When was the last time news mattered.

First, my heart goes out to the families in the earthquake and tsunami.  I hope them well and to make the best out of this hardship.

When I woke up this morning I turned on the news.  The first thing an anchor said was that “Oil prices should be going up because Japan refines oil but because oil prices are down because they will not be able to consume oil.”

Stop for a second….  Think really hard, when is the last time news meant anything.  Seriously when.

I am not making any prediction on what the market is going to do.  From a technical standpoint the S&P 500 is in a crucial area.  Anything can happen.  And that is the point ANYTHING CAN HAPPEN.

My theory is that there are not very many people in this market right now.  There is not going to be a huge amount of people acting in the same matter.  But that does not mean that technical or fundamental reason are not going to attract more people.  There always is a tipping point, I don’t know will cause it. Sometimes it is easier to find something when you aren’t looking for it.

Be careful, follow your rules.

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  • ” The first thing an anchor said was that “Oil prices should be going up because Japan refines oil but because oil prices are down because they will not be able to consume oil.”

    The first point to this is that people imagine the oil market as this giant market with millions of global players or something. It’s not, it’s actually relatively thin and thus very volatile. I recommend “Oil 101” by Morgan Downey (15 yr+ oil trader, runs a shop) for more insight.

    Back to your point, you are partially correct. I wouldn’t say that news doesn’t matter at all, but the market likes to “lock on” to a theme and then move accordingly. In late 2008 early 2009 it was the jobless number that would move us for days after. In early 2008 it was rising oil’s inverse correlation that killed us. Again today it is the Middle East “uncertainty” and the inverse correlation is back to oil.

    Toward the end of last year / beginning of this year there was no major headwind the market decided to care about. “News” that should matter (jobless numbers, etc.) didn’t, so it’s hard to figure out what news “matters” at any time.

    So basically I’m saying that the market is in general a big baby that freaks out whenever something perceived as big happens and then everyone piles in. Question is, we don’t know what is going to rock the crib…. (ominous pause) ….

    • Thanks for taking the time to comment. I do not know much about trading oil. I will have to check out that book. I could have made my point clearer. It is not that news does not matter, it just that it does not matter right now. I believe that it is convenient to say that the market did X because of X news. If anyone feels there is advantage in trading with the news than I think they should pursue it.

      It has proven to be successful at times but right now it means you have been short for the last 700 points in the SP.

      Thanks again for your comment.

  • Pingback: When news and technicals collide we have days like this. | traderhabits.com()

3 Responses to When was the last time news mattered.

  1. MarketShot says:

    ” The first thing an anchor said was that “Oil prices should be going up because Japan refines oil but because oil prices are down because they will not be able to consume oil.”

    The first point to this is that people imagine the oil market as this giant market with millions of global players or something. It’s not, it’s actually relatively thin and thus very volatile. I recommend “Oil 101” by Morgan Downey (15 yr+ oil trader, runs a shop) for more insight.

    Back to your point, you are partially correct. I wouldn’t say that news doesn’t matter at all, but the market likes to “lock on” to a theme and then move accordingly. In late 2008 early 2009 it was the jobless number that would move us for days after. In early 2008 it was rising oil’s inverse correlation that killed us. Again today it is the Middle East “uncertainty” and the inverse correlation is back to oil.

    Toward the end of last year / beginning of this year there was no major headwind the market decided to care about. “News” that should matter (jobless numbers, etc.) didn’t, so it’s hard to figure out what news “matters” at any time.

    So basically I’m saying that the market is in general a big baby that freaks out whenever something perceived as big happens and then everyone piles in. Question is, we don’t know what is going to rock the crib…. (ominous pause) ….

    • Eradke says:

      Thanks for taking the time to comment. I do not know much about trading oil. I will have to check out that book. I could have made my point clearer. It is not that news does not matter, it just that it does not matter right now. I believe that it is convenient to say that the market did X because of X news. If anyone feels there is advantage in trading with the news than I think they should pursue it.

      It has proven to be successful at times but right now it means you have been short for the last 700 points in the SP.

      Thanks again for your comment.

  2. […] Friday I wrote a post asking when was the last time news matter?  Later in that day Anthony Crudele (DELI) wrote a post about how he saw the S&P 500 at a […]

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