Best of the Week
Most Popular
1.The Greatest Stock Market Crash Of Your Life Is Just Ahead… – Warns Harry Dent - GoldCore
2.Budget 2016: Borrowing, Lifetime ISA, House Prices, Economy, Syria, Brexit and Stocks - Nadeem_Walayat
3.Gold Price Intermediate Top - Clive_Maund
4.Brussels Terror Attacks, Death of the European Union, BrExit Wake up Call - Nadeem_Walayat
5.Stock Market Maybe This Time is Different? - Tony_Caldaro
6.UK House Asking Prices Break Above £300k! Housing Market Paralysis - Nadeem_Walayat
7.A Big Reason Why Silver Price Is Set To Soar - Hubert_Moolman
8.The Financial Crisis Has Just Begun; Is The American Dream Is Over? - Chris_Vermeulen
9.Gold Stocks Spring Rally - Zeal_LLC
10.GLX, GLDX, Baby Gold Bull Market Stillborn? - Rambus_Chartology
Last 7 days
Stock Market Downtrend Should be Underway - 30th Apr 16
Gold And Silver – A Clarion Alarm Call For All Paper Assets - 30th Apr 16
US Economic Statistics LIES, LIES AND OMG, MORE LIES - 30th Apr 16
Stock Market Strong Elliott Wave Relationship is Developing - 29th Apr 16
Fed's Kaplan: Brexit to Factor in US June Interest Rate Decision - 29th Apr 16
Silver Miners Strong in Grim Q4 - 29th Apr 16
Is Silver a better bet than Gold in the Near Future? - 29th Apr 16
How to Use the CoT Report in Gold Investing? - 29th Apr 16
Sri Lanka is Intriguing: Areas to Consider for Value Investing - 29th Apr 16
Gold “Chart of The Decade” – Maths Suggest $10,000 Per Ounce Says Rickards - 29th Apr 16
Are We or Are We Not in a New Gold Bull Market? - 29th Apr 16
Silver: The “Five Year Plan” and the Great Leap Forward - 28th Apr 16
Michael Hudson: The Wall Street Economy Has Taken Over The Economy and Is Draining It! - 28th Apr 16
AUD/USD - Trend Reversal or Just a Bigger Pullback? - 28th Apr 16
A Gold Revaluation Could Transform Your Financial Status - Overnight - 28th Apr 16
Monetary Policies Misunderstood - 28th Apr 16
Gold Bullion vs Gold Miners - 28th Apr 16
OECD Suggests BrExit Would Cut Net Migration by 1.2 Million by 2030 - 28th Apr 16
MP Naz Shah Punished for Tweets Made During Israel's Genocide of Gaza Palestinian People - 28th Apr 16
Global Recession in 2016 and Beyond - The Obvious Evidence - 27th Apr 16
Why Gold Bugs Need to Stop Listening to The Fear Mongers and Start Thinking for a Change - 27th Apr 16
BlackRock’s Fink: Fed to Raise Interest Rates by Quarter Point ‘at Best’ - 27th Apr 16
Gold More Productive Than Cash?! - 27th Apr 16
Donald Trump Will Fire Janet Yellen and Be Trapped - 27th Apr 16
Money Saving Gardening by Propagating Roses From Cuttings - Propagating Rose Plants Over 2.5 Years - 27th Apr 16
Facebook Censors Pro Trump and Negative Hillary News - 27th Apr 16
This is the Era of the Democrats and Your Taxes are Going Up - 27th Apr 16
Long Awaited Gold Price Breakout - 26th Apr 16
Crude Oil Price Double Top or Further Rally? - 26th Apr 16
Madness in the Crimex Gold and Silver Trading Pits - 26th Apr 16
Britain's Prospects: GBP and BREXIT - MAP Wave Analysis - 26th Apr 16
CRB, Gold, Oil, Cotton, Coffee - 7 Must See Commodities Charts - 26th Apr 16
Gold Price Target is $3,000 and Silver is $75 per Ounce - 25th Apr 16
Parameters for a Stock Market Sell Signal-in-the-making - 25th Apr 16
Stock Market Dangerous Divergence - 25th Apr 16
Gold Miners Nub is the Sweat of the Sun - 24th Apr 16
US Dollar Price Forecast - 24th Apr 16
Stock Market Upside Objective Reached - 24th Apr 16
Why Leftist Greeks have more reasons than Liberals to favour Entrepreneurship and Support Entrepreneurs - 24th Apr 16
The Dow Jones is a Catalyst for Misplaced Stock Market Optimism - 24th Apr 16
Why Russia Harasses U.S. Aircraft and Ships - 24th Apr 16
Stocks Bull or Bear Market Rally? - 23rd Apr 16
A Bright Future for Solar Power in the Middle East - 23rd Apr 16
Silver Commitments of Traders – Halloween is Arriving Early This Year - 23rd Apr 16
Good News, Bad News, Both Favor Gold And Silver - 23rd Apr 16
Mish's Sure Fire Proposal to End Japanese Deflation - 23rd Apr 16
Mish Shedlock: “EXCUSE ME MR. PRESIDENT, IS THAT A JOKE?” - 23rd Apr 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Catching a Falling Financial Knife

The Markets Are About to Tell You Something

Stock-Markets / Financial Markets 2012 Apr 15, 2012 - 11:51 AM GMT

By: Money_Morning

Stock-Markets

Best Financial Markets Analysis ArticleShah Gilani writes: Most people seem to have a hard time understanding why the markets do what they do.

