Podcast: Play in new window
Dave Allman joins the McAlvany Weekly Commentary to discuss the technical analysts who helped shape his market thinking, including Joseph Granville and Robert Prechter, two influential figures in the history of technical analysis.
This week’s highlights:
- Dave Allman discusses the analysts and ideas that shaped his approach to markets
- Granville and Prechter: two giants of technical analysis
- Get a copy of Wall Street Uncut, edited by Dave Allman, at https://www.elliottwave.com/mwc
About Dave Allman
Dave Allman began learning about money at age 11 while working summers on the Boardwalk in Atlantic City, New Jersey. At 19, he graduated from the University of Maryland with a degree in mathematics and bought his first house the following year just outside Atlantic City. After the casino gambling referendum passed and real estate prices began to boom, Dave’s interest in markets quickly overtook his original plans for a career as an actuary.
Dave has worked closely with Bob Prechter since 1983. He has lectured around the world on the Wave Principle, Fibonacci relationships, and investor psychology, and has taught advanced Elliott Wave classes to hundreds of investors.
“February 1966 is when the Dow peaked, both on a nominal basis and on an inflation-adjusted basis. On a nominal basis it got cut in half. On an inflation-adjusted basis it dropped from 1966 until 1982. And now you got Musk in 2026 being the first trillionaire. To me, those things, there’s a rhyming there. It’s not anything specific, but to me it’s the kind of thing that, as I would say, is really going to look good when you put a couple of arrows on the chart. And if 2026 ends up being a high, and SpaceX ends up being a peak, this doesn’t end well. We all know that. But what we don’t know is when does it end?” —Dave Allman
* * *
Kevin: Welcome to the McAlvany Weekly Commentary. I’m Kevin Orrick, along with David McAlvany.
Dave, we’ve got a guest today, another Dave. Tell us about him.
David: Dave Allman has been in the world of technical analysis for 50 years, and has had the opportunity since 1983 to be working with Bob Prechter. Through the early 2000s—late ’90s and early 2000s—he conducted a series of interviews which have been put into a book called Wall Street Uncut: Unconventional Interviews with Giants of Technical Analysis.
I love it, Kevin. I think it is a great introduction to the various methodologies, the things that have worked for various traders through time. And there’s many of these aspects that weave their way into the way that we manage money, indicators and thresholds and rules for risk mitigation that are absolutely imperative. And so, I look forward to the conversation with Dave.
Kevin: I’m also looking forward to hearing what books he reads. I know he is a voracious reader.
* * *
David McAlvany: Dave Allman, you’ve worked closely with Robert Prechter since 1983. And reading your recent book, Wall Street Uncut: Unconventional Interviews with Giants of Technical Analysis, I thought I was reading a Norton’s literature anthology of technical analysis. It was fabulous. Where do we start?
Your book is not the anthology, like thousand pages plus, it comes in a more modest 250 pages, but the breadth is still staggering. I went to the table of contents, and to be honest, my first question was, where’s Bob Prechter, where’s Louise Yamada, where’s Alan Shaw? And of course, I did find Shaw eventually buried in Chapter 12. I was grateful.
These are interviews conducted 25 years ago. And so our listeners might ask, “Are they still relevant after all that time?” And I would say, “Well, is the truth still relevant after 25 years, after 250 years or 2,500 years?” I think the answer’s yes. So thank you for opening so many varied lines to the truth, and lining out facts of the marketplace. Welcome.
Dave Allman: Thanks, David. And thank you for the very kind and generous introduction. I appreciate it. And thank you. I still have a copy of my Norton’s Anthology from when I was at high school, I think. And I didn’t finish reading that either.
So we decided—we being Bob and I—kicking it around one day, going, “The only time technical analysts get interviewed are on Wall Street Week.” And Wall Street Week has a bit of an attitude about technical analysts, and we’ve come a long way since the year 2000, let alone 25 years prior to then. So we just wanted to try something a little bit different where we let the technical analysts shine and talk about their methodologies more than they were getting to do on Wall Street Week. And that was the inception of the show and it just went from there.
David McAlvany: You know what I loved about the book is you’ve got 16 interviews with technical analysts that share a love for measurement, calculation, deep regard for price action. And all of them share in common charts, capturing history, reflecting bias, revealing belief, showing psychology, and maybe even at times the market psychosis. I’d love to start with your story. From the ’80s till now you’ve operated as something of a charts linguist. You’re studying the universal language of investor choice, and we see it in lines, we see it in the technical indicators. Where did that start for you?
Dave Allman: Well, I grew up on the boardwalk in Atlantic City. And in 1974, the gambling referendum in Atlantic City failed, and in 1976 it passed. And in May of 78 they opened the first casino in the hotel a half a block away from where I’d spent all my formative summers from when I was 11 years old, right across from Steeplechase Pier. And I got hooked on the gambling stocks. The gambling stocks back then were a less roided up version of bitcoin or AI nowadays. (You used to say they were a less roided up version of biotechs back in the late ’90s or dotcoms in the ’90s, but now you got to talk AI and cryptos.)
