Watching the chatter class on cable, its easy to get caught up in their mindless ramblings. Sell off -Terrible. Rally- Party hats and Champagne for all! The repetition is sometimes mind numbing. Bad news always gets more attention. In a country of 340Million people, it seems as though there are 339 million eager to be able to say “see, I told you so”, when the market sells off.
I am a big fan of listening to both the conservative AM entertainers as well as the “progressive ” left wingers. Each one has their own perverse ideology. It always boils down to blaming sell-off’s on “the other side”. I listened to Smiley and West several months ago and they were both bemoaning the “massive trillions of wealth” lost during the stock market panic of 2009. The seemed oblivious to the fact that all of those losses and then some had been gained back. The lows were traceable to Reagan, Bush/Cheney, as if the 8 yrs of Clinton/Gore saw a suspension of any policies which could ever have lead to any of the problems which sparked 2009.
Conversly, listening to the right wingers, the recent 1,000 pt swings lower were All attributable to one person, POTUS. All attributable to the ACA (Obama care) and all somehow easily blamed on one person. Its just as ridiculous as when one side does it as the other if you ask me.
Skewed logic on both ends if you ask me. However, it gives a person with no real ideological bent a great key as to when markets are turning.
Right now, if you look at the chart below, we’ve had a 1,000 pt trading range for the past 6 months in the Dow futures. I use the Dow , because, although 90 percent of traders look at the S&P because its a broader index, I have found that for a psychological read on the country, the Dow average, for better or worse is a more meaningful guage. Bottom line its my personal preference given my history of having spent 7 years trading that Dow index back when the open outcry pits were in place.
Yes, there is a ton of correlation between the S&P 500. Yes you can use one to trade off the other. I am aware of all that. I am just explaining why I concentrate on the Dow.
We have been between 14,600 and 15,600 for the past 6 months. Look at the Daily chart of December Dow below:
