proposal: "Requirements against debits to deposits"
After a 45 year hiatus, this research paper was "declassified" on March 23, 1983. By the time this paper was "declassified", Nobel Laureate Dr. Milton Friedman had declared RRs to be a "tax" [sic].
These #s aren’t good #s. The #s shouldn’t require interpretation. Nothing’s been optimized. There’s been no concerted effort to right the economic world.
"But opinions vary widely on what M1 and the other, broader Fed measures really mean. The experimental measures are designed to resolve some of the confusion by isolating money intended for spending, the money held as savings. The distinction is important because only money that is spent-so-called “true money” – influences prices and inflation"