And essentially you could throw a dart at anything that had anything at all to do with gambling stocks, and the stocks were just going up. Just up, up, up. And it was a few months until I learned that stocks actually could go down. And that was an interesting lesson, being on margin and finding out that, wait a second, you just lost a lot of money.
David McAlvany: Markets can move both directions.
Dave Allman: Yeah, but I was absolutely hooked, and that’s what led me to get involved in technical analysis. Essentially, Joe Granville, who was hot as a pistol back then, was touring, and he was primarily in the Northeast, and that’s Philly and Jersey and et cetera. And Granville was not only a major proponent of technical analysis, he was also an incredibly entertaining, iconoclastic presence, and he was touring. So everything about him drew me into the business.
David McAlvany: We’ve got a number of interns this summer who are learning about equity analysis. And there’s fundamental analysis, which we’re starting them with, just so that they understand the difference between a balance sheet and an income statement and various metrics, whether it’s price earnings ratios or price to book. But the keystone for the summer will be a big book on technical analysis, and for them to bring that synthesis. What was your gravitational pull towards technical analysis as opposed to fundamental analysis?
Dave Allman: Well, fundamental analysis didn’t work, and there were any number of things that you would see. The basic one is, a stock comes out with good earnings, good guidance, good everything, and it goes down. Or vice versa, stock comes out with bad news, bad this, bad that, and it goes up. There was no rhyme or reason to how that— That didn’t work.
And there are many, many other examples that we can look at throughout history. I mean, look at how the Federal Reserve Board, for example, who are supposed to be guys who get paid for their opinions and paid to know what to do, and yet completely missed inflation, completely missed the rise in interest rates, were theoretically in charge as interest rates skyrocketed to close to 20% back in 1980, 1981. So it wasn’t that difficult to go, “Gee, fundamental analysis probably really doesn’t get it. What else is there? Oh, let’s check out technical analysis.”
The first book that I ever read, and what really got my attention because I’m a math guy, was How Charts Can Help You in the Stock Market. The book is by Bill Jiler. It’s just a very, very basic—I don’t want to say watered down or dumbed down—version of Edwards and Magee. But that was what did it for me, was the first time looking at charts and going, “Oh my gosh, there’s a history here. Look at this. And look, there’s not just a history that goes back three months or six months or in some cases 10 years or even longer than that, and you can see what happened and how stocks absolutely— Wow, this stock really came from nowhere, or oh my gosh, look, this stock has dropped 80% four other times in its history.”
You don’t get that from fundamental analysis on Wall Street. You don’t get that from people who don’t look at historical charts and get a sense of what has come before. And if you were asking me, “Hey, Dave, I got a group of interns who I’m trying to teach about the stock market.” Man, teach them to look at a chart, teach them to look at history and see what has happened, and not to take what they hear anywhere at face value. Do the research yourself and check it out.
I don’t want to get too tangential, but one of my pet peeves is when you’ll hear some commentator report a number as though it’s a big deal number. In fact, a lot of what you see nowadays are numbers that are reported as: this number just set a record, that number just set a record, record number of this, et cetera, et cetera.
And you go to read the article— That’s the headline— You go to read the article and you see that it’s a record because their dataset only goes back five years. Well, this market’s been around for 50 years or 100 years. How can you make that statement? And it’s because they are casual and sloppy about it. One thing that you would not say about any of the people that are in the book or any of the people that I interviewed over the years was that they were casual or sloppy, because they absolutely, positively were not.
And one of the cool things for me about all these people is how old-school things were back then. I used to be the youngest guy in the room, I’m not anymore. But back then we didn’t have computers on everybody’s desk. You had to use a payphone if you wanted to dial up your broker, and hopefully you could get through so that you could get a quote, and a lot of these people did charts by hand. I think that there’s something to the idea that you get more of a read, more of a sense of the market, back then when these guys were plotting and in some cases—Justin Mamis, for example—hundreds of charts a day by hand. He knew whether stocks were moving, were feeling heavy, or whether there was something else happening.
David McAlvany: Well, you’ve got the 16 interviews, and with so many methodologies for technical analysis, is there a Rosetta Stone that ties them all together?
Dave Allman: Not that I’m aware of. What I’ve told people over the years, because I’ve talked to a lot of guys who trade and a lot of guys who are looking for the Holy Grail and this, that, or the other, and for some guys it’s percent R, for some guys it’s stochastics, for some people it’s SMACD, other people it’s Elliott Wave or candlesticks, et cetera.
What I’ve always and ever told anybody is two things: One, if you’ve got something that works, don’t let anybody talk you out of it, no matter how ridiculous it may sound when you’ve tried to explain it to someone. If it’s working for you, then just continue doing it until it doesn’t.
And the other thing is, you only need one thing. So if you’ve figured out how to use a moving average crossover and that works for you, use it. If you figured out that, man, I just like to trade breakouts from triangle patterns, and that works for you and you know how to manage the risk and how to allocate your assets accordingly, then use that. I think it’s whatever works for the individual.
David McAlvany: You curated a list of technical analysts for this book, and I wonder why these analysts, and what do they bring together collectively? Because frankly, being the person who put together the “anthology,” my guess is that there was some benefit to you of seeing maybe a little cross pollination or how these systems can in fact work in a complimentary way.
