All You Need... is a Chart

[firewalker]

"The people who tell you that commodity prices today are driven by “economic fundamentals” are the same ones who said that house prices in Britain were rising because of land shortages. The amazing thing is that just months after losing hundreds of billions in the housing and mortgage bubbles, investors and governments around the world have reverted to the discredited fallacy that financial markets always reflect economic reality, instead of the boom-bust cycles and misconceptions that George Soros's book vividly describes."

http://www.timesonline.co.uk/tol/com...cle3980797.ece

[nasdaq.nyse.day.trader]

It's one of those deja vu threads all over again..........
Good stuff firewalker
Not much evidence of bandits here; I might start posting myself.
Richard

[firewalker]

On Friday, 'important' figures about existing home sales were released at 1600PM (time on the chart). The exact minute is circled on the 1-min chart..

If you look back at the chart of the day, I think it's clear to say the news had almost no impact, other than a very temporary effect. On a 5-minute chart this spike completely disappears and even the volume doesn't mean anything.

Price was on the way down to support at 470 and the news could not change that in any way.

[Trader333]

It was highly unlikely to have any impact because the actual result was pretty must as forecast.


Paul

[firewalker]

	Quote:	Trader333
	It was highly unlikely to have any impact because the actual result was pretty must as forecast. Paul

Actually, the fact that the result is as forecast, does not automatically mean the market will not react.

This is an example of April 30, where the FOMC decided to lower intrest rates to 2.00%, exactly as predicted. One could hardly say there was no impact in this case... As always with news, 'good', 'bad' or 'neutral' news, might be fun for analysts, but is mostly irrelevant for traders.



On Friday, the market was attracted to support at 470, almost like a magnet. Therefore, odds were higher that it would continue lower after it broke down 570.

[DbPhoenix]

You're mixing apples and oranges. There have been a number of market-moving factors in the past which prompt not much more than a ho-hum these days: consumer sentiment, the price of oil, home sales, unemployment, etc. What moves markets the most these days is interest rates, but not the raising and lowering per se. Instead it is the outlook for rates and rate changes that causes the moves. Re 4/30, what moved the market was not the rate cut itself, but the concern that it might be the last.

[firewalker]

	Quote:	DbPhoenix
	You're mixing apples and oranges. There have been a number of market-moving factors in the past which prompt not much more than a ho-hum these days: consumer sentiment, the price of oil, home sales, unemployment, etc. What moves markets the most these days is interest rates, but not the raising and lowering per se. Instead it is the outlook for rates and rate changes that causes the moves. Re 4/30, what moved the market was not the rate cut itself, but the concern that it might be the last.

I realize the example may not have been the best, but the point was to illustrate that numbers that come out "as forecasted" sometimes will, other times won't, have an effect on the market. True, interest rates usually create more effect than any other potentially market moving factor... But like you said yourself, some factors have caused movement in the past, they don't as much nowadays. But they might again create more volatility in the future, or not...

Anyway, point was to show that when a figure (for example quarterly company results) comes out "as forecasted" does not mean that price cannot take a sudden jump lower or higher.

[smwinc]

	Quote:	DbPhoenix
	You're mixing apples and oranges. There have been a number of market-moving factors in the past which prompt not much more than a ho-hum these days

I tend to agree with DB.

I understand the point your making FireWalker, but I think rather than the generalisation "economic news doesn't matter", should really be changed to less focus on the result of the news, and more focus on what the market is doing into and out of the news.

Especially in the markets you have listed like the DAX, there have been 100's of days where you would be blown out of the water if you were not aware of the news coming out. The vast majority of the time there is always "evidence" in the price action that something is going on, but it is often much harder to notice and have conviction when you don't have any reason for a sudden sharp reversal.

It doesn't mean that you need to even understand what the news implies (this is almost always the case with earnings); rather using it as a potential timing tool and/or period of volatility.

[firewalker]

	Quote:	smwinc
	I tend to agree with DB. I understand the point your making FireWalker, but I think rather than the generalisation "economic news doesn't matter", should really be changed to less focus on the result of the news, and more focus on what the market is doing into and out of the news.

Actually, that's the point I'm making. Perhaps I didn't make myself clear. I didn't say the news won't affect the market. Sometimes it will, other times it won't. But it's not the news itself, it's the action of the market that really matters.

	Quote:	smwinc
	Especially in the markets you have listed like the DAX, there have been 100's of days where you would be blown out of the water if you were not aware of the news coming out. The vast majority of the time there is always "evidence" in the price action that something is going on, but it is often much harder to notice and have conviction when you don't have any reason for a sudden sharp reversal.

Why would you be blown out of the water because of the news? If price moves against you, you have your (be it fixed be it mental) stop, right?

	Quote:	smwinc
	It doesn't mean that you need to even understand what the news implies (this is almost always the case with earnings); rather using it as a potential timing tool and/or period of volatility.

That's exactly who I use it. I write down the time periods where potentially market moving news is released. If you don't, you might wonder why price is sitting there for one hour (apparently in anticipation of something). But there are many traders who completely shut their eyes to all these things and trade very profitable as well.

[smwinc]

	Quote:	firewalker
	Actually, that's the point I'm making. Perhaps I didn't make myself clear. I didn't say the news won't affect the market. Sometimes it will, other times it won't. But it's not the news itself, it's the action of the market that really matters.

No problem, I missunderstood.

	Quote:	firewalker
	Why would you be blown out of the water because of the news? If price moves against you, you have your (be it fixed be it mental) stop, right?