Best of the Week
Most Popular
1.Putin’s World: Why Russia’s Showdown with the West Will Worsen - John_Mauldin
2. Stocks Bull Market Grinds Bears into Dust, Is Santa Rally Sustainable? - Nadeem_Walayat
3. Gold and Silver 2015 Trend Forecasts, Prices to Go BOOM - Austin_Galt
4.Gold Price Golden Bottom? - Toby_Connor
5.Gold Price and Miners Soar on Huge Volume - P_Radomski_CFA
6.Stock Market and the Jaws of Life or Death? - Rambus_Chartology
7.Gold Price 2015 - EWI
8.Manipulated Stock Market Short Squeezes to Another All Time High - The China Syndrome - Nadeem_Walayat
9.Gold, Silver, Crude and S&P Ending Wedge Patterns - DeviantInvestor
10.Is the Gold And Silver Golden Rule Broken? - Michael_Noonan
Last 5 days
Why It's Way Too Early to Count Out Putin - and Russia - 22nd Dec 14
Stock Market At Minor Top - 22nd Dec 14
UK Christmas Sales 2014 High Street Start Dates List - 22nd Dec 14
Ruble Takedown Exposes Cracks in Putin’s Defense - 20th Dec 14
Oil Drilling Our Way Into Oblivion - 20th Dec 14
Stocks Bull Market Resumes - 20th Dec 14
Gold And Silver Nothing Is Ever As It Seems And No Respite For PMs - 20th Dec 14
What Are Technical Indicators Saying About the Stock Market? - 20th Dec 14
Here’s How You Can Still Make 27% With Apple Even if You Buy Now - 20th Dec 14
Gold Stocks to Shine in 2015 - 19th Dec 14
Why Alibaba Stock Shares Are a Screaming Buy - 19th Dec 14
China, Dollar, Japan, Europe Burning Questions for 2015 - 19th Dec 14
U.S. Economy is in a Sweet Spot! - 19th Dec 14
US Dollar and the Gold Fairy Tale - 19th Dec 14
Show Me The Money (Flow)! Tracking Money-Flow Through Value Shifts In Stock Markets - 19th Dec 14
The Commodities Market Is Not Dying, It’s Just Hibernating - 19th Dec 14
The Price Of Gold And The Art Of War - 18th Dec 14
Euro Succumbs to ECB QE Expectations and FOMC - 18th Dec 14
John Williams: A Downhill Run for the U.S. Dollar in 2015 - 18th Dec 14
Outrage at Taliban Islamic Fundamentalists Massacre of 132 Pakistani School Children in the Name of God - 18th Dec 14
How Inflation Changes Retirement Benefit Choices - 17th Dec 14
The Real Reason It's Tough to Beat the Stock Market - 17th Dec 14
Russian Currency Crisis and Debt Defaults Could Create Contagion in West - 17th Dec 14
How to Profit From Russia's Stock Market Crash - 17th Dec 14
Russia Crisis - If You Put Your Money in the Bank Will You Get it Back? - 17th Dec 14
Crude Oil Price Crash, U.S. Employment and Economic Growth - 17th Dec 14
Opposing Forces At Play In Gold and Silver Precious Metals Complex - 17th Dec 14
Wall Street Will Always Find An Excuse For Not Raising U.S. Interest Rates - 17th Dec 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Dramatic Stock Market Selloff

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

© 2005-2014 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

Free Report - Financial Markets 2014