Editor's note: Our friend Greg Diamond from our corporate affiliate Stansberry Research is back... We shared Greg's insights for the first time last week. And today, we're highlighting another essay from him. It published on March 14, 2025 in Stansberry's free DailyWealth e-letter. In this essay, Greg discusses putting the power of market patterns to work – and how this approach is particularly useful amid high volatility...
Editor's note: Our friend Greg Diamond from our corporate affiliate Stansberry Research is back...
We shared Greg's insights for the first time last week. And today, we're highlighting another essay from him. It published on March 14, 2025 in Stansberry's free DailyWealth e-letter. In this essay, Greg discusses putting the power of market patterns to work – and how this approach is particularly useful amid high volatility...
How to Invest With the Power of Human Nature
By Greg Diamond, editor, Stansberry Research
"Human nature never changes..."
"History repeats itself..."
These adages stick around because they're true. And they even apply to the markets.
Market swings are nothing more than the graphic representation of human behavior... expressed on a chart of buyers and sellers.
And this market behavior tends to repeat.
That's how technical analysis works. We know what's happening because we've seen this all before.
Today, I'll explain more about how we can use this approach to our advantage as investors...
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Here's a perfect example of a type of technical analysis that foreshadowed a storm brewing at the start of 2007... well before the market crashed in the financial crisis.
It's called "intermarket analysis." This idea is based on correlations between asset classes. When one of them turns down, it may be a warning sign for other asset classes (in this case, stocks).
We know this because these chart patterns have shown up before, and those "other" assets have fallen.
Take a look at this chart. It shows the relationship between the S&P 500 Index (in black) and the U.S. 30-year interest rates (in blue), right before the financial crisis...
The S&P 500 and U.S. 30-year interest rates traded in tandem for much of the early 2000s. Then, in late 2007, the correlation broke down. Interest rates started to fall, which signaled a slowing economy.
Look at the red line above...
See how stocks made new highs, while interest rates failed to? That was a warning that something was wrong.
Of course, most analysts at the time pointed to strong earnings and solid "fundamentals."
The ultimate "fundamentalist" in this context – former Federal Reserve Chairman Ben Bernanke – proclaimed that the effects of "the subprime sector on the broader housing market will be limited and [that he did not] expect significant spillovers... to the rest of the economy or to the financial system."
You know what happened next.
This is the essence of technical analysis – understanding the behavior of markets and history. This concept is lost on many investors. They're not willing to put in the necessary time and effort to understand it. So they simply write it off.
Technical analysis is much more than trend lines and charts. It's understanding the past to profit in the future.
I'll be honest... It took me a while to grasp technical analysis. But time and time again, I've witnessed how well it works.
I want you to see much more than the trend lines and patterns. We're studying the behavior of market participants... and learning from history.
And to do this, we don't need to speculate about the reasons behind the behavior. We don't need to worry about the fundamentals.
There's nothing wrong with wanting to know why a certain stock will move... But I'm much more concerned with when that stock will move and what the price will do (i.e., how much it will go up or down).
Think about what really matters in investing – WHEN you buy and sell. The why is less important when it comes down to the goal of investing.
The real question is: Did you make or lose money? That's all that matters.
Perhaps the greatest value in technical analysis is that it's both a trading strategy and a risk-management system wrapped into one. It shows us opportunities – and provides warnings. And it keeps us focused on making and preserving wealth.
If you're like most people, this is likely a brand-new way to look at the market. So it's going to take some time to get used to.
But once you understand the basics, I promise you'll begin to invest in an entirely new way... and eventually reap the benefits.
Good investing,
Greg Diamond, CMT Editor's note: Earlier this week, Greg went on camera to share a dire warning about the markets this year...
He called the COVID-19 crash, the 2022 tech collapse, and the 2023 bank crisis with startling accuracy. So it's worth hearing his big prediction for 2026. As Greg says, if you play the coming weeks wrong, it could erase all of the gains you've accumulated over the past three years.
— According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks are somewhat Bearish. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Energy
+1.41%
Information Technology
+0.42%
Communication
-1.51%
Consumer Discretionary
-1.93%
Utilities
-2.33%
Health Care
-2.67%
Consumer Staples
-2.95%
Real Estate
-3.09%
Financial
-3.61%
Industrials
-3.68%
Materials
-4.01%
* * * *
Industry Focus
Dow Jones REIT Services
10
61
29
Over the past 6 months, the Dow Jones REIT subsector (RWR) has outperformed the S&P 500 by +0.58%. However, its Power Bar ratio, which measures future potential, is Weak, with more Bearish than Bullish stocks. It is currently ranked #17 of 21 subsectors and has moved down 1 slot over the past week.
Indicative Stocks
AIV
Apartment Investment
AVB
AvalonBay Communitie
BDN
Brandywine Realty Tr
* * * *
Top Movers
Gainers
MOS
+10.08%
ORCL
+9.18%
CF
+9.16%
VLO
+6.46%
SNDK
+5.9%
Losers
FICO
-9.33%
CPB
-7.05%
CAG
-6.08%
IFF
-5.67%
MKC
-5.46%
* * * *
Earnings Report
Earnings Surprises
PATH UiPath, Inc.
Q4
$0.30
Beat by $0.05
CPB The Campbell's Company
Q0
$0.51
Missed by $-0.06
* * * *
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