Dave Allman: I would love to have some eloquent answer to that, and say that I based the selection on this, that, or the other. Over the course of about a year and a half, I conducted somewhere between 50 and 60 interviews, and they were people who were interesting, who were important to the field of technical analysis, and were active and were interesting and had done something that was unique and worth talking about. And as far as narrowing that list down for the book, I didn’t use a specific methodology for saying, “I need this person.” Granville’s in there because he’s Granville. I mean, he’s the guy. He was, of all the technical analysts on the planet—ever, I think—he’s the one who had the biggest presence—the biggest personality, for certain—and his contributions are significant.
But everybody else in the book is in there and has— I think anybody could glean at least one important lesson, insight, value from any one of the interviews and use it to their benefit. And I think that the history’s very cool. A lot of these people contributed things that we take for—when I say “we”, anybody looking at charts today, anybody using an online trading platform—takes for granted. For example, anytime you go to a trading platform or pretty much even just a— Well, Schwab’s a trading platform, I guess, not to just name Schwab, or Interactive Brokers or anybody else. You have a choice of pulling up a line chart or a bar chart or a candlestick chart.
In the old days, if you wanted to plot anything, you had to draw that on a piece of graph paper and you had to grab the high and the low and the open, if you wanted it, and the close, and put your own hash marks on the chart, let alone doing candlestick charts. Now all of that’s programmed, so somebody like Steve Nison—who pretty much was responsible for making, for popularizing candlesticks in the United States—should be credited for having done that. People take the 200-day moving average like it’s some magical indicator; that was Granville. Stage Analysis is Stan Weinstein. Ned Davis took the Weekly Hotline and turned it into a major institutional research firm.
And then I guess there’s some people in here who I’d consider a little bit more esoteric. Someone like Evelyn Browning, whose dad, Iben Browning, came up there absolutely, going to see that, oh well, he forecast a volcano that didn’t destroy the world and that’s what people like to talk about, of course. We see that happen in a lot of different areas. But Browning made some very, very insightful comments about long-term climate cycles and climate change and things like that that put everything that is on the top of people’s minds today about global warming in a much better perspective.
People forget that back in 1975 the big worry was global cooling. They’re worried about the next mini ice age. And again, look at the chart. Somebody like Browning, or his daughter who continues his work, look at charts going back centuries and demonstrate climate cycles so that you can see, oh, this has happened before, oh, this isn’t that strange, oh, it’s not that this was happening a thousand years ago and, gee, we weren’t flying airplanes and theoretically destroying the ozone layer then, so maybe it’s not us.
David McAlvany: There’s a common theme throughout your interviews that I picked up on, which is to be a successful trader— And of course, they’re using technical analysis to trade and make money. But the common theme seems to be, or themes, risk management and adaptability. Why are those important for investors? How does technical analysis support them?
Dave Allman: I think that technical analysis— There’s a book by a fellow named Dave Aronson called Evidence-Based Technical Analysis. And I’ve commented over the years that I wish that somebody had insisted that I read that book before I got involved in the career of looking at charts and technical analysis and being involved in the market. Because basically it’s easy, it’s so easy for people to look at a chart of, let’s just say a moving average crossover. Everybody’s familiar enough with that, and go, “Oh, I’d have bought them when the fast moving average crossed over the slow moving average here, and I’d have sold them where the fast moving average crossed over the slow moving average here or maybe down through zero or what have you. And gee, I’d have caught this move and I’d have caught that move and I’d have done this and I’d have made a lot of money.” No, you wouldn’t.
And the reason you wouldn’t have is because the mind seems to have a tendency to overlook all those areas where the decision that you would have had to make half a dozen times in real time as that same moving average cost up and then down and then back up and then back down again before it finally crossed up and the move finally occurred, and you weren’t there for it because you were burnt out and your discipline had withered a little bit. And I know the question is about risk, and I think that even with any form of technical analysis there has to be an additional layer of, how am I going to risk the funds that I have to put at risk, how am I going to allocate, how am I going to place a wager, how am I going to determine how much money I can lose?
I think there are numerous ways to do that incorrectly, and there are numerous ways to do it correctly. I don’t know what the holy grail to that is, but it’s something that, again, people should not summarily or casually ignore. It’s something that has to be dealt with. And as you point out, a number of the guys in here—Stan Weinstein, Justin Mamis, I think specifically Earl Hadady—all talk about risk, but I don’t think that any one of them has, “Hey, here’s a golden formula that’s going to guarantee that you make money.”
David McAlvany: It seems like there’s a rules-based system when it comes to technical analysis, and those rules could be as simple as cutting losses and letting profits run. Those risk mitigators could be back to position limits and what you’re describing about, how do you allocate funds, what’s too much, what’s too little? The unique thing seems to be lack of ego. When I think of the adaptability piece, if the market moves against you, price action is not supportive, you break a particular trend line or what have you, what’s the next thing that you do?
You don’t convince yourself that you’re right, you don’t even try to justify the position that you’ve taken, you go ahead and reverse course. And that adaptability seems to fly in the face of a lot of the ways that investors approach the markets, where they get enthusiastic about something, they buy into an idea or a narrative, or going back to our earlier conversation about fundamentals, develop this case that this is the greatest stock ever to own, only to discover you’re losing money, but you remain unconvinced that you’re wrong—can’t be wrong. There’s perhaps a little bit of ego involved. I love the adaptability built in.
