Editor’s note: This paper was prepared and originally published by Lowry Research Corporation and is published here with permission. Paul Desmond is President of Lowry Research. Paul also wrote the 2002 Charles H. Dow Award winning paper, Identifying Bear Market Bottoms and New Bull Markets. The Law of Supply and Demand is universally recognized in both academia and the business world as the foundation, the starting point of all economic analysis. The Law of Supply and Demand states that when demand for a freely traded commodity exceeds the supply of that commodity, its price will rise. And, if the supply of that commodity exceeds the demand for it, the commodity’s price will fall. Notice the lack of equivocation. No mights or coulds or shoulds, just will. It’s the Law. And, since common stocks are a freely traded commodity, their price movements are dictated by the Law of Supply and Demand –

Fred Dickson, CMT, Senior Vice President, Chief Investment Strategist, passed away on October 31, 2014, after a brief illness. Fred worked as an investment analyst for more than 40 years. In his most recent position, he was named Chief Investment Strategist for the various Davidson Companies in October 2009. Prior to that appointment, Fred served as D.A. Davidson’s Director of Private Client Research and Chief Market Strategist between August 2001 and September 2009. Fred served earlier as D.A. Davidson’s Director of Research between 1993 and 1997. In his capacity as the firm’s Chief Investment Strategist, Fred provided daily, weekly and monthly commentary on the various financial markets and was a frequent speaker at client events, community public service clubs, and trade association meetings throughout the west. Fred served on the D.A. Davidson Board of Directors between 2004 and 2007. He was a frequent guest commentator on the CNBC and Bloomberg television networks

Editor’s note: This was originally published in the October 30, 2014 issue of Bloomberg Brief: Technical Analysis and is excerpted below. U.S. equity markets have performed best from October to May over the past 30 years, an S&P 500 seasonality chart shows. The chart above was created with Bloomberg’s SEAG function. It shows the average percent return of the S&P 500 beginning in October for the last 30 years. On average, the index rises about 8.5 percent. Adding to the bullish outlook is the fact that the best six months coincide a favorable election cycle. Chad Gassaway, CMT has calculated the return of the S&P 500 during the last 16 midterm election years. He found that the market went up during the fourth quarter 14 out of 16 times. Paul Ciana, CMT, is an equity and technical analysis specialist at Bloomberg LP in New York. He can be contacted at PCiana@Bloomberg.net

The Puget Sound Chapter had the pleasure of hosting Heather Greshan and John Antal at a meeting on October 9, 2014.  They gave a captivating presentation on the Investor Business Daily’s stock selection approach utilizing the CANSLIM approach and illustrated how fundamental and technical analysis combined can be effectively used to time entry and exit points for individual stock selection. Their approach uses fundamentals to search for the strongest stocks in the strongest groups through the IBD’s relative strength ranking. The relative strength ranking is usually at the 90 level. In addition, the stocks must meet earnings and revenues criteria, such as EPS above 90. This technique aims to enhance a traders probability. Particularly interesting was the use of classic chart patterns combined with volume analysis. This simple but effective approach favors the investor while allowing for assessment of risk/reward. A position is entered once a stock has proven itself and made

Editor’s note: This was originally published in the October 16, 2014 issue of Bloomberg Brief: Technical Analysis and is excerpted below. GT Advanced Technology recently filed for bankruptcy. Pundits claimed that the filing came as a total surprise to just about everyone. Could one, using technical analysis, have known that GTAT was going bankrupt, or at least have been prepared for a precipitous drop? To the former, no; to the latter, yes. Technical analysis can help predict future price behavior, but doesn’t generate reasons for this behavior. Nevertheless, GTAT was in a clear bearish trend with targets below $6.00 confluent. The daily chart alone shows multiple bearish factors. The gap marked “1” is an exhaustion gap, indicating that the uptrend may be ending. The gap wasn’t filled on a closing basis before $18.90, marked “2” with a horizontal dashed line, representing the 76.4% retracement for the move down from $20.54 high, a standard level

Overview This two-part article will provide evidence of the stock market attempting to successfully break above resistance in a fashion that has only occurred three times previously in the Dow’s history. In addition, the S&P 500 is simultaneously breaking major resistance from a large expanding parabolic channel stemming from 1982. In Part One, a yearly log chart of the Dow demonstrates 2014’s attempt at a potential breakout indicating a continued massive bull market. In addition, I offer evidence that unless November signals a false breakout by closing below monthly geometric resistance, the markets will embark on the continued large rally, and offer two some price/time targets in the short-term for the Dow. Part Two (next month) will offer long-term targets for the Dow, and both short and long-term targets for the S&P. In the case of the Dow, I will offer sequential analysis that indicates every successive major top from each respective breakout,