I often talk and write about the dangers of listening to anyone or anything related to the markets. It’s especially important to ignore the market doomsayers, as their opinions don’t matter. The only guide you should be listening to is the market itself.
Now with that said, you and I do need some guidance at times when the market’s message is unclear or muddled. Unfortunately, it’s easy to get lost in a sea of information when searching for the best and most valuable data. Don’t get lured in by the market doomsayers!
Ignore the market doomsayers
The doomsayers are easy to spot: They are the ones who are trying to time the markets. They get it right every once in a while, but their data and warnings are not to be trusted on a regular basis. It’s very difficult, if not impossible, for anyone to get it right all the time.
But the markets? They are the perfect indicator. Understanding (and analyzing) technical and sentiment indicators is critical to a successful career as a trader and/or investor.
Turn to market analysis instead
Market analysis is not brain surgery. All you really need to do is pay attention to price and volume action.
Last week, three out of four major market indices closed at all-time highs. Volume trends were solid, breadth improved (if only for a day) and the indicators began turn up into a positive direction. Admittedly, the indicators (and the markets) were rather wobbly last week but the ship may have righted itself.
Meanwhile, the market doomsayers were out in force after a break lower on Thursday. It was a poor session, but a shift in the trend requires some followthrough. That didn’t happen on Friday, and up we went. Those naysayers? Silence, as usual. But if you followed their lead you might have been buying options or stocks back at higher prices.
Always pay close attention to the market’s message. It won’t often lead you astray.
