The Secret to the News Equation

Discussion in 'Trading' started by simpleRT, May 24, 2012.

  1. simpleRT


    Here is how the News Equation works… The type of news were talking about is “unexpected” good or bad news.

    Scenario – Market is midway into a strong monthly and weekly rally cycle. Basically, the strongest market possible…

    Very Bad News – Market dips hard, sells off for an hourly cycle or two, then forms a divergence and rallies HARD into new highs.

    Bad News – Market dips hard for a few hours then begins a fast rally into the highs.

    Good News – Market rallies hard for a few hours into new highs then slowly chops upward.

    Very Good News – Market rallies hard for an hourly cycle or two then goes sideways for days.

    So, do you get it? The pattern the news causes is relative to the bigger picture trend strength levels. After years of watching the market I have found this to be a solid fact.

    When we were in a daily upward cycle a few weeks ago Spain was downgraded two notches in the overnight session and after the sharp dip we immediately hit new highs. Then when we were in the downward cycle the market just kept selling no matter what. If the Spain downgrade had hit intraday during that downtrend it would probably have resulted in a 3%+ down day… Not a rally into new highs a few hours later.

    The news equation is kind of a tricky one to solve... But after you understand the basic rules you should begin to "get it".

    Anyone else have any comments? No trolls please! :D

    A great trade is never an easy trade!!! The way the market works screws with peoples emotions so badly... Bad news during an uptrend causes a very sharp rally after the reaction dies down, while the exact same news during a selloff... Causes an accelerated selloff. And they are like :eek: . Quite hilarious really.

    Full Blog Post with Pictures Here!
    The News Equation -
  2. You've assumed the future, there, a rather classic error.

    It is impossible to know, in the moment, whether the market is "midway into a strong monthly...rally", or whether it is "the strongest market possible".

    Those things are only determinable in hindsight, when we look back and see how the market actually reacted to the news.
  3. simpleRT


    LoL... I feel sorry for you. You sound like someone who was stuck short through the QE1 or QE2 rally cycle and still isn't willing to admit he's wrong.

    Someday you may come around to the realize the truth... Or maybe you won't.

    Good luck. :)

    It's quite obvious where we are at right now. We are in the first month of a approximately four month bear market. We are also on the verge of a small weekly rally into next month.

    Attached is a monthly chart.

    Once the market goes down hard enough or crashes bernanke will find support again politically for another quantitative easing program, but not until the fear hits everyone!

  4. I don't trade direction.

    I'm surprised your crystal ball didn't tell you that, too.

    Yes, it's quite obvious we're in the "pontificate under yet another new alias" bull cycle.
  5. simpleRT


    I'm writing your name down so I can come back and rub it in when we are a few hundred points lower in a couple months... LoL! :D

  6. I would be very happy if the markets moved down another 10%+, especially if it happens quickly. What exactly would you be rubbing in?

    You might want to work on your comprehension skills before playing Internet Market Karnak.
  7. vinc


    a couple of live calls to back up these 'essays' ? will take you a line or two.. no big deal for a hot shot like you :)
    see you in 'journals section'.. or you'd rather stick to writing rather than trading?? if so - it's hardly an exception here:D
  8. vinc


    hey , people!!
    trading is simple
    there is demand and supply
    there is bid and ask
    what else do you need?? :)

    TRADING is simple / for some/ and so is LOSING !
    I don't have to go to the 'journals section' to prove it :D
    yeah,yeah.. talk is cheap..
  9. Too many trolls. Just too many...
  10. #10     May 24, 2012