Hello traders everywhere, Adam Hewison here co-founder of MarketClub with your mid-day market update for Thursday the 29th of September.
Do you see the trees in a forest, or do you just see the forest?
There is a saying that goes like this “can't see the forest for the trees” is a reference to people who get so involved with the details of an issue that they lose sight of the big picture.
If your involved in the markets, it is easy to fall into the trap of just looking at the minute or hourly charts, rather than considering the market as a whole. When you can't see the market for the minutia, it means that you are deeply involved in a situation, and you are perhaps focusing too much on the inner workings of the market, and not enough on the big trends.
With all of this talk of problems in Greece, defaults, contagion and a host of other problems in Europe, it is easy for traders to get distracted, and not see the forest for the trees.
The most important element in trading in my opinion, is the direction the major trend for that market. It doesn't really matter what the news is, if the market is doing something else. As traders I believe we have to look at the forest in this case the big trends in the marketplace.
Let's look at them now: S&P 500 index–major trend down. Gold-major trend up. Metals–major trend down. Crude oil–major trend down. Dollar index–major trend up. CRB index–major trend down.
So, there you have it, all the major trends in all the markets we are dealing with right now. Everything else is just individual trees, that don't mean a heck of a lot in the big picture.
It takes a tremendous amount of energy to move a market and change a major trend. This kind of energy normally does not happen in one or two days. As they say in statistics, one data point does not make a trend.
Now let's go to the 6 major markets we track and update every trading day and see how we can create and maintain your wealth in 2011. Continue reading "Do You See the Trees In a Forest, Or Do You Just See the Forest?"