I'm a big fan of technical analysis. It helps to give actionable signals with favorable risk reward.
We can view it as a "prescriptive" model, where a trader can develop models that are much more objective than just saying "the trend is your friend."
But sometimes it's good to have "descriptive" models to help guide your trading. These kinds of models can help you create a trading lens but aren't always that actionable. We could also call these models narratives, which I've mentioned in the past.
If you are reading this, odds are you aren't Bill Gross. You probably lack the proper capitalization to truly move markets.
But it's still a good idea to think like the fund managers with deep pockets (FMWDP).
Take this week for instance.
The northeast just had a massive hurricane come through that left many areas unscathed but wiped others out.
Either way, it's an "inconvenience".
So the FMWDP comes into work late Monday because it was a pain to get to the office from all the traffic. She is also looking forward to the 3-day weekend and probably wants to get an early start because of the nasty traffic from both the vacationers and the traffic.
And our FMWDP will probably not sell anything more right now, and if there's anything to be rebalanced, she will get a head start on the week because liquidity will drop off towards the end of the week.
From this perspective, we can start to develop our descriptive model. Odds are, those that had to sell have already sold, and may be looking to get back in. There's also going to be a sense of urgency to get business done before Thursday.
From this descriptive lens, we can then weight our prescriptive technical analysis against this backdrop. So far, the current market is lining up with this sort of thesis.