Tuesday, July 15, 2008

Don't fight the trend

Iran launches dozens of new missiles!
Iranian missiles are fake!
Oil Rises!
Oil Falls!
Second largest bank failure in history!
Fed rescues Fannie Mae and Freddie Mac!

What do all of these news stories have in common? Answer: None of them caused the S&P 500 to break out of its declining channel pattern.The irony is that the S&P will probably break out during a slow news day.

Not only does technical analysis tend to work, but it's much easier than trying to stay on top of the tsunami of financial and geopolitical news. Over the past couple of weeks I've heard from many people who are jumping back into stocks, citing one reason or another why the bear market is finally over. I've also seen people predicting "bloodbath" crashes following bad news. Neither extreme has panned out. The Market just continues on its merry way.

Don't fight the Fed trend!

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