Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

News Is NOT the Main Driver of Stock Market Trends

InvestorEducation / Elliott Wave Theory Mar 03, 2011 - 02:51 PM GMT

By: EWI

InvestorEducation

Best Financial Markets Analysis ArticleBreaking News Bulletin: News Is NOT the Main Driver of Stock Market Trends
A FREE myth-busting report from Club EWI reveals the real force behind long-term trend in financial markets


Conventional economic wisdom is founded on one core concept: namely, that events that exist outside the market (part of "market fundamentals") trigger trend changes in the financial markets.

Because of this belief, you have the mainstream experts of finance watching everything from weather patterns to crop conditions, political exploits to the subtlest changes in punctuation in the Fed's minutes -- all in the hopes of anticipating the next big move in commodities, stocks, gold, the dollar, etc. In a nutshell, "positive" news and events cause a rise in prices, while "negative" news pushes prices down.

In reality, however, things are not as clear-cut. Markets regularly "ignore" the news, shrug it off -- and move in the opposite direction of their "fundamental" cues. OR, worse waver in two different directions after the same event.

Take, for instance, the recent slew of news items following Federal Reserve chairman Ben Bernanke's March 1 testimony before the Senate Banking Committee:

  • "US Stocks Advance Ahead of Bernanke's Testimony" (International Business Times)
  • VERSUS -- "US Stocks Turn Lower As Bernanke Testifies To Congress" (NASDAQ)
  • VERSUS -- "US Stocks Rise With Bernanke In Focus" (MarketWatch)
  • VERSUS -- "Stocks Decline As Bernanke Comments Fall Flat." (Wall Street Journal)

What often ends up happening is this: Because the original event fails to predict the movement in stocks, commentators then sift through the day's news feed in search of a different "trigger" -- one that fits price action AFTER the fact.

The fallacy of a news-driven market is the first misconception exposed in Elliott Wave International's Club EWI free resource "The Independent Investor" eBook. Here's a short preview of this eye-opening report.

Chapter 1 opens with the question "What Really Moves the Market?" You then get the answer via riveting excerpts and charts from EWI president Bob Prechter's monthly Elliott Wave Theorist publications, such as this one below:

"Suppose the devil were to offer you historic news days in advance. He doesn't even ask you for your soul in exchange. He explains, 'What's more, you can hold a position for as little as a single trading day after the event or as long as you like.' It sounds foolproof, so you accept. His first offer: 'The President will be assassinated tomorrow.' You can't believe it. You and only you know what's going to happen. The devil transports you back to November 22, 1963. You short the market. Do you make money?

The first arrow in Figure 6 shows the timing of the assassination. The market initially fell, but by the close of the next trading day, it was above where it was at the moment of the event. You can't cover your short sales until the following day's opening because the devil said you could hold as briefly as one trading day after the event, but no less. You lose money."

Independent Investor eBook further exposes 10 other commonly held economic beliefs for what they truly are: Wall Street myths disguised as reality. Here's what else you'll learn: 

  • The Problem With “Efficient Market Hypothesis”
  • How To Invest During a Long-Term Bear Market
  • What’s The Best Investment During Recessions: Gold, Stocks or T-Notes?
  • Why "Buy and Hold" Doesn’t Work Now
  • How To Be One of the Few the Government Hasn’t Fooled
  • How Gold, Silver and T-Bonds Will Behave in a Bear Market
  • MUCH MORE

Keep reading this 118-page Independent Investor eBook now, free -- all you need is a free Club EWI profile.

This article was syndicated by Elliott Wave International and was originally published under the headline Breaking News Bulletin: News Is NOT the Main Driver of Stock Market Trends. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in