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BEHAVIOR ANALYSIS

Presented at theCIFPs 9th National Conference

June 6, 2011by Ron Meisels

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• Behavior analysis is the study of thebalance between demand and supply(Buyers and Sellers).

• Imbalances are the result of eagerness by one side or the other; and create(rightly or wrongly) fundamental trends (cycles).

• Trends persist as long as there is animbalance between these two forces.

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Imbalances betweenSupply and Demand

Create EMOTIONS (Fear and Greed);

Fear and Greed create Cycles;

Cycles create Price Patterns.

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History repeats, but do not duplicate itself:earthquakes, wars, bankruptcies

Cycles are history, not magic!

Physical cycles are regular:planets, sunspots, climate

Commodity cycles are irregular:wheat, energy, materials

Human cycles can be both:Sleep; fear - greed

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BEHAVIOR ANALYSISis the study of

• Cycles• Sentiment

• Price patterns (Charts)

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The 4-year (Dunbar)and 10-year (Juglar) cycle

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The Decennial (10-year) Stock Market Cycle

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Secular (40-year) Stock Cycle

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1789 to 1984

1806-1813

1835-1857 1889-1896

1929-1938

1968-1974

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S&P 500 (1927-1938)

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10

5

-89%

1927 1938

In 2 ½ years

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S&P 500 (1968-1974)

19741972

+77% in 32 months

19701968

-35%In 1 ½ years

100

80

90

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S&P 500 (1996-2010)

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The 40-week (200-day)Moving Average

Falling MA is bad

S&P 500

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Citigroup (2007-09)Falling MA is bad

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I B MMajor break-out

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TECHNICAL ANALYSISis the study of

• Cycles• Sentiment

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The cycle of emotion

Optimism

Enthusiasm

Contentment

EuphoriaAnxiety

Denial

Worry

Hopelessness

Panic

Discouragement

CapitulationDepression

Disbelief

Hesitation

Optimism

Highest point of financial risk.

Temporary reversal – I am

saving in the long run.

Lowest point of financial risk.

Wait for a reaction to

buy.

This market is going to the dogs.

I am very satisfied with my current position.

Buy before it’s too late.

This is just another rally.

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Bulls vs. Bears

Intermediateand

longer-termforecasts.

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S&P 500

S&P/TSX

40wMA

40wMA

S H S

SH

S

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S&P 500

S&P/TSX

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TECHNICAL ANALYSISis the study of

• Cycles• Sentiment

• Price patterns (Charts)

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Markets and stocksare ultimately based on

human psychology.

By charting these,we are converting

human psychologyinto graphic representations.

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Simple Stock Pattern

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Subdivided Stock Pattern

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Stock Pattern with MA

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The 40-week Moving Average

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Real life example

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Major uptrend

Imperial Oil (IMO)

Huge double base

Viterra (VT)

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16, 40

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AT&T (T)

Major Break-out35,39

Major upside targets90, 150

Potash (POT)

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Major Break-out

Denbury Res. (DNR)

Oil & Gas

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Brinker Intl. (EAT)

HS S

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mfst

C

Publications

• Market Comments,• Buy and Sell Reports,• Trade and Investment Ideas,• Weekly Updates (we never ever drop a

stock),

• Caldwell Meisels Canada Fund,• TOP 100® Portfolio.

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Questions?