The only reason I don't is that I've been trading professionally for 30 years.

Not that I "got it" when I started out. I didn't. I had to learn. And I learned much of what I know the hard way. I made a lot of mistakes. I studied my mistakes, I still do, just as much as I study what moves markets and what I get right.


I'm always learning. That's because everything changes. You have to always take in new data, mesh it with recent data, layer it over the past, and not ever think you know for sure what's going to happen.

So, how do you do it? How do you understand what's going on with different markets?

Here's how I do it (and get it right a lot)...

It's First and Foremost About the "Big Picture"
I synthesize all the big goings-on, all the headline market-moving news and data points, and I watch and "listen" to how the markets react.

Money moves markets, but psychology moves money.

Markets are living things. They have feelings; their reactions are a direct reflection of the psychological impact reflected in the buying and selling of traders (first) and investors (distantly second) to the goings-on that participants believe will affect the decision-making of other market participants.

It's not about numbers. It's about interpreting others' reactions to numbers and news.

It's first and foremost about the "big picture." If you get the big picture right, you'll generally be on the right side of the major trends. That's where everyone should start - on the right side. That's where I start. I might go into different iterations of the major trends and drill down and take positions on instruments within subtrends or the major trends.

But it all starts with knowing that I don't know. Then I synthesize that with what's out there and listen to the markets tell me how they're feeling about all the same stuff they're subject to.

What Markets Are Saying Now, and What I'm Seeing
Here's a broad look at what I'm looking at, what I see, and what the markets are saying about these things.

Money moves markets, right? You better believe it. So, what's going to happen with all the stimulus money that's floated global markets higher since March 2009?

The Federal Reserve has been super-aggressive in its no-interest rate policy (that's what I call it). Chairman Ben Bernanke has said they'll keep it that way until the end of 2014.

But Fed Vice-Chairwoman Janet Yellen just said, "Maybe we will, maybe we won't."

That's unnerving to markets that have relied on cheap financing for everything - from traders leveraging short-term positions because they can borrow at next-to-nothing, to corporations reengineering their balance sheets and chalking up great profits, knowing they can raise capital cheaply in the bond market and finance production and inventory building on wafer-thin borrowing costs.

As for the rest of the world, China has grown significantly on stimulus. They're rethinking all that loose money in the system. Europe, too, has floated itself out of depth of a drowning-in-debt-death by pouring money on every fire everywhere. Upcoming elections across the Continent may change that mandate, as governments themselves may change to reflect the public's changing perceptions of "Union."

Less money, if that's what's ahead of us, is going to cause markets to stall in mid-air.

Europe is slipping backwards. Italy's borrowing costs are rising again; Spain's too. I'm watching what will happen (I already know) if the bond markets in Europe start taking hits. A lot of sick banks bought a lot of new bonds, and if they start falling in price, well, there's the domino thing, or "contagion," that is hanging out there on the edge of what-if.

Earnings in the U.S. will be telling - how markets react to the winners and the losers.

Alcoa Inc. (NYSE:AA) rose almost 10% Wednesday on good news. But how hard will losers get hit? Will they fall double digits? What will the net effect of the sum total of earnings and corporate guidance say about the spring?

We've just come off an outrageous rally. We've been rallying since March 2009.

Everyone's talking about the bull market. I think they may have gotten ahead of themselves... just like the markets. After all, we are NOT out of the woods. We have not made new all-time highs. We may just be witnessing a bull run in a secular bear market.

Either way, I know that I don't know what will happen next. But the markets are whispering that they're tired, and I hear them loud and clear.

Can they gather strength and make an assault on all-time highs? Sure. But first they're going to have to feel better enough to get back to where they were last week.

If they try, and fail, to get back what they've lost in the past week, listen up, because they're telling you something.

I try and give you my insights here. You have a few more today.

We're at a pivot point. These next few sessions, the next two to three weeks, are going to be telling.

Look, listen, and learn.

Source :http://moneymorning.com/2012/04/13/markets-are-about-to-tell-you-something/

Money Morning/The Money Map Report

©2011 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2016 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

Catching a Falling Financial Knife