Dave Allman: Right. And if you’re not humble, the market has a way of providing that humility, I’ve found, over the years.
David McAlvany: Oh, yeah.
Dave Allman: Right? That sounds right.
David McAlvany: Oh, yeah.
Dave Allman: Again, I don’t know if there’s a methodology out there. For example, what methodology out there told you that you should buy Micron a year ago, let alone back anywhere coming off the lows in 2009? I mean, the stock was $2 on a split-adjusted basis. It’s over 1,000 today. What combination tells you you need to be buying this $2 stock as opposed to another $2 stock? For me, after being in the markets for, I’m pushing 50 years, that’s still a question. It’s largely a matter of individual makeup.
Take bitcoin for example. Forget buying it if you bought it at 10 cents or when it was— Here’s a question. In the year 20— What was it? 2010, bitcoin’s coming out, it’s a new currency, it’s trading at 10 cents. And at that point, I had a couple of dollars to rub together. Is that the expression? Not like in 1980 when I had my brief, failed stint as a stockbroker because I wanted to be near the stock market and this is great, they’ll pay me and I can be near the stock market and sit and watch quotes all day. But I quickly learned that sales wasn’t my forte. It was more technical analysis. And interest rates were at 20%. It’d be great to lock some of that in, but didn’t have any money.
Why didn’t I put 100 or $1,000 in bitcoin in the year 2010 and leave it there? Even if you had, and I’ve had my share of, I bought this stock. Well, I bought it at a dollar, maybe I’d put a few dollars into it, but there was no way. There’s no way that if I had a position in a stock like Micron near the lows in 2010 at $2, that I’d still own anywhere close to that position here in 2026 with the stock at 1,000. It’s just not happening. So, what in terms of asset allocation or money management or just discipline tells you or allows you to stay in that stock? I don’t think that there will ever be an algorithm that does that for people. I don’t think that’s possible.
David McAlvany: I think it was Ralph Acampora who basically said, “Prudential hired me to get in early and to get out early.” And it didn’t have to be perfect. You didn’t have to be there for the entire move, but you were looking for signals to do something to take action, and that could either be growth oriented or risk mitigation oriented.
Many of the interviewees that you have in the book I either know personally or have met at conferences or have read or read about over the past 25 years. And there’s no bibliography at the back of the book, but there is reference made to dozens of books throughout.
I wondered if you would pick top three, top five that have influenced your thinking and trading practice within this genre of technical analysts.
Dave Allman: Personally, like I said, Jiler was not in the book because he wasn’t around to interview, but if people could find a copy, I would read that. Granville’s New Key to Stock Market Profits was 1960, plus or minus a couple of years, and I think people should read that just to see what the state of technical analysis was way back then. And again, I realize I should be promoting the book, but I would encourage people to read Dave Aronson’s book, Evidence-Based Technical Analysis. I think that’s important that they read that. Stan Weinstein’s book is a great overview and a great presentation of technical analysis on a practical basis.
And then I guess the other book that influenced me significantly was not written by Evelyn Browning, but by her dad, Iben Browning, Past and Future History. I think that’s an important book as well because it deals with climate and it deals with the influences that climate can have on economies and on people. And I think also because it underscores that there’s data and charts going back thousands of years in some cases, and to ignore that data is to be out there playing a game without all the tools available to you to do your best job. And I think that’s true as far as markets are concerned too.
David McAlvany: Well, to illustrate that point, you mentioned Micron. So, it goes from a $100 billion market cap last year to a trillion dollars this year. Significant move. Does it go to four trillion? Well, one thing we do know is that semiconductors run in pretty radical cycles. We’ve had 14 cycles since the 1960s, and they tend to be very boomy and very busty. They go up like a rocket and then when the rocket runs out of steam, they roll over hard.
If you were looking at a one year chart, you don’t have enough data. You don’t understand that this is a whole sector that gets sucked up into a fervor and tends to overproduce and then deals with inventory gluts. And you don’t see inventory gluts in the charts, but that’s what’s behind the scenes. You just can’t sustain it. The interest and activity in the stock wanes, price suffers, and you start to cycle all over again. But you go back 50, 60 years, and, yeah, 14 cycles for semiconductors.
Dave Allman: Right. And sure, you can look at the chart and you go, “Oh, well, it’s a parabolic rise, and parabolic rises always end poorly.” But something could be parabolic at 200 and then you change the scale and, gee, it looks even more parabolic. It’s really parabolic here at 500. And now look, it’s at a thousand, now that’s a parabola. You still don’t know if it’s over or not. And in the meantime, you got a couple of margin calls between $200 and $1,000 if you were short the name, right?
David McAlvany: Yep.
Dave Allman: Hey, I used to read your dad religiously. Can I just mention one thing about something that has stayed with me all these years?
David McAlvany: I’d love to hear it. I had no idea. This is great.
Dave Allman: It’s positive. Anyhow, your dad’s on. Back in, I want to say it was 1989, I’m pretty sure that that was the year, but he wrote a piece. He had his regular newsletter. It was like a beige color, right?
