Thursday, September 19, 2013

Joe Granville, RIP

Joseph Granville, a stock market newsletter write and, technical analyst, with a one-time huge following, has died. He was 90.

Granville reached the peak of his fame in the early 1980s, when he was bearish, while the stock market crashed as a result of Paul Volcker's tight Fed monetary policy. Many at the time viewed Granville as something of an oracle as a result of his bearish warnings. I always thought of him as a personality who tended to prefer the bearish side and who just happened to be in the right place at the right time in the early 1980s, when Fed forces were pushing the market down anyway, to match his bearish-type personality.

He had published the Granville Market Letter since 1963, and also warned of the stock market slide of 1977 to 1978..

He fell out of favor with stock market followers, not surprisingly, when Volcker reversed engines and started printing massive amounts of money, beginning in August 1982. The stock market exploded. Having no monetary theory and being more of a great technical analyst, Granville never saw the upside reversal coming, which in its early stages would not have been detected by the type of technical analysis Granville used.

That said, Granville's invention of the technical tool, on balance volume, which measures stock volume on upticks against down tick volume, is an important technical tool for short-term traders in detecting money flows. (It will, however, be of no help for major moves like the August 1982 move that was caused by Fed activity that could not have been detected in advance by internal stock market money flows.)

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