Arguing over “why”
A Catch-22 of business & trading
“Some men see things as they are and say, ‘Why?’ I dream things that never were and say, ‘Why not?’”
–George Bernard Shaw (Irish dramatist, 1856-1950)
So my dad and I have this ongoing disagreement about news.
He likes to be informed about the happenings in the world and uses that info to help him make educated guesses about what might happen in the market.
Me?
I don’t care much about the news. I take the approach that almost all the information I need can be seen in the technical analysis (aka, the charts).
In short, he leans more fundamental and I lean more technical.
I like the trading edge these discussions give us.
There are times when he points out some fundamental or news related things that I just haven’t considered, and it’s good analysis. Like today, NVDA earnings are getting posted.
NVDA is the biggest company (by valuation) in the world.
A $5 trillion company ...
WOW!
I know that the earnings event is posted on the technical chart, but at its core, an earnings report is a fundamental event. This one, in particular, has a high chance of actually moving the markets ... in a big way.
Alternatively, there are times when I point to the charts and say, “that news is just a trigger for what the chart wanted to do anyway.”
Will that happen today?
I look at the market pullback recently and see that we’ve tested support, blown through it (thus, taking out a bunch of stops that long traders probably had working) and we’re poised for a big move higher.
Abnormally big.
I’m talking like a 2% move in the S&P 500 if we get a favorable report from NVDA.
Not a guarantee, because my crystal ball I use to predict the future is still broken. But my educated guess is that the market is about to move higher.
The trigger is probably today’s earnings report.
Something else to think about:
Right now we’ve got a crazy low Fear & Greed Index number. As you can see, it’s sitting firmly inside the Extreme Fear zone. The market is worried about a bubble popping, a recession starting, and they’re nervous.
The bigger point I’m making here is that this is all data we can use to help guide our guesses.
Now, the reality is there is too much information to sift through. So when I’m trading, I just have to make a choice: look at my data, see where it’s pointing, and decide what to do about it.
I can never gather enough data to make a perfect decision.
In fact, if I were to try and gather all the data possible to make the safest bet I could make, the opportunity to make money from the decision would have already passed. It’s a nasty Catch-22 of the business world.
By the way, that’s as true in business as it is in trading.
Because, at the end of the night, trading is just negotiation. And so is business.
All right, here’s a different choice to make:
To move on with your day or check out my (still work-in-progress) trading course + community?
Here’s the link, for your consideration:
— Ricky Ketchum