The Contradiction That Wasn’t

An interesting conversation I had last week reiterated an important lesson in my life, which was that it’s okay to have opposing views on different timeframes as long as you clearly articulate those seperate views.

The conversation started when I peeked at the Finviz futures screen and uttered the phrase “I think bonds are setting up nicely on the short side.”

My friend’s response was “What? You’re bearish on bonds? Anytime someone talks about rates you say that they’re going lower. All you ever talk about is bond yields going lower, and now you’re bullish rates? What gives? You can’t just change your tune all of a sudden.”

Okay, that was a bit of an exaggeration, his response was more along the lines of “meh” or “pffft”, followed by “what’re we ordering for lunch?”, but nonetheless it brought to light an important topic of which the bond market is a great example of right now.

Long term I continue to think that current market conditions point to lower rates. I’m a keep it simple kind of guy, and rates beiing in a roughly 30 year downtrend suggests that this trend is not going to stop on a dime.

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No News Is Good News

Just when you thought it was safe to turn on the teevee or search your favorite financial media website again, the dreaded “good news, bad news” debate is back again in full force. Friday’s non-farm payrolls miss and continued equity market futures weakness / bond strength brought pundits out of the woodwork once again to hash out whether or not bad news really is bad news.

If you’re confused about the constant flip-flop and what exactly it all means, don’t worry, the people debating this topic haven’t a clue what it means either.

That brings me to this blog post’s title, no news is good news. As a technician, I choose to focus on price and market behavior so that I don’t have to worry about what’s going on in the news. At the end of the day, I have to trade the market that exists, not the one that the media is portraying, or that financial pundits are trying to convince me is coming. It’s a personal choice, but I’ve never understood the “news junkies” that think having a handle on every single piece of information out there is going to give them an edge in the market.

For example, the economic calendar for top countries alone has 36 events scheduled for Monday, April 6th, according to tradingeconomics.com. Combine that with the several earnings reports and conference calls that come out as well and you’ve got quite a bit of data to digest. Not to mention what the calendar might look like if we were still in the heart of earnings season.

Nobody in their right mind could possibly estimate and interpret all that data and forecast what the market’s reaction will be with any sort of accuracy. Trying to do so would not only be a waste of valuable time and resources, but the process itself would likely be dull enough to drive even the most patient person insane. The good news is, you don’t have to stress over any of this because price discounts the “news” in advance and represents all of the forward looking expectations of its participants. If you’re studying price, you’re already well ahead of the game in terms of getting down to the real story, what the market thinks.

At the end of the day, I’m not saying it’s unimportant to know what’s going on in the economy or news in general, but don’t expect to make any consistent profits off of it. I learned a long time ago that as market participants we’re not paid to know why, which is why I focus on the what / when and ignore the rest.

As always, if you have any questions feel free to reach out and I’ll get back to you as soon as I can.