Ok…I care a little bit.
But…I care about what happens, not what might happen, or why it happened. It saves a lot of time and worry. I feel I am not trying to predict the S&P 500…I’m trying to classify changes that have just occurred.
There are an infinite number of news sources saying this or that might happen, or why this might or did happen. You’ll go crazy with worry about this and that. I don’t care what the Chairman of the Fed says, or whether there is a prediction of a recession, or whether somebody invaded somebody else (actually I do care about that, but that’s another story). I don’t listen to people screaming on the TV why I should buy this or that. I generally feel that overthinking daily financial news and speculative market triggers leads to stress and anxiety, and emotional trading.
Remember, you are not trying to model or predict the overall economy or financial markets. You are trying to model aggregate Investor Behavior specifically in the S&P 500. Their hopes, fears, greed, expectations, etc. The S&P500 is a leading indicator relative to the economy. That means sometimes when we are in the depths of a recession…the stock market goes up!
The S&P500 will go up for many reasons. I don’t care why. Just that it does. It usually goes up slowly, in an up-and-down seesaw ratcheting way 2 days up, 1 day down…slow and steady up, with lower volatility over a number of months, sometimes 4 or 5 months or more. It rarely shoots straight up. The gains are slow and steady. You are not going to miss a rise…it is more likely that you are going to get in too late.
The S&P500 will go down for many reasons. I don’t care why. Just that it does. REGARDLESS OF THE REASON. That is my trigger to SELL/STOP LOSS (move into TSP G). The drops (Pattern 2) are usually more abrupt, with greater daily swings and shorter in duration than the rises (Pattern1), except in an extended crash. But you will be spared from that because you would have gotten out of C using the SELL signal.
I generally feel that in the early days of a strong rise, news doesn’t affect the market as much because the strong upward momentum is driving it up.
But over time as the rise goes on and begins to soften and get “mushy”, many things might trigger a drop. Why…because the index becomes more and more overbought and traders have built up expectations that it is going to drop. Any negative news might fulfill those expectations. I just wait until it starts to go down to get out.
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