We often say that it’s the pricing action that drives the headlines, and not the other way around. A big bounce off support levels over the past couple weeks left the indices somewhat overbought on a short-term basis and up against various resistance levels, leaving stocks vulnerable to the sort of action we saw on Tuesday after the long weekend.
Seasonality and technicals have been the major driving factors, but the business media can’t (or won’t) recognize the fact that the market doesn’t follow a neat narrative or the news cycle. Instead, the pullback in early August was due to Korea and Charlottesville, the bounce was due to a renewed focus on tax reform, and the selling Tuesday was due to concerns over Hurricane Irma and Korea (again).
The point is that there will always be plenty of “news” out there to explain away the action, but the only thing that really matters to our bottom line is the pricing action. Focus on that first and foremost, and you’ll be able to take advantage of the opportunities that the market continually presents.
Let’s take a look at some charts
At the time of this post, RevShark had no positions in any of the stocks mentioned.
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