David McAlvany: Yep.
Dave Allman: The paper that it was printed on, because his business is significantly different than it was 40 years ago. But your dad wrote a piece about Russia and about the Russian deception, et cetera. And it was just really so well done talking about the history in Russia and their methodology for combat and for world conquest. And they would say one thing and do something else, and they had a long-range game. I’ve read thousands of articles over the years, and it’s one of the dozen or so that stayed with me. And I just wanted to mention, I always enjoyed reading your dad’s stuff, and that piece in particular stayed with me.
David McAlvany: Well, if you’ve got kids, be encouraged. The older your kids get, the smarter you become. And as I look back and go through the archives, I kind of shake my head. I’m like, “Wow, that’s my dad. That’s amazing.” Well, I wanted to thank you for saying that. I appreciate that.
Dave Allman: Yeah, it was very cool. Very cool.
David McAlvany: At a high level, there’s a couple out of this 16 that I think have probably made an impression on you. If there’s some things that you could glean or distill down for our listeners, for instance, somebody doesn’t know Joe Granville. What is the importance to technical analysis? More interesting to me, frankly, is how he shaped your approach to the markets, what impression he left on you. He’s an influence. And this whole principle of ad fontes, go back to the fountainhead. I’m interested in Dave Allman’s mind. To get into your mind, I need to know what’s been in your mind. Where did it come from? So share with me Joe Granville, Stan Weinstein, Ned Davis. The ones out of the 16 that really shaped your thinking and your approach.
Dave Allman: I think Granville, for me at least, was “take nothing for granted. If something is obvious, it’s obviously wrong.” That was Granville’s line. And the market basically took no prisoners. I don’t know that Joe would consider himself jaded and cynical. I would absolutely describe myself that way. But Joe didn’t cut anybody any slack as far as the market is concerned. He had his song, The Bag-holder Blues. And he had a little sock puppet that he would lecture with. He was a bank credit manager. And Wall Street and the financial establishment— He was anti-establishment. That the establishment was always late to the game, and always after the big run-up in the stock had occurred, they would say, “Give me that bag.” And they’d just ride it all the way back down. So Granville was a big influence, a very big influence.
David McAlvany: How about Stan Weinstein?
Dave Allman: I knew Stan a little bit better because he and Bob were friendly. They were both in the touring lectures circuit pretty much the same time that they would run into it. I used to listen to Stan’s update. I used to wait for, I’m going to say it was Friday night. If I find out in hindsight that it was Tuesdays, then oh well. But used to wait to listen to what Stan had to say about the market on his hotline that he would record once a week. That was a paid-for service. You got the letter, professional tape reader which he bought from Justin Mamis. And talk about the markets and whether stock was in stage one, two, three, or four, and what that meant, and not to stray from that.
But Stan also, I’d spoken to him a couple of times, and I had just started going out on the lecture circuit, and this is a while ago, and he said, “Dave, be honest, be pithy, have fun.” We’ve spoken, I guess I talked to him sometime in the last few months because of the book, and he’s just always been such a great guy, just a great guy.
David McAlvany: Before we move on to the next one, I’m curious if his stage analysis, stage one, two, three, and four, can you apply that to an index as well as a stock?
Dave Allman: Oh yeah, absolutely.
David McAlvany: Where would he put the S&P in stage analysis today?
Dave Allman: I don’t want to put words in Stan’s mouth, and I don’t know. I’ll tell you where it’s not. It’s not in stage 4A or 4B. Absolutely not. Nor is it in stage 1 or even stage 2. So I guess that narrows it down, but each stage has an A and a B so we’ll leave that there, though.
David McAlvany: It’s a helpful reference point. It remains inconclusive. That’s fine. As you go through your book, there’s a lot of these guys that’ll reference things like stock market capitalization to GDP. And Jim Bianco was talking in his chapter about how we’d reached an all-time high. It was crazy, never seen before at 150%. This was meaningful to him, not necessarily as a market timing tool, but you know you’re in the neighborhood of elevated levels when you’re up in this space. Well, that was 150, and that was the year 2000, and now we’re 219. And if it was rich then, it’s rich now.
Combine that with a stage 3-ish. With Weinstein, you begin to build a composite, and I just wonder if that’s not a part of the value of reading your book is to say there may be one thing that you trade with, one tool that you use, but there’s also a benefit to this composite. If you can create a mosaic of indicators, what does that tell you?
Dave Allman: Are you asking what does it tell me today now about the market or in general? As I was putting the book together over the course of the last part of 2025 and the first part of this year, and I’m going through the interviews, many of which I hadn’t really looked at for a quarter of a century.
And went for a walk with Bob, and I said, “This is really a great collection. There’s not a bad interview in here. Everybody has something to contribute. Everybody has something unique to talk about.” And I’ll be honest, I don’t have a “this is the perfect mix” recipe of things you put together. I think that everything that people talk about, all the different techniques and methodologies and approaches that the interviewees discuss are worthwhile. I think everyone brings something to the table, and I think all the stories are very, very interesting. It was a significantly different time when many of these people were coming up in the industry and in the marketplace.
