Read The News: All Good Market Trends Come To An End
The market is always a two-sided debate that takes place with words around proverbial water coolers, on the internet and in the mainstream media and on the floor of the exchanges where real buying and selling determines the price of all traded entities.
Unfortunately, the former influences the latter, and this causes the mainstream public and anyone with a negative attitude to miss many great opportunities.
The current battle pits the bulls, who've been long for five years, against the bears, who are a constant supplier of lists explaining why the market should go down. The current list includes, but is not is not limited, to the following:
Even though corporate profit margins are at an all-time high and corporations are sitting on more cash than they ever have before, the economy is only doing so-so. The shrinking middle class is seeing jobs shipped overseas or wages/salaries reduced, and with the US being a consumption-based economy, who will buy products if the trend continues?
The employment situation is not good enough for the Fed to reduce their monthly bond purchases.
The under-employment rate has been quoted as high as the 25 percent.
The debt load of college grads coupled with the poor employment prospects may handicap an entire generation. And with Obamacare essentially shifting some of the health insurance burden away from older folks or people with pre-existing conditions to the younger and healthier generation the situation will only get worse.
The US seems to be making more enemies in the Middle East, not less.
Given the low interest rates are and all the QEs, the Fed is out of bullets to do anything should the economy slip.
The US is as divided now as it's been since the Civil Rights era, and possibly since the Civil War. The two dominant parties in Washington could not be more different, and their willingness to be open minded and seek common ground is at an all-time low.
Facebook (NASDAQ: FB) could be considered a scam, worth no more than five bucks. Tesla (NASDAQ: TSLA) is mostly all hype. Yelp (NYSE: YELP) is full of fake reviews, leading investors to presume its worth. Web 2.0 companies are not exactly real, tangible companies. Getting eyeballs for the sake of selling advertising is not a business model. The list goes on.
Without access to the charts, one would conclude from the above that the market would be declining or already in the dumps. Yet, just a couple weeks ago it hit all-time highs, and despite numerous reasons the bears should be able to take over and push prices forcefully down, they just haven't been able to do it. The S&P has dropped about 60 points off its high, about 3.5 percent. Big deal!
If the bears can't take over when there are so many reasons the market should drop, one can only conclude the market (stock market, not economy) is strong - for whatever reason.
Now we have the circus in Washington, which at first was expected and not a big deal but now may start to inflict some damage on the economy and the psyche of the country.
The problem with these arguments is most have existed for a very long time. The US has always had a lot of debt. The unemployment rate has been high for several years. The Middle East has always been a nonstop war zone. And the divide in the country is nothing new. It's been growing for years.
The only new circumstance is the debt ceiling talks (which involve Obamacare), but this is a one-time event. Sorry, the market isn't going to be negatively affected by one-time events - especially ones that are political in nature, not market related. In fact many companies now have an excuse to miss their Q4 numbers. They can just blame the shutdown.
Here is the weekly S&P 500 chart. The trend is up. Simple as that. Traders talk about using a stop to cut their losses, but they never talk about lost opportunities. They never admit being on the sidelines while the market trends up for five years costs much more than moving a stop from a seven percent level to a 10 percent level.
If what's being stated here sounds familiar, this is directed at you. The trend has been mostly up for five years. Stop letting your negative thinking, negative beliefs, negative attitude and negative persona prevent you from making money. Being objective means being able to go long while you're a nonbeliever because that's what the charts tell you to do. If you have political or economic beliefs, fine. Don't let them interfere with you making money.
The trend is up -- until it's not.
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