| China Press Reader Asks: Government has announced many projects under ETP, and market analysts favors construction counters but they do not show exceptional performance, does this mean they have reached their highs?Readers must have a clear understanding on the mechanism and the real causes of the financial market.There are two essentials: one is news announcement, the other is the fluctuation of stocks price. Based on the readers’ question, their interpretation of stock market mechanism is news equals to stock price fluctuation.This is the understanding of 90% stock investors, this also explain many losing money without knowing why.How about the 10%? They are the ‘reversal-er’. News and the stock’s price are related but both aren’t equivalent.
Think about it, readers. If stock price rises or falls depending on news, then the world is in the mess as news about terrorists attack are common.
For instance, opportunist and terrorists can just simply take the advantage by shorting big amount in Index Futures Market, on the other side, the terrorists bombed the Twin Towers.
Based on simple analysis, if there is trouble with Twin Towers, it is a catastrophe, and it will impact the stock market volatility, and ‘fore-guess’ index futures will fall and taking profit by going short.
My answer to you is: based on news to ‘fore-guess’ for trading, it is unlikely to make a handsome profit. Index Futures volatility is for moments only because majority ‘fore-guess’ it will have a significant reaction, it should retraces, and go short too. Furthermore, there are ‘long’ players clear their positions. The accumulative effect is there is high volume for short. The chart will reflect a correction, but they are times it will rebound quickly.
When the timing has not come, the price will not rise high or higher. Similarly, if the timing for it to go lower low, it will change its trend no matter how much volume is being sold.
Today, let’s not follow the crowd, i.e. do not focus on news to determine the rising or falling of stocks price.
Yes, government has announced many projects under ETP, how about the execution side? Will they be materialized? The cost of building materials and developers face many challenges too. Surely, it is also depend on the quality of developers counters too. When the time has come, plus the unseen hand maneuvering the stock, together with good news, price going high is a matter of time only.
David Yap
Founder & Master Coach
Oriental Master Code & Millionpreneur Investment Community
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Welcome. Our investment and trading methodology is applicable to forecast the financial markets. Oriental Master Code™ and Millionpreneur™ Forecasting Software covered the most critical challenges in understanding the financial markets. It has been tested and proven to be the most simple, effective and efficient solution and a worthy companion for you to play the Wall Street Game beautifully, masterfully and profitably. - David Yap
