Bicycling and the Bear-o-meter


If you read the MoneyLetter, you may appreciate a 2-part column I am in the  process of writing for that publication. The columns outline how an investor might design a trading system. In the articles, I illustrate the process that we at ValueTrend utilize in buying and selling stocks. Briefly, the key elements of a trading strategy are:

  1. Broad market phase analysis
  2. Individual sector and stock  phase analysis
  3. Fundamental analysis
  4. Position size rules
  5. Sell rules.

I’ll post the articles to the ValueTrend website ( over the next 2 months after they are published. If you wish to read them earlier, I might suggest subscribing to the Moneyletter service. I think it’s less than $40 for a trial  subscription (


The reason I bring this up is because I view success in any endeavor as available only to those who apply  a structured, systematic discipline. For example, I am an amateur competitive cyclist. Racing bikes is different than one who pursues bicycling for general fitness and entertainment. My routine as a racing cyclist involves specific types of (often) intense riding on specific days of the week. I have been fortunate to train with one of the top amateur competitive cyclists in Ontario. Dave (my friend) has been a competitive cyclist for most of his life. At 64 years of age, Dave still wins or places very highly at open cycling events, often, if not usually, beating top-notch competitors who are 1/3rd his age. Dave overcomes his “age barriers” through the most disciplined approach to training and science that I know of. Food intake, bike positioning, structured training intervals, recovery methods and a scientific approach to every conceivable (natural) edge that Dave can utilize are part of his lifestyle. Dave is a machine. Although I am not in his athletic category, I have learned much from Dave regarding structure and discipline in cycling.



Similarly, my prognosis on the markets is a structured one. Like Dave, I incorporate elements of analysis that I have found to be successful in investing (although not infallible). And like Dave, I am always studying my trade to look for another edge.


The Bear-o’meter is a quick-glance tool that I created 2 years ago for use within my macro-market analysis (step 1, above). It incorporates 6 high-confidence indicators that measure market risk vs. potential reward at any given time. I post the Bear-o-meter periodically on this blog—notably when there is a shift from one of the three zones (Bearish, Neutral, Bullish). This is one of those times. My Bear-o-meter index has moved from bearish/neutral throughout the summer to neutral/ bullish as of today. The indicators show as:

Breadth: bullish

Seasonality: bullish

Relative fundamental value: bearish

Momentum: neutral

Trend: bullish

Sentiment: bullish


All in, the Bear-o-meter reads as 5, or neutral/bullish at this time. This is up from 2 in September—which was a bearish reading. Back then, sentiment and seasonality were bearish – bringing the level into its questionable zone.   While this indicator is not a short termed one, the Bear-o-meter is currently suggesting that conditions are ripe for a continuation of the bull market. This suggests that, despite short termed corrections, all lights are green for stock investors with a time horizon of more than a few months.


Upcoming events with Keith Richards


BNN “MarketCall Tonight” this Friday November 7, 2014 at 6:00pm

Phone in with your questions on technical analysis for Keith during the show. CALL TOLL-FREE 1-855-326-6266. Or email your questions ahead of time (specify they are for Keith) to [email protected]


  • Hi Keith,

    i have a TA question for you please! Have you ever heard of the TA pattern called “mirror image”?? this pattern apparently looks like a head and shoulder pattern (or an inverse head and shoulder pattern) and ACTS like a head and shoulder pattern (or the inverse head/ shoulder) but yet is called a “mirror image” instead! Have you ever heard of this pattern?? and if you have, then can you please explain to me why this is called a “mirror image” pattern instead of just a head and shoulder (or an inverse head and shoulder)??

    Thank you so much Keith!! I look forward to your reply 🙂


    • Never heard of it Eve
      But please don’t forget–naming a formation is much less important than noting if its a top or bottom phase. The fact that we no longer make higher highs and lows in an uptrend means its a topping formation. No longer making lower lows and highs means its a base bottom potential.

    • Thanks Keith! Yes, I agree with you re the “name” of something – but the person who wrote about this is a person who does a lot of TA (just like i do as well- I’m well known on Don V’s site 😉 – though I no longer post there)- and I recently posted (on a trading board) about a head and shoulder formation on the 5 day hourly chart for a stock – and this other TA person posted it as a “mirror image” pattern – mirror image I’m sure to the inverse head and shoulder pattern this stock just completed as of yesterday- but nonetheless, I’ve never heard of a “mirror image” pattern – so, i wanted to come to a well known TA person to ask about such a pattern- and you gave me that answer Keith – so, thank you 🙂

      Thank you Keith 🙂 look forward to watching you on BNN on Friday 🙂


      • Sometimes people like to impress with fancy names or knowledge. Pragmatically, I just want to identify the opportunity so I can make money or avoid loss.


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