Small Cap Network Blog

If you want to know why you don’t follow the crowd when they have a knee-jerk reaction to economic news, this is why. At 11:00 am this morning all hope was lost for the market…we were deep in the red. Surely all this joblessness meant the end of the world was right around the corner.

I guess all those unemployed people had job interviews and got hired over the following four hours…the market closed in the black for the day. Ridiculous journalism. To assign a cause/effect relationship llke this is far from the whole story.

Anyway, take a look at the Yahoo! Finance home page, have a laugh, then keep reading.

I’m not saying it’s bullish or bearish. I’m just saying this is evidence that you can’t worry about the media - they don’t know or care what they’re doing, and they only think/write/live in the moment.

As I’ve said hundreds of times in the last several months, economic data is long-term data, and should be used accordingly. Using it to make short-term decisions makes you a volatility trader. That’s fine, as long as you understand that today’s counter-intuitive upside reversal is the norm.

You should use short-term charts to make short-term trades; fundamentals don’t play a role there. Use fundamentals and economic data to make long-term trades, and don’t let the short-term volatility shake you out. The only thing the short-term stuff is good for to long-termers is getting in or out at a slightly better price.

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