Joseph Granville passed away over the weekend, he was a well known technical analyst and newsletter writer who moved the stock market with his bearish calls.
He started the Granville Letter in 1963 and was one of the first to use pure price action as an indicator versus earnings and economic data. His best calls included bearish calls in the late ’70s and a tech bubble call at the Nasdaq peak in 2000. He also correctly called the bear market in 2008. Still, he was wrong in ’82 and ’95 calling for pullbacks which never happened.
As a fellow technician and member of the MTA, I’ve always looked up to those that came before me and Joe was one of the first to show following price action can be very profitable.
He is most famous for the 2.4% drop he sparked in ’81 after he told subscribers to “Sell Everything!”
His father lost his entire fortune in the ’29 crash and this had a profound effect on him. “It was my father’s devastating experience with the stock market that made me so sensitive to the economic realities that lay behind every human pursuit,” he said.
Along with follow price action, he used new highs and lows, along with volume to make trading decisions. In fact, he created the On Balance Volume (OBV), which adds volume on up days and subtracts it on down days.
“Everyone is following the economy. I’m following the market,” Granville once said. “I’m the exact opposite of Wall Street.”
I love that quote because it is so true. The market and economy aren’t as correlated as most want to think and he was one of the first to realize this.