When there is high uncertainty as there is now we often search for clues telling us when market direction will change. Where do we go for answers? The media of course, because they seem to know what the next move will be (insert: sarcasm). The financial media seems to believe all involved with markets are ‘long’ and bullish, therefore down moves are considered ‘bad’ or even inspired by evil. It’s interesting, when markets go into a tailspin we see more bears showing up on TV or in other financial media.
Yet, the markets will provide all the clues we need to help us figure things out. Some will tell us differently, preferring to anticipate a move without understanding patterns, relationships and trends. I will look for time-tested and proven trends to guide me, and fall into the trap of ‘knowing’ the markets will do this or that.
Last Friday’s job report was an interesting situation. Earlier in the week markets were taking it on the chin, getting hammered as volatility exploded. But midweek that all started to change, as we saw volatility sellers emerge. That is important, and told me the market would be sanguine about the jobs report. With the down open, that didn’t seem to be the case, yet a 65 handle move upward was robust and may have been a game changer. Volatility collapsed for a third straight session.
Everyone in financial media was shocked and stunned by the turnaround. Yet, the clues we follow seemed to dictate the market action. When there is high uncertainty as there is now we often search for clues telling us when market direction will change. Where do we go for answers? The media of course, because they seem to know what the next move will be (insert: sarcasm). The financial media seems to believe all involved with markets are ‘long’ and bullish, therefore down moves are considered ‘bad’ or even inspired by evil. It’s interesting, when markets go into a tailspin we see more bears showing up on TV or in other financial media.
Yet, the markets will provide all the clues we need to help us figure things out. Some will tell us differently, preferring to anticipate a move without understanding patterns, relationships and trends. I will look for time-tested and proven trends to guide me, and fall into the trap of ‘knowing’ the markets will do this or that.
Last Friday’s job report was an interesting situation. Earlier in the week markets were taking it on the chin, getting hammered as volatility exploded. But midweek that all started to change, as we saw volatility sellers emerge. That is important, and told me the market would be sanguine about the jobs report. With the down open, that didn’t seem to be the case, yet a 65 handle move upward was robust and may have been a game changer. Volatility collapsed for a third straight session.
Everyone in financial media was shocked and stunned by the turnaround. Yet, the clues we follow seemed to dictate the market action. Following trends and patterns has its merits and can be used as a superb guide, rather than just guessing by sticking a finger in the air to see which direction the wind is blowing.