David McAlvany: And yet what we see after 25 years is that truth ages well, truth ages well. I read it, and it was refreshing. I’ve got lots of marginalia in my copy, and some of it is a conversation about current market dynamics. Some of it is historical in nature, kind of tying points made in theory to things that I’ve observed in the charts through the years, and that’s the reality, is truth ages well. So what you put down 25 years ago, what you structured into this book, it’s very informative. So we talked about Joe, we talked about Stan Weinstein. Ned Davis, anybody else make the short list?
Dave Allman: I’ve read Jim Stack’s newsletter InvesTech Research for gosh, close to 40 years, maybe a little bit longer, close to 40 years. And Jim manages, I used the word runs and he corrected me and said, “manages, Dave.” And manages a nice chunk of change these days. And if I were directing someone to a newsletter that I thought was balanced and did a great job looking at history and a great job assessing all the indicators and putting a composite together and is actually doing it in real time, as I say, he’s managing money actively. Jim Stack’s InvesTech newsletter would be in my top three absolutely. I don’t think Jim has a book out himself.
David McAlvany: What does make me wonder, if Jim’s top three, who are the other two?
Dave Allman: Well, I’ve worked with Bob since 1983. When I first read Bob’s newsletter, I got it from a friend who worked with Bob Nurock at Butcher and Singer up in Philadelphia. Nurock was at Butcher and Singer. I was at Janney back then, and I read Bob’s newsletter about the Elliott Wave Theory and I said, “Of all the stuff that I’ve read, technical analysis, this guy’s different.” And it was different because it was based more on pattern recognition. And at the time, I’m in my 20s, I’m like, “This guy’s got to be old the way he writes.” And he wasn’t, he’s only a few years older than I am, and I’ve been very, very fortunate to have been able to work with Bob for as long as I’ve been at work with Bob.
Back then I told my friends, because I’m in the Northeast and they’re like, “Why are you moving to Georgia?” And I said, “Well, it’s kind of like I’m interested in physics and I’m getting to go work with Einstein.” And I still feel that Bob has a passion for the market—and like I say, he’s a few years older than I am—that some people never have in any industry. I mean, the guy still looks at one-minute charts and tick divergences and breadth statistics every day in and out. Some days it’s actually daunting, and he’s been prolific. So I’m going to put the Elliott Wave Theory in there because I think that people should read that because I think it’s a very good perspective.
David McAlvany: I read every copy that comes out, and Bob Prechter— It’s such a great synthesis, again, of technical analysis—of course, of what he describes as socionomics and cultural insights being brought to bear into a market analysis. It ties into a question I have, maybe something a little bit esoteric. Many of your guests made a correlation between the worlds of music and that of markets. And I was at dinner, this is probably five years ago, and my wife’s in a local theater group, and one of the guys that’s in that theater group, he’s a retired Treasury trader.
So over dinner, we’re talking about the Treasury markets and we’re talking about interest rates, and he starts riffing on his love of Elliott Wave, and I’m like, “I’m going to have dinner with Bob Prechter in about two months.” We met up down in New Orleans and had great dinner, and he’s like, “Wait a minute, you know Bob Prechter?” And he goes into this story about how he made this big pitch, an institutional pitch in London, and he brings in this full mock-up of a model in a super short skirt, and of course all these very stiff collared London bankers are wondering what the heck is he doing with this rather attractive paperboard life-size model, and she’s very—not well covered, I guess you could say.
And he goes in and he starts talking about the Treasury market, and he talks about these market indicators. And all this to say, we’re sitting there at my friend’s house, and he’s talking about Bob, and I see all these guitars around his living room, and he loves music. So here’s a Treasury trader who loves music. I know Bob absolutely is a fanatical music connoisseur, musician, himself, and there’s a couple people in your book as well that there’s this connection between the worlds of mathematics, the world of music, and the world of markets. What are your thoughts on that?
Dave Allman: I think, is that left brain or right brain? It’s left brain, isn’t it? Music and math? There’s a structure to music and there’s a structure to markets, and at the same time, I think Granville talked about it, he would bring up piano when he would do his lectures. Then he wouldn’t bring one, they would provide one, and Joe would play it and talk about how there was a pattern to the markets just as there’s a pattern in Bach or in Beethoven, and you can tell if a note is out of place. And maybe that’s true in the markets with charts as well. So I can [unclear]. I don’t have much of a bucket list. I have no desire to play golf or to travel, but I’d really like to play piano better than I do. Archie Andrews played piano at one of the major cycles conferences, which is another book people should read, book on cycles from many decades ago.
David McAlvany: Yeah. There was the comments from Connie Brown, and she’s talking about octaves and the connection between octaves and Gann lines. And again, I think it is this pattern recognition that fits well. I think for many people the first thought of technical analysis is it’s somehow voodoo. It’s not tied to reality. It’s actually more tied to reality, whether you’re talking about Fibonacci sequences, octaves, Gann lines, the interconnection, the deeper realities there.
