Follow the Weight of Money

You don’t have to read everything about a stock.

Or know every single thing about a company.

The market tells you all about it.

That’s if you can read a chart that is.

In other words, if the trend on the chart is up or down, there will usually be a reason for it.

Don’t second-guess it.

The reasons might not be obvious at the time.

Often the news comes out later.

Think of it this way.

Somehow, someway, people, get to know something about a company.

And if they know something, they act on that information.

And that can’t be hidden.

That buying or selling has to show up on the chart, which all adds up to give a trend on a stock.

So, follow the weight of money.

Stop Listening to the Opinion of those So-Called Experts

The market often moves before the news is widely known or reported. Knowing that is a very tradeable dynamic.

Once you know this, and have seen it for yourself in the charts, you’ll stop listening to the opinion of all those so-called experts. Those who claim to know what is, and what is not a good company to invest in.

There’s a traders’ saying that goes something like, ‘news goes with the trend’. 

And so it does. That’s been my experience anyway.

We might get an example of this as some of the internet giants report earnings this week.

On Monday the universal search engine — which is also YouTube and so much more — Google, or Alphabet Inc [NASDAQ:GOOG], is to report earnings. Really news will come this morning our time.

Then Wednesday social media giant Facebook Inc [NASDAQ:FB] report. Followed on Thursday by e-commerce and cloud computing giant Inc [NASDAQ:AMZN]. And to round off the week Twitter Inc [NYSE:TWTR] reports on Friday.

Let’s bring up their respective charts. Here’s the weekly charts on all four:

Alphabet Inc [NASDAQ:GOOG], Facebook Inc [NASDAQ:FB], Inc [NASDAQ:AMZN], Twitter Inc [NYSE:TWTR] charts 24-07-18

Source: Optuma

[Click to open new window]

Now here’s something you might want to follow. A bit of a forecast.

These four internet heavyweights are very likely to report strong revenues and earnings growth this week.

I can make that forecast simply based off the charts.

The market usually knows, the good or bad news to come.

You have to come to this understanding, if you want to trade markets well.

Are Stocks Rising Because of Stimulus Measures?

Some analysts suggest that stocks are rising because of stimulus measures. But I get the feeling stock price movements have more to do with whether a company is growing revenues or not.

The trend in the chart often tells you that in advance of the reporting date.

Once you understand this, you’ll come to find everything that is written about a stock is totally irrelevant. My writing included.

A lot of people struggle to accept this at first.

All that’s known about a company is in the chart.

But what makes the charts so interesting to follow, is that they often contain information about what is not general knowledge.

That’s why I suggest you trade the trend of the market, rather than start trading your own opinions, or the opinions of others.

Trading opinions can be costly.

Opinions are the last thing you want to bring to the market. Trading markets is easier and far less stressful when you leave your opinions at the door and just trade the trend of the chart in front of you.

Stock price movements move with the direction of revenues and earnings.

And the market is suggesting that Google, Facebook, Amazon and Twitter have revenues moving in the right direction. We’ll know soon enough. By the end of the week in fact.

Let’s wait and see.

Best wishes,

Terence Duffy,
Chartist, Phil Anderson’s Time Trader

Terence Duffy is an analyst and chartist, specialising in researching economic trends and cycles.  His primary focus is housing and land affordability. But you can also depend on him to offer his unique analysis of stock market charts. As Terence will show you, the charts often forecast, well in advance, the good or bad news to come — which he details in Cycles, Trends and Forecasts.

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