When we last spoke, we discussed the fact that it’s the market action that drives the headlines rather than the other way around. Dow down? Then investors must be worried about Korea or politics or whatever might be on the newswire that day. Stocks are up? Then obviously investors must be focused on tax reform or relieved over some threat that has passed.
The problem is that, not only are individual investors missing out on real insight that might actually help them make informed decisions, they’re also led to believe that, if they can just figure out how various events will play out, they’ll be able to predict what the market is going to do next. In other words, too many market participants are under the impression that their superior insight will help them outthink the market.
On the flip side, if you simply focus on what the pricing action it saying, then your job of profitably navigating the market becomes a lot less complex. The simple fact is that we are in a very long-term uptrend, and trends tend to persist. The media might have all sorts of headlines to create their narrative, but all we really need to know is that the odds favor the bulls in an uptrend and vice versa. At some point, that pattern (and trend) will change, but trying to predict it ahead of time is a hard way to make a living.
Let’s take a look at some charts:
At the time of this post, RevShark had no positions in any of the stocks mentioned.