Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Trump Stocks and Crypto Mania 2025 Incoming as Bitcoin Breaks Above $100k - 8th Dec 24
Gold Price Multiple Confirmations - Are You Ready? - 8th Dec 24
Gold Price Monster Upleg Lives - 8th Dec 24
Stock & Crypto Markets Going into December 2024 - 2nd Dec 24
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

News Is NOT the Main Driver of Stock Market Trends

InvestorEducation / Elliott Wave Theory Mar 03, 2011 - 02:51 PM GMT

By: EWI

InvestorEducation

Best Financial Markets Analysis ArticleBreaking News Bulletin: News Is NOT the Main Driver of Stock Market Trends
A FREE myth-busting report from Club EWI reveals the real force behind long-term trend in financial markets


Conventional economic wisdom is founded on one core concept: namely, that events that exist outside the market (part of "market fundamentals") trigger trend changes in the financial markets.

Because of this belief, you have the mainstream experts of finance watching everything from weather patterns to crop conditions, political exploits to the subtlest changes in punctuation in the Fed's minutes -- all in the hopes of anticipating the next big move in commodities, stocks, gold, the dollar, etc. In a nutshell, "positive" news and events cause a rise in prices, while "negative" news pushes prices down.

In reality, however, things are not as clear-cut. Markets regularly "ignore" the news, shrug it off -- and move in the opposite direction of their "fundamental" cues. OR, worse waver in two different directions after the same event.

Take, for instance, the recent slew of news items following Federal Reserve chairman Ben Bernanke's March 1 testimony before the Senate Banking Committee:

  • "US Stocks Advance Ahead of Bernanke's Testimony" (International Business Times)
  • VERSUS -- "US Stocks Turn Lower As Bernanke Testifies To Congress" (NASDAQ)
  • VERSUS -- "US Stocks Rise With Bernanke In Focus" (MarketWatch)
  • VERSUS -- "Stocks Decline As Bernanke Comments Fall Flat." (Wall Street Journal)

What often ends up happening is this: Because the original event fails to predict the movement in stocks, commentators then sift through the day's news feed in search of a different "trigger" -- one that fits price action AFTER the fact.

The fallacy of a news-driven market is the first misconception exposed in Elliott Wave International's Club EWI free resource "The Independent Investor" eBook. Here's a short preview of this eye-opening report.

Chapter 1 opens with the question "What Really Moves the Market?" You then get the answer via riveting excerpts and charts from EWI president Bob Prechter's monthly Elliott Wave Theorist publications, such as this one below:

"Suppose the devil were to offer you historic news days in advance. He doesn't even ask you for your soul in exchange. He explains, 'What's more, you can hold a position for as little as a single trading day after the event or as long as you like.' It sounds foolproof, so you accept. His first offer: 'The President will be assassinated tomorrow.' You can't believe it. You and only you know what's going to happen. The devil transports you back to November 22, 1963. You short the market. Do you make money?

The first arrow in Figure 6 shows the timing of the assassination. The market initially fell, but by the close of the next trading day, it was above where it was at the moment of the event. You can't cover your short sales until the following day's opening because the devil said you could hold as briefly as one trading day after the event, but no less. You lose money."

Independent Investor eBook further exposes 10 other commonly held economic beliefs for what they truly are: Wall Street myths disguised as reality. Here's what else you'll learn: 

  • The Problem With “Efficient Market Hypothesis”
  • How To Invest During a Long-Term Bear Market
  • What’s The Best Investment During Recessions: Gold, Stocks or T-Notes?
  • Why "Buy and Hold" Doesn’t Work Now
  • How To Be One of the Few the Government Hasn’t Fooled
  • How Gold, Silver and T-Bonds Will Behave in a Bear Market
  • MUCH MORE

Keep reading this 118-page Independent Investor eBook now, free -- all you need is a free Club EWI profile.

This article was syndicated by Elliott Wave International and was originally published under the headline Breaking News Bulletin: News Is NOT the Main Driver of Stock Market Trends. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in