Dont understand news reaction...

Discussion in 'Trading' started by dac8555, Jul 28, 2006.

  1. dac8555


    I rarely pay attention to the news with the exception of important economic reports. I read, but find that too much information is difficult to digest and make sense of...much less predict price action.

    Somebody explain todays new to me. My bloomberg says:

    1. US output slows
    2. teasury yields decline
    3. Dollar declines

    after the markets falling offin the afternoon yesterday, i would have expected a lower open, but we GAP UP.

    apparently on speculation that the fed will stop raising rates?

    somebody explain the logic here please...
  2. You missed one more piece:
    4. Inflation is still running high.

    Today is actually not straight up, but a battle. The bulls buy on the news that the economy is slowing (implying that the FED might stop raising rates). The bears sells on the inflation (implying that the FED will continue to raise). Will be interesting to see who prevails today -- it might be indicative of the next days direction.
  3. dac8555


    exactly...inflation with stagnant growth...they essential CONFIRMEd stagflation.

    who can buy on that?
  4. I agree, I am pretty confused by the move today.... higher inflation and slower growth..... makes no sense.... I think its a false move... Will reverse hard in the next few days... possibly even later this afternoon... With the price being up 120+ pts.... I cant see it going TOO much higher on the day... epecially with lunchtime aproaching, it has been pulling back at lunch time a lot lately if it moved hard early.... So i'm tempted to start building up a short position....

    Slower growth, higher inflation, isnt this EXACTLY what peopel were afraid of??
  5. So far today, the action looks like this:

    The bulls buy aggressively at the open, pushing S&P up 10 points. The bears look at the news and can't believe their eyes. So they short the market big time to "correct" it. The bulls stand aside, and watch with a big grin on their faces. Once the bears are exhausted, the bulls step in and bring the market to a new intraday high.

    I personally gave up on trying to interpret the news and arbitrage the market reaction to the news. The path of the least resistance is just to go with the flow.
  6. This is an election year, the party in power will try everything they can to keep the market from falling to far. Never underestimate the power of politicians. Last night I watched MR Smith goes to Washington. To this day nothing has changed, big business runs this country, and the Republicans help them to do it.

    Common ordinary folks get crushed, look at the example our current administration is setting, spend spend spend, all that spending has done little to lift the markets, over the last three years the SP500 is up an average of 4% what a waste of money, tax brakes for the mega rich.

    I just pray, this changes and soon.

  7. agreed. if we take out 1280, i think 1300 will break soon after.

    bottom line is the market has been over-sold and bearish for too long. there hasn't been any balance. today's action - so far - tells me that the makert is REACHING for any excuse to move higher, and that is a bullish signal.
  8. Market is guessing the next fed move will be a cut in 4th qtr, 1st str 2007... greasing the wheel for the next cycle...

    Looking ahead 6-9 months
  9. spinn


    There is now way to tell what it is that actually moves the markets.

    Money flows into and out of markets in cycles. We are still in a rising money flow environment on my longer charts but that looks to be nearing an end.

    I just buy as the money starts to cycle in, which will be near the bottom, and sell when money starts to cycle out.

    As entertaining as the news can be......we would all do better trading with Bugs Bunny than Bob Pisani.
  10. dac8555


    bonds (bills and notes) AND stocks are up...mixed signals.

    I bought DIA, XLE, SPY, OIH puts yesterday...and I am not off much...looks like the option markets are also prcing in a decline for the next week.
    #10     Jul 28, 2006