Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Further Clues Reveal Gold’s Weakness - 26th Nov 20
Fun Things to Do this Christmas - 26th Nov 20
Industries that Require Secure Messaging Apps - 26th Nov 20
Dow Stock Market Trend Analysis - 25th Nov 20
Amazon Black Friday Dell 32 Inch S3220DGF VA Curved Screen Gaming Monitor Bargain Deal! - 25th Nov 20
Biden the Silver Bull - 25th Nov 20
Inflation Warning to the Fed: Be Careful What You Wish For - 25th Nov 20
Financial Stocks Sector ETF Shows Unique Island Setup – What Next? - 25th Nov 20
Herd Immunity or Herd Insolvency: Which Will Affect Gold More? - 25th Nov 20
Stock Market SEASONAL TREND and ELECTION CYCLE - 24th Nov 20
Amazon Black Friday - Karcher K7 FC Pressure Washer Assembly and 1st Use - Is it Any Good? - 24th Nov 20
I Dislike Shallow People And Shallow Market Pullbacks - 24th Nov 20
Small Traders vs. Large Traders vs. Commercials: Who Is Right Most Often? - 24th Nov 20
10 Reasons You Should Trade With a Regulated Broker In UK - 24th Nov 20
Stock Market Elliott Wave Analysis - 23rd Nov 20
Evolution of the Fed - 23rd Nov 20
Gold and Silver Now and Then - A Comparison - 23rd Nov 20
Nasdaq NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times - 23rd Nov 20
Learn How To Trade Forex Successfully - 23rd Nov 20
Market 2020 vs 2016 and 2012 - 22nd Nov 20
Gold & Silver - Adapting Dynamic Learning Shows Possible Upside Price Rally - 22nd Nov 20
Stock Market Short-term Correction - 22nd Nov 20
Stock Market SPY/SPX Island Setups Warn Of A Potential Reversal In This Uptrend - 21st Nov 20
Why Budgies Make Great Pets for Kids - 21st Nov 20
How To Find The Best Dry Dog Food For Your Furry Best Friend?  - 21st Nov 20
The Key to a Successful LGBT Relationship is Matching by Preferences - 21st Nov 20
Stock Market Dow Long-term Trend Analysis - 20th Nov 20
Margin: How Stock Market Investors Are "Reaching for the Stars" - 20th Nov 20
World’s Largest Free-Trade Pact Inspiration for Global Economic Recovery - 20th Nov 20
Dating Sites Break all the Stereotypes About Distance - 20th Nov 20
THE STOCK MARKET BIG PICTURE - Video - 19th Nov 20
Reasons why Bitcoin is Treading at it's Highest Level Since 2017 and a Warning - 19th Nov 20
Media Celebrates after Trump’s Pro-Gold Fed Nominee Gets Blocked - 19th Nov 20
DJIA Short-term Stock Market Technical Trend Analysis - 19th Nov 20
Demoncracy Ushers in the Flu World Order How to Survive and Profit From What Is Coming - 19th Nov 20
US Bond Market: "When Investors Should Worry" - 18th Nov 20
Gold Remains the Best Pandemic Insurance - 18th Nov 20
GPU Fan Not Spinning FIX - How to Easily Extend the Life of Your Gaming PC System - 18th Nov 20
Dow Jones E-Mini Futures Tag 30k Twice – Setting Up Stock Market Double Top - 18th Nov 20
Edge Computing Is Leading the Next Great Tech Revolution - 18th Nov 20
This Chart Signals When Gold Stocks Will Explode - 17th Nov 20
Gold Price Momentous ally From 2000 Compared To SPY Stock Market and Nasdaq - 17th Nov 20
Creating Marketing Campaigns Using the Freedom of Information Act - 17th Nov 20
ILLEGITIMATE PRESIDENT - 17th Nov 20
Stock Market Uptrend in Process - 17th Nov 20
How My Friend Made $128,000 Investing in Stocks Without Knowing It - 16th Nov 20
Free-spending Biden and/or continued Fed stimulus will hike Gold prices - 16th Nov 20
Top Cheap Budgie Toys - Every Budgie Owner Should Have These Safe Bird Toys! - 16th Nov 20
Line Up For Your Jab to get your Covaids Freedom Pass and a 5% Work From Home Tax - 16th Nov 20
You May Have Overlooked These “Sleeper” Precious Metals - 16th Nov 20
Demystifying interesting facts about online Casinos - 16th Nov 20
What's Ahead for the Gold Market? - 15th Nov 20
Gold’s Momentous Rally From 2000 Compared To Stock Market SPY & QQQ - 15th Nov 20
Overclockers UK Quality of Custom Gaming System Build - OEM Windows Sticker? - 15th Nov 20
UK GCSE Exams 2021 CANCELLED! Grades Based on Mock Exams and Teacher Assessments - 15th Nov 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Economic Forecasts Have Nothing to do With Stock Market Direction

