True technical analysis is purely about the market internals. The market is all you need to know about the market, the theory goes.
The reality, however, is that external factors such as politics, wars, and catastrophic events do help shape the long term picture in the market. Getting that macro picture right is as important to trading as having a feel for the short term moods and trends reflected in the market.
My sense is that the macro picture of the American economy includes a crash of some sort. I don’t believe investors can jump fully back into this market with all its uncertainties until we see a sudden and dramatic fall in prices that says clearly “it ain’t gettin’ cheaper than this.” Until then, I we’re just biding time.
Now I could proceed to make a case why the market will tank sooner rather than later, but the truth is that I don’t know exactly what will precipitate it. There’s the technical side of my trading philosophy coming out. However, I do believe that fundamental factors regarding the underlying weak economy are starting to come to the fore in investor sentiment.
Getting the macro picture right
By Option Trading Blog on July 15th, 2010
True technical analysis is purely about the market internals. The market is all you need to know about the market, the theory goes.
The reality, however, is that external factors such as politics, wars, and catastrophic events do help shape the long term picture in the market. Getting that macro picture right is as important to trading as having a feel for the short term moods and trends reflected in the market.
My sense is that the macro picture of the American economy includes a crash of some sort. I don’t believe investors can jump fully back into this market with all its uncertainties until we see a sudden and dramatic fall in prices that says clearly “it ain’t gettin’ cheaper than this.” Until then, I we’re just biding time.
Now I could proceed to make a case why the market will tank sooner rather than later, but the truth is that I don’t know exactly what will precipitate it. There’s the technical side of my trading philosophy coming out. However, I do believe that fundamental factors regarding the underlying weak economy are starting to come to the fore in investor sentiment.