Here’s a graph and commentary from our December Global Market Perspective: Note the lack of a link between the FTSE 100 and the UK Severity Index, which captures the number and severity of the UK government’s coronavirus response. Stocks fell from February to March this year – with little or no cap – and then rallied from March to May during the UK’s toughest cap to date. Stocks have gradually declined along with the lifting of government restrictions from June to early October. And when restrictions tightened in early October, the FTSE 100 first fell and then rose. In other words, a perfect foresight of the largest and most extensive social constraint in modern history (and possibly in the entire history of mankind) would not provide any useful information that investors could use to trade stocks.
As Elliott Wave International has repeatedly said, financial markets are often ahead of the news. They are not driven by news; the mainstream is simply using the news to justify what the markets have already done. Yes, there are indeed trading days when stock markets are up, when the news is “good.” However, it is often the case that the news is “good” and the stock is falling, and vice versa.
As the classic Wall Street book, The Elliott Wave Principle: The Key to Market Behavior, by Frost and Prechter says:
Sometimes the market appears to reflect external conditions and events, but other times it is completely separate from what most people think are causal conditions. The reason is that the market has its own law. It is not promoted by external causality, to which one gets used to in everyday life experience. Price movement is not a product of news … The market is developing in waves. Waves are patterns of directional movement.
translation from here
“Exciting Times for Asia Pacific Markets!” (1 week FULL FREE access December 29 – January 6)
Crypto Trading Guide: 5 Simple Strategies To Watch Out For New Opportunity
Now the Elliott Wave Principle, a handbook of wave traders, can be found in free access here
And don’t forget to subscribe to my Telegram channel and YouTube channel
Free Guide “How to Find High Probability Trading Opportunities Using Moving Averages”
If you find the article interesting, put the plus signs and add to favorites.