Stock-Markets / Stock Markets 2016 Sep 06, 2016 - 03:16 PM GMT

By: Sol_Palha

Stock-Markets

"Wise men are instructed in reason men of less understanding by experience; the most unknowing learn by necessity. Wise men do in the beginning what fools in the end." ~ Anonymous

Trying to gauge where the economy is headed is almost always a waste of time; other than pouring over seams of data and losing a large dose of time, you will be none the wiser. If this activity were indeed useful then almost all Economists would be millionaires; sadly, they are not. They are usually working for large multi-million or billion dollar corporations, who can afford to hire them to come out with these silly scenarios that they do not even believe in; it is not by coincidence that economics is referred to as the "dismal science."


Most successful businesses do not waste time trying to figure where the economy is headed; they are looking at what they have to do to improve their business. In today's age of hot money, there are two options on the table. Work hard and try to produce a better product or come out with something new that will replace an older product or service and offer it at a better price. The second option, borrow large sums of money and buy back your shares and magically improve your EPS, without doing anything extra. A large number of corporations are focussing on the second option as it is a very easy for corporate officers to reap to great bonuses without doing anything.

Naysayers would rant of a list of negative developments, some of which are listed below; but despite these developments the market has continued to soar higher.

  • The current economic recovery is the weakest on record since 1949; so what. How is this data supposed to help you in terms of investing in the market? It cannot because it tells you nothing. The economic recovery has been weak for years on hand and yet each year the Dow trends higher. If this data were relevant and investors paid attention to it, then the market should have crashed and should have been putting a series of lower lows.

  • The dollar is weakening; wait a second were not experts claiming that a strong dollar was bad for the economy and how did that argument work out?  So why would anyone pay attention to this nonsense? In reality, the dollar is still much stronger than it was back in 2010. There is no such thing as a strong dollar or strong Euro; it is all relative as the world is looked in a competitive currency war. In this war, there is no option but to devalue or die.

  • Weak Economic Growth; another useless static that has no bearing on market direction; if it did the markets should have crashed already; instead it is trending higher. This data can be revised upwards and next month growth rates could come in higher than expected. All the data is manipulated, so based on how the manipulators feel, it can be twisted to create a rosy or dire picture. The only two things that matter are emotions and price action. The crowd is still extremely bearish in this crowd and price action is positive. Translations, markets will experience corrections ranging from mild to wild, but these pullbacks should be treated as buying opportunities.

We could also use data albeit manipulated data, to support a bullish picture. For example, wages are rising, unemployment has dropped, lower inflation, etc. The data used is twisted at best, so the picture they provide has to be taken with a barrel of salt.

Economic Growth (GDP) and Market performance not related especially in the era of "hot money."

The last eight years are a perfect example. On its best day, this economy can be compared to a plane flying with one engine; the second one is not working.  The plane needs both for optimal performance, but it can still continue operating with one. Mass psychology clearly illustrates that markets top when the masses are Euphoric; how did the housing bubble end. It did not end on a note of panic but on a note of euphoria.

Conclusion

Don't waste time pouring over useless economic data; all the data is twisted, so your conclusion will be flawed as it will be based on faulty data. Focus on the emotion and trend (price action); the trend is always your friend.  What investors are interested is in earnings and EPS has been improving even though in many instances the technique being used to boost them borders on fraud (increasing earnings through massive share buyback programs), earnings are still growing. Furthermore, the market does not seem to care about what method is employed to improve EPS; for if it did, the market would not be trading next to all-time new high territory.

"Success is just a matter of luck, all you need to do is ask a failure. History may be written by academics, but it's rarely created by them." ~ Anonymous

by Sol Palha

www.tacticalinvestor.com

Sol Palha is a market analyst and educator who uses Mass Psychology, Technical Analysis and Esoteric Cycles to keep you on the right side of the market. He and his partners are on the web at www.tacticalinvestor.com.

© 2016 Copyright Sol Palha- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 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

6 Critical Money Making Rules