Wednesday, February 22, 2006

If not indicators, then what?


Some say chart patterns don't matter and that the patterns are just as likely from occuring by flipping a coin. Some say that there are no holy grail indicators. Some say there is no way of knowing what way the market is going to go. Fine. Don't use any of that. Then what are you going to use. Your answer is the news and has always been the news and will forever be the news. Plain and simple example, the terrorists attack the U.S. september 11....should you go long or short...hmmm,,,short,,why?,,because we are under attack and freaking out,,thats why!
Example 2: Oil production has slowed and supply next quarter will be lower by 50 million barrels,,,,hmmm,,,,last time oil went up the DOW went down,,,,so we short the Dow and go long the oil contract. Example 3: Biotech company Novavax says they have a way to beat the scary bird flue virus which could kill millions,,,,hmmm,,,,the stock is at $1,,,,I'm going to buy,,,Oh look, its $3,,,$5,,,,ok back down to $4,,,not to bad. Biotech company will release news on there FDA approval,,,,its approved,,,,,dam,,wish I would have bought, or good thing I didn't buy,,,,how about trading the competitor biotech firm the other direction,,,like INSMED and TARCEVA.

Moral of the story,,News trumps all at affecting the markets. If not news, then technicals and institutions with deep pockets are moving the market the way they want it.

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