Money, Its gotta be the Charts

• CIO’s and MBA’s are defending their calls with straight and squiggly lines

One Wall Street group is doing something it never thought it would do, and for some reason, they think they’ve found a can’t lose strategy.

Fundamental strategists are siding with their mortal enemies. Their playing technicians on TV and using things like trend lines, jargon, and moving averages to sell ideas and predict stocks.

Like Morgan Stanley CIO Mike Wilson. In his weekly notes, he’s been circling, drawing lines, and kneeling to the almighty chart. Last month Bloomberg reported:

“We are now sellers again,” the strategist (Mike Wilson) and his colleagues wrote in a note on Monday. They expect the S&P 500 to resume declines after the index crossed above its 200-day moving average last week, saying the downtrend since the beginning of the year remains intact. “This makes the risk-reward of playing for more upside quite poor at this point,”

*courtesy of Bloomberg, Morgan Stanley’s Michael Wilson Is a Seller of Stocks Again

And in his latest Weekly Warm Up note dated Jan. 17, 2023, Wilson said. “S&P 500 Remains in a Well Defined Downtrend...Don't Fight It”

This new group of CIO technicians seems overconfident. This reminds me of 2020 when people like David Portnoy thought technical disciplines would always work “I’m sure Warren Buffett is a great guy but when it comes to stocks he’s washed up. I’m the captain now”.

But remember this:

• Investing isn’t that simple

• Strategies don’t work forever

• and technical analysis fails a lot

What do you think about this new behavior?

JIM