Want Success in Trading? Lose Your Opinion — Now

It’s hard to not listen to the experts and pundits who offer an array of opinions and points of view.  Everyone has to be smarter than us, right?  A market opinion is like a mouth – everyone has one and most don’t know when to shut it (there is a similar analogy most know of, but I wanted to keep it clean!).  But those opinions tend to sway us to move in dangerous ways.  The market will never divulge an opinion, but like Jack Webb said in Dragnet:  ‘just the facts’.

Lately the market opinions are popping up everywhere and it seems that wild guesses are tossed around daily that turn out to be frightening scenarios that end up being false.  Yet, if we look at the charts and technicals the ‘truth’ is easily revealed without any bias.  One fact we have noticed is the lightning speed of market moves, not to mention the rising market volatility.  We saw this starting to happen in December as trends started to break down, even some pundits said we would likely see more volatility in 2015.  Correct so far, but it’s only been a month.  Forecasts and market opinions after January 2014 were quite bearish for the year, and if you listened to those you probably ended up losing.

We continue to be pummeled by news, events and shocking moves (black swan type) and the markets reflect the worry that the other shoe will drop.  Let’s peel off the macro ones from January:  Swiss Bank decouples from the euro, the ECB announces a massive QE plan to shore up their economy, 13 other central banks cut rates significantly, terrorism still reigns, crude oil drops to its lowest levels in five years and doesn’t seem to have a bottom in place and the strong dollar is causing a worry among many of our companies.

Interest rates have fallen to historic lows, chasing down emerging market and euro debt yields.  And let’s not forget the big, bad weather that hit the east coast this month.  All of that in January!  No wonder the VIX went haywire this month.  I believe there were triple digit moves every single day this month (20 trading days).

So, where do we go from here?  No doubt the market looks vulnerable to a decline, and the conditions mentioned above are not going inspire much confidence to get long the market.  Everyone now wonders if the Fed put is all but gone.  I’m not sure, because off these stock market gains belong to the Fed, and if they are gone before it is safe to leave the playing field, well that leaves everyone with too much doubt and very little confidence.

However, we are still in a trading range, albeit at the bottom of the range and until something cracks then we will stay the course.  So many market opinions have pushed us to do make the wrong move, and following those have put some of us on the wrong side of the fence.  Read them, acknowledge them but don’t trade on them.  The market will always tell you where it’s been, where it’s at and where it is going.