Today, on this last day before Adam returns, I wanted to pull back the Trader's Blog vale and show you a little behind the scenes action. I'll get to the great article by Douglas Newberry from The-Market-Toolbox.com, in a second, but first do you know how valuable you are to us? No really, you are our business and without you we have nothing.
Without your support of our site, without you visiting our guest bloggers sites, and without your comments we're dead in the water. So THANK YOU! Second, do you know how many sites, professional traders, and alike want to be guest bloggers?? Over 50 requests A DAY! We screen each one, check their background, and research like crazy just to make sure the content they present to you is great. It's a lot of work, but you are our customers and without you we'd be GM...HA!
Now to Douglas he's a great guy, I've known him forever and he and his partner for the longest time and I can attest to the quality of their site, knowledge, and desire to truly expand your trading knowledge. Please visit The-Market-Toolbox.com, comment below, and enjoy the article on news media and the financial markets...
There are many ways to pick stocks to trade and a whole lot more ways to “invest”.
There are some great strategies and indicators that are staples in any good trader’s arsenal and some have been around for decades…even longer.
Most people are looking at stock charts and reading financial statements and supposing how they think a particular stock or market will perform.
Most are looking at chart patterns and calculating odds, managing risk and designing an exit strategy and all of these are important steps in the process.
One way we find traders get “tripped up” is not looking at the open carefully enough. One of the most powerful ideas we have come across is the idea of looking at the market “from the open” as opposed to yesterday’s close.
There are many occasions where we see the market gap up at the open and trade lower for the rest of the day. Those who are not watching closely will be misled as the news all day will report that the market is up and then toss out the current quote.
The problem with this is that they are comparing the current quote with yesterday’s close.
It’s like living in “The Matrix”.
Would it not be a more accurate report to say the market has dropped from the open and then lay out a figure?
Surely it would give investors or those concerned with the markets action a better idea of what is happening today.
Ideally every mention of the market conditions on the news would include both lines of text and give a very clear picture of what is going on in the market today.
Something like this would be great.
“The Dow Jones added a quick 150 points as the market gapped up this morning and has since given back more than 130 points sitting right now at (insert current quote here).
Investors are (mood) about (headline) and expecting (more information to come).
End fake news copy here…
How the market opens and trades after the open is a lot more important than where it closed yesterday and the financial news media are all using the same “scheme” to feed the public market results.
For instance, in the above scenario you could surf all over the financial Internet and see green arrows and positive headlines. The talking heads on CNBC would all have their happy faces on and talk about how the market is up based on some news item.
But, is the market really up?
I suppose that would be open for debate. But there is no mistake that anyone looking to trade today is seeing a market that is giving up 130 points even while all the happy chat goes on.
Moms and Pops driving around in their new downsized SUVs will hear NPR say the Dow is up 20 as they listen without any indication that we have already dropped 130 points for the day.
The thing about this that bothers me is that it is misleading and seems “managed”.
I am sure that each one of you can remember a day when the futures were up and the market gaps up big and everyone gets excited and thinks we are have a “good day” in the market only to watch it all evaporate and close even or down for the day.
The same thing happens in reverse as well. The market gaps down, and trades higher all day and the “news” will be equally misleading all day.
There are other things that make me concerned about the way the media presents the market to the public and we are trading now in a market that is more “news driven” than at any time I can remember.
It makes you wonder why the markets keep trading higher in the face of some of the worst headlines any of us can remember.
Wars, deficits, debts, bailouts, bankruptcies, terrorism and now we get a pandemic just to round things out and yet a defiant market pushes higher.
Now would be a great time to be really careful with your trading. The market has come a long way and bear markets can have many rallies before we see the real bottom.
It is important to be aware of the news that can drive the market, but you really need to watch how the news is delivered and the agenda of the sources.
Take a fresh look, you might be surprised what you find.
Please visit The-Market-Toolbox.com for some quality material!