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Strategies & Market Trends : Ask Vendit Off-Topic Questions -- Ignore unavailable to you. Want to Upgrade?

To: rrufff who wrote (8282)	5/1/2005 11:18:10 PM
From: Walkingshadow	Read Replies (1) \| Respond to of 8752

What's even more ludicrous is if you look at the briefings on Yahoo early in the session, and compare that to later in the session. Often, if there is some reversal, they will attribute both bullishness and bearishness to exactly the same "cause" within hours. So if the FOMC says it is satisfied with a "measured pace" and the market sells off, that may be attributed to "jittery traders dumped shares today amid disappointing news that the Fed plans to keep raising rates on schedule, taking that as evidence that the Fed may be starting to become more concerned with inflationary trends tied to rising fuel prices." Then if the market rallies, it will be "traders bullishly bought stocks today amid after being heartened by news that the Fed plans to keep raising rates on schedule, taking that as evidence that the Fed no problems in the economic recovery." It is not that unusual to see both types of stories appear within a single session. Sometimes they even attribute things to "causes" that are not happening at all, or the complete opposite is happening. We saw this last week, for example. There were stories about traders dumping shares of stocks because of concerns over rising fuel prices.... well, oil formed a double top late in March and has fallen like a hot knife thru butter ever since, losing over 15% in about a month: futuresource.com And it pulled all other fuel prices right along with it, too. I don't know how anybody can be concerned with rising fuel prices when they are actually falling precipitously. One might think the market should rally instead.... except that oil prices really have only a modest effect on stock prices at best (actually, there is a weak but positive---not negative--- correlation between oil prices and stock index prices). Yet nobody seems to object that these stories sometimes completely ignore reality. ....they should just pay me to write these things and be done with it. I could write the scripts out for years in advance, just filling in the blanks with the particular news of the moment. Regardless of what it is, that is the "cause" of market action. I don't even have to know what the news is, really. I could still write these columns. Heck, you could probably write software to do it automatically. Just plug in the lead story on CNN into the blank, then pick the adjectives according to whether the market is moving up or down: "After hearing news that ______________, heartened/worried [select only one] traders responded by buying/selling [select only one] shares of stocks." Anyhow, now you know why I spend little time trying to divine how the market might react to particular news items or even fundamentals. I think my time is far better spent trying to understand the highly dynamic output of the discounting machine---the charts and indicators. I don't care what went INTO the machine, and I don't care how the machine works, either. I do know that the output has a very real bearing on future prices, and that is my major concern. T