One day, my very well-meaning father announced that he had purchased his own company stock for me as an investment in my future. The US market made another positive week last week, pretty much against my predictions over the past two weeks that the market should take a breather back down to the 30MA before it has energy to move any higher due to extreme short term overbought condition and a looming resistance zone on the new high level. US market continues to climb higher towards all time high today despite worsening economic data over the last two days.
The market has persisted in deeply short term overbought position so far, making it extremely hard to set up a confident intermediate term trade and this is certainly not the time to employ a buy and hold strategy on stocks. In terms of stocks, many in the bottom 90% decided against gambling money in the stock market after being wiped out by the dot-com crash. If you enjoyed this site for at least 2 hours this year, and you donate $25, you already received more entertainment than you did from the movie.
The U.S. stock market is integral to the global financial system in two that investment banks, pension funds, insurers and multitudes of 401K retirement plans are dependent on current equity valuations, a crash would impair virtually the entire spectrum of finance from hedge funds to banks to insurers to pension plans. By turning the health of the economy into a reflection of the stock market, the Status Quo has made the stock market into the one bellwether that matters. In effect, the stock market is now integral to the economy as a measure of sentiment and evidence that all is well with the economy as a whole.
The stock market is now the signal everyone follows: if stocks are rising, we’re told that means the economy is healthy. The stock market addresses this asymmetry by signaling what’s really going on via price: if the market sells off, that tells even those with little other information that all is not well in the economy. This explains why a rising stock market is now essential to the Status Quo: if the market reverses, everyone who sees mostly stagnation in their corner of the economy will realize that is the norm, not a local aberration.
The market is made up of minds of many men and when you put all these men together, everyone has their own views and outlook which could mislead your initial thought process. To sum up, if you want to be profitable in the market, you must adapt fast to changes because the market is so dynamic. The market is not always forgiving, so please don’t attempt to punt the market if you are ignorant.