Dave Allman: Technical analysis has come a long way in the last 40 years when it was really, really the ugly stepchild off in the corner, and that is not the case any longer. A lot of that credit goes to guys like Ralph Acampora and Connie Brown. Connie was very active in IFTA and Ralph was one of the founders of the MTA, in getting technical analysis recognized as a discipline pretty much by the New York Stock Exchange, and getting the CMT exam and licensing to be up there with the CFA. So it’s the old Virginia Slims: We’ve come a long way, baby. Yeah.
Connie, unfortunately, was very young and she passed away last year. She worked with Elliott Wave International for a while, and Connie could be very, very intense. The book talks about, she was a world-class swimmer and incredibly disciplined and incredibly focused, and she brought that to the markets, too. You don’t want to get in between a trader and their focus. The only advice I would give to somebody, yeah.
David McAlvany: Well, so we talked about the connection, perhaps esoteric connection, between music and the markets. Now to sort of a practical application. This is as we wrap up our conversation today. Your views on markets, drawing from technical insights, you could give a two-sentence answer, however much you want to go into this. But your insights on US equities, bonds, thinking of Treasuries, precious metals, real estate, the big categories of investments. Technical analysis tells you what about those big asset classes today?
Dave Allman: I think a traditional read of technical analysis, stocks are incredibly overextended. But you could have made that statement, as you pointed out, a year ago, or several years ago. When you get an index like price to sales and you go, wow, it was 1.5 in 1987—and I’m making that number up—and it was 2.5 in 2000 and now it’s at 4.6. How high is high?
David McAlvany: Well, it would be SpaceX at over 110, with the long-term median being 1.6.
Dave Allman: I look at things that strike me as— Since you mentioned SpaceX. Bob just wrote this up in the newsletter, but we had talked about it earlier this week. Musk is the first trillionaire, et cetera, et cetera. Everybody knows that. But it got me thinking, because Howard Hughes, right? He was a billionaire and he had something to do with planes and he had long fingernails and went off by himself. When was Hughes popular? And I dug it up. I just Googled it a little bit. And Hughes’s peak fortune was— Guess a year. Guess what year Hughes’s peak fortune was?
David McAlvany: This might be late. I’m thinking of the popularity of airplanes, 1937.
Dave Allman: No, no. That’s too early. Okay.
David McAlvany: Too early.
Dave Allman: But he was big then. To be honest, I was thinking Hughes, I was thinking, yeah, he must have been ’40s and ’50s, right? Anyhow, Howard Hughes’s peak fortune was in 1966.
David McAlvany: Oh, that’s classic.
Dave Allman: Now 1966, I’m sure you know, but for the listeners, I mean February of 1966 is when the Dow peaked both on a nominal basis and on an inflation-adjusted basis. On a nominal basis, it got cut in half. On an inflation-adjusted basis, it dropped from 1966 until 1982. Now you got Musk in 2026 being the first trillionaire. To me, those things— There’s a rhyming there. It’s not anything specific, but to me it’s the kind of thing, as I would say, that’s really going to look good when you put a couple of arrows on the chart. If 2026 ends up being a high and SpaceX ends up being a peak— I mean you can’t have extreme— This doesn’t end well. We all know that. But what we don’t know is when does it end?
David McAlvany: Right.
Dave Allman: Technical analysis is going to give you, whether it’s pattern recognition and you’re counting to five with Elliott Wave or whether you’re looking at moving averages and you’re using a cross, or whether you’re looking at a divergence on a stochastics or an RSI or Williams %R or whatever, there will be a signal, and that signal might be on the five-minute basis or the 10-minute basis or a 15 or a 60, or a daily or a weekly, whatever.
What you don’t know is is that the big kahuna? What did I just reel in? Did I reel in, okay, this is just another two-day top and they’re going to scream to a new high next week and I better get out of the shorts that I just put on, or did you catch something bigger and you’re going to, as you said earlier, cut your losses, let your profits run? How do you know?
So do you trail a stop? Do you use moving averages? What period moving average do you use? Do you try to count to five and count to three and then count to five again? Which one of those is going to work out for you? Sometimes it works out and sometimes it doesn’t.
As far as bonds are concerned, I have a personal bias. I would love to see rates go into double digits, because I’d like the T-bill interest now that I have a couple of shekels that I could actually collect interest on.
David McAlvany: What about real estate? People tend to think of that as a safe place to be. I had that question asked yesterday on a call with 500 people, and they’re like, “Yeah, but what about real estate?”
Dave Allman: Yeah, real estate’s not a safe place to be. Everything cycles. Real estate does the same thing. I have a very difficult time, because my kids both bought property sometime in the last few years, and after me saying prices are awfully expensive. It used to be $100 a square foot would buy you a very nice interior to a home back 30, 40 years ago, maybe even more recently depending on when. Now you get barely builder grade, and they’re charging $300 a square foot for it, and people are fighting over it.
Now that’s changed a little bit over the course of the last couple years as the market’s changed and interest rates are no longer 3% to get a mortgage, and people are just like, “I can’t afford to pay that.” But those things cycle. Real estate’s going to come back.
It can be a store of wealth, but that depends on whether or not it’s a consumable or whether you’re looking at it as a speculation. If you look at any long-term chart of real estate prices and you believe at all in reversion to the mean, you know that one of two things are going to happen. Either real estate is going to sit here and prices are not going to go higher for the next 15 years while that average catches up to them, or real estate prices are going to drop 30 to 50%—which, I get it, gee, how could that possibly happen—in order to get back to what’s traditional mean level?
