Hey traders,
Yesterday, I told you about a big problem in the market.
It’s especially true for newer traders, but honestly everybody does it.
They see a news headline come out or some new economic numbers — CPI, PPI, rate hike, you name it — and they trade based on that news.
It’s a big waste of time. I know this from my nearly 40 years of being in the markets.
But it’s a hard habit to break, so I wanted to show you solid examples of how little the news moves markets.
GoDaddy (GDDY)
Look at GDDY. It’s been in a significant uptrend since late 2023.
In the meantime, it’s had its share of bad news:
But look at that trend. It’s solid — with the stock barely ever dipping below its short-term 20-day moving average.
Even while the bad news was coming out.
Intuitive Surgical (ISRG)
Ok but maybe you don’t think the GoDaddy news was “bad enough” to move the stock…
How about we look at at a stock I gave away as a free trade in my FREE Telegram channel?
The stock is ISRG. Let’s look at the chart:
The stock’s been in a strong trend since late last year.
And during that time, it’s had its share of bad news, too:
They even had a lawsuit saying that one of their surgical robots caused a patient to die!
If news was going to move the stock, surely that would have done the trick.
But no. The stock trend strong even while news of the lawsuit was hitting.
And despite a little trouble in April, when most of the market took a dip, the stock has continued its strong trend.
What’s It All Mean?
And these are just a few quick examples. I could go on and on showing you how little the news actually impacts stocks.
Just look at a chart of the broad market and compare whenever CPI and PPI reports come out.
Maybe there’s a bit of a hiccup that day or the next day, but the effects rarely last.
The point is that the mainstream news media needs to fill time and they need to get your attention.
And one of the best ways of doing that is to get you to worry about what Powell is saying, or how this company just had a lawsuit or what the next CPI reading is going to be.
But the news is just the news.
Sometimes investors will react positively to negative news. And sometimes they’ll react negatively to positive news.
There’s really no way to tell how markets are going to take it.
And most of the time, whatever the reaction was will fade in a couple of days anyway.
The only solid indicator I’ve ever come across — and this is after nearly 40 years in the markets — is the trend.
If you’re convinced that trends are the way trade, here’s an article I wrote where I show you exactly how I set up my charts.
Now, don’t get me wrong: I’m not saying that trends always win.
Clearly, trends come to an end. They have to — nothing goes up or down forever.
Lots of people I talk to are scared of trading trends because “it’s got to come to an end.”
And they’re right — but it only happens once.
Meanwhile, the whole rest of the time you’re trading that stock and generating income on it.
Then, once the trend breaks, you can move on and trade another stock that’s trending.
That’s how I’ve made my money in the markets over the past few decades and how I recommend most people do it.
If you’re not ready to spot the trend yourself, I just released a tool that I think is ready to replace me — if I ever decide to retire. Check it out here.
Trade well,
Jack Carter
