What/When to Listen!

Are you listening to the markets or is some pundit/expert pounding it in your head what the next move should be?  Ask yourself – what makes them smarter than you?  Experience?  Wealth?  Influence?  I find it very hard to trust others’ judgment when there are blanket statements being made about where the next move will take us.  Frankly, guessing is a fun game but in this business a guess will usually get you in trouble.  After all, what advantage do you have?  The market signals and TELLS you what is happening and then you can make your moves.

My good friend and Real Money Contributor Helene Meisler is brilliant at analyzing market indicators (I have been following her for a dozen years), often reminding us to shun the rationality of a move or indicator and just interpret based on history and the charts.  Rarely does she just give a market opinion unless it is tongue-in-cheek.

When we hear/read about other opinions of the ‘next move’ in markets it is often built with evidence that is not too consistent with their normal research.  For example, a friend forwarded the writings of a fund manager (not on this site) who is a terrific fundamental analyst but was using Elliott Wave, astrology patterns and Zero Hedge articles to support his bearish case.  What is odd is he hardly ever uses those tools in his analysis but expressed the concern for markets due to mere convenience of building evidence.  I really don’t know if he even believed it but no matter. There are advantages to using both fundamental and technical analysis, but to state a case is being selective.

I rarely have the volume up on CNBC even though it’s on in the background.  There is just too much noise and distraction.  I love to read and learn new things each day but I shun the stuff that could influence my next moves.  Have I been bullish of late?  I don’t know if you can say yes or no, but the plays I have been on are mostly long calls.  When the setups are there I just take them. They don’t always work of course but then again trading is not a game of perfect.

The latest word is an attack from Israel on Iran, or vice-versa.  What can we do with that?  Is that truly helpful in trying to figure out what to do in markets?  I can tell you this much – it can certainly paralyze you.  I’m not saying to ignore the news or turn a stone-cold eye at it.  I realize there are issues to be addressed but don’t let that be the MAJOR influence for how you trade or invest.  Further, don’t let anyone with influence take you off your track.

Trade what you see not what you think, feel or hear and you will be much better off.  The noise right now is loud – why?  Because the questions linger:  Why is this market going up?  Why am I missing out?  When should I get in?  Why did I listen to that guy when he said to stay on the sidelines?  We want to know the answers – yet if you are looking to the wrong outlet you won’t get them.  Turn down the noise and distractions – you’ll perform better.

What do you think?

Bob Lang is the Senior Market Strategist for option trading newsletter Explosive Options