David McAlvany: Well, there’s the mean reversion suggestion, but there’s your comments on US Treasuries as well. You see the 10-year march towards 6, 7, 8%, let alone the double digits that you are dreaming and hoping for. If we get them, where do you think real estate is? I mean this is a levered asset.
Dave Allman: I don’t think they have to go together. Higher interest rates don’t need to take real estate prices higher. I would point to 1981, 1982 when real estate was definitely in the doldrums. I was there, I know, and rates were sitting at 20%.
David McAlvany: And that’s what I meant. It’s like the other end of the seesaw. The higher the rate goes, the lower the home value goes, particularly if there’s debt attached to it. So the last one, just to get an idea of where you think metals are today and what their future holds as a technical analyst.
Dave Allman: If you took Weinstein’s approach, I think the metals are certainly in stage three somewhere and haven’t quite finished that up where they’re ready to launch again, and the plethora of radio ads from a variety of celebrities that came out when gold was 5,000, pushing 5,500 kind of said it’s done for a little while.
I know the guys who do the Elliott Wave stuff at the office who spend a lot of time with gold are looking— Did a good job calling it or were looking for a correction, and I think for a little bit lower before it gets its feet underneath it again and then heads higher on an intermediate term basis. So I’ll defer to them.
David McAlvany: Yeah. We’ve talked to Steve Hochberg, and the impression that I got was short term correction; intermediate, long term, it’s got legs. But they also take it a day at a time.
Dave Allman: Right, exactly. You’ve got to give credit to the guys—I think your dad would have been one of them—who were long term gold bugs when gold was— After it peaked at 850 in January of 1980 and it’s come down, it’s trading $250, $300, $350 an ounce. Long term, the guys are like, “This is real money, this is it. This is where you got to be,” and you got to buy gold.
You have to respect a guy who had not just the vision but the conviction to say, “I believe that gold is real money and that everything else is fiat, and gold is where I’m going to put my money,” and who has acquired and accumulated and held onto gold for the last 30 years, and owns it at less than a tenth of where it’s trading today. You have to respect somebody for being correct and acting on that conviction.
David McAlvany: It’s amazing to have that conversation with my dad. He’s got ounces at 35, he’s got ounces at 197.
Dave Allman: Yeah.
David McAlvany: He’s got ounces at 102 in the context of the correction from 197 to 102 on its way to 400 and then 875. He owns more ounces at 450 off the correction of 875. And he’s really not particularly perturbed by the fact that he has ounces at 850-ish and 450-ish and 102 and 197.
Dave Allman: Yeah. That’s the whole we’re not worthy. You got to look at a guy like that and you go, “Well done. Well played.”
David McAlvany: Well, Dave, thank you. I’m going to say the same. Well done and well played. I appreciate your book. I appreciate the effort that you put into the interviews a couple decades ago and the effort to put it together into a book format. It’s a great primer into the various methodologies and technical analysis. It broadens the scope and I think is going to create a good bit of stir. So I appreciate that. Thank you very much, and thanks for joining us on the Commentary.
Dave Allman: David, thank you for taking the time and guiding the interview. I appreciate it very much.
David McAlvany: Dave, if people are interested in finding more about your work and ordering a copy of the book Wall Street Uncut, where can they find it?
Dave Allman: It’s elliottwave.com/mwc. That will take them directly to a link for the book. I can say with certainty the book is better than I’ve represented in this interview.
David McAlvany: Oh, this has been fun. This has been fun. Dave, I look forward to a dinner in Atlanta. Next time I’m through town, I’d love to get together.
Dave Allman: Okay, terrific. Thank you, David. Very nice talking to you.
* * *
Kevin: What an interesting interview, and I think it was a shock to you, Dave, that David Allman was also reading your dad probably when you were just a child.
David: Well, I actually have some recollection of that particular newsletter—
Kevin: I do, too.
David: —because it was the look at Glasnost and Perestroika and the very complicated and well thought-out program of opening up and bringing in foreign direct investment into the Soviet Union to sort of refortify and retool for the next stage of progress towards world domination. Now outside of the Cold War that might sound a little bit crazy, but that was the world we lived in, and that was the letter my dad wrote, and it does put a smile on my face.
Kevin: He really had so much respect for your dad too, because here’s a technical trader. Prices mean a lot to technicians. Yet when it came to gold, he just basically said of your dad, well done and well played. For a guy to go all the way back to 1972 and just see what gold is, whether you buy it low or whether you buy it high, it didn’t matter, and he appreciated that.
David: Yeah. No, that’s a reminder of what my father’s legacy is.
* * *
You’ve been listening to the McAlvany Weekly Commentary. I’m Kevin Orrick, along with David McAlvany and our guest today, Dave Allman. You can find us at mcalvany.com and you can call us at 800-525-9556.
* * *
This has been the McAlvany Weekly Commentary. The views express should not be considered to be a solicitation or a recommendation for your investment portfolio. You should consult a professional financial advisor to assess your suitability for risk and investment. Join us again next week for a new edition of the McAlvany Weekly Commentary.
