For years, I got up early and religiously watched the news trying to gain some insight or edge before I would begin my trading day. While working out or riding my stair stepper I would soak up the financial news, all the while, thinking I was learning something of value that would pay off for me. I mean they are the experts, so they should know. They had the contacts and often brought in famous traders and stock research gurus, so they obviously had more knowledge and information than I could ever hope to know on my own.

They would share data and inside information as to why a stock or market was going to explode or sell off, and it would sound so convincing and make so much sense, but then the trading day would begin, and the stocks and investments would do the exact opposite of what they claimed based on their research or data they shared. They were always wrong, always, and it never made sense how they could get it so wrong. Sure, they occasionally got lucky and made a call that was correct, but it was rare, and certainly not often enough to make money or to gain an edge. I quickly learned that the news was only good for seeing things after the fact. If you wanted to check the market results for the day, then maybe those financial channels had some value. As for learning anything important or how to invest your funds, you will never gain any real advantage by listening to them. They just do not know, and it is obvious if you watch them.

My point is that you should understand that the news guys do not know. They do not offer anything of value that makes it worth your time. If you want to make money, learn to read the chart. When it comes to after-market reports, those are written solely on the price action, after the fact, and their reasoning for things is usually 100% contrarian to what they called earlier in the day. Never believe you can gain an edge from the financial news stations on TV. You would be better served watching re-runs of Seinfeld or Andy Griffith while working out than trying to watch the confusion and uncertainly of any of the financial news services. They will only put a bias in your mind for the day and that will trip you up in the end.

Once I learned to read the chart and completely understand price action, it all started to make sense. I quickly understood that these people had no idea why prices were doing what they did, as they searched for evidence and information to back up the moves. They were actually writing the news to match the price action at the end of the day. It was not long before I realized that price action truly was king and only a chart could tell me anything about prices and where they were headed next. Once you learn to read a chart; price action will make you the smartest guy in the room when it comes to talking about stocks and any investments for that matter. You can look at a chart and know more than anyone else, regardless of your IQ or your level of education. Assuming of course you know what to look for and how to read the chart.

As a good example of my claims, I received the following news brief from Yahoo Finance this morning. Since this was sponsored by Fidelity, I would assume Fidelity wrote the report. We already knew prices were likely going higher yesterday in an attempt to reach a measured move. How could the price action know the Feds would raise the rates and this create a rally? We obviously know that the price action could not know anything, but we knew prices had a strong chance of going higher because we knew they had not yet reached a measured move. I am attaching the report below so you can read it and see how they conveniently explain the rally, but we know better. It was all in the cards long before the feds made a single move with interest rates.

It’s interesting that we knew a couple of days ago, even as prices were trending lower in an attempt to retest the breakout area of the range on the daily chart, that prices were not done to the upside and that they still had room to go higher and likely would go higher after testing the breakout area down below. Once prices reached the breakout area, they did just as expected, they tested that price level, found support, then turned and raced straight back up to reach the measured move, where they then instantly turned lower again. We knew all of this days ago, or at least we knew that is what the chart was telling us. Sometimes the chart does change, but we can count on it to follow through so often that we have a distinct edge in the markets.

Prices still have two more possible targets to the upside, and with the turn around so far this morning, prices may indeed still have more room to the upside. There is a measured move based of the width of the range, which is the red arrow level, and then the possibility of a retest of the breakout when prices headed lower back in June, and that is the blue arrow price level. Remember, prices almost always retest important breakout levels before moving on in that breakout direction, and that breakout level at 4100.00 has yet to be tested from below. So those are two more legitimate and possible targets to the upside that are still in the cards.

Two More Posible Targets to the Upside on the Daily Chart.

Notice that prices never retested that breakout area around 4100.00 (blue arrow) when they dropped lower out of that small congestion area, and it is uncommon for prices not to retest breakout areas. In the end, I still expect a retest of the lows on the current chart (below 3650.00). Things could change at some point, but the chart still tells me prices will retest the lows before we truly find a bottom. How will the news pundits’ word their report if and when that happens? How could they come up with a reason for a swift turn lower when they are now saying the worst is behind us?

We already know what is likely to happen well in advance, and that is that prices are likely going to make another run lower soon. How will Fidelity explain the retests of the red and blue arrow price levels if we do indeed retest those to the upside? More importantly, how will they explain another sell off that makes new lows when they are calling a bottom already? It is always possible a bottom is actually in, but the charts don’t say that yet. Maybe they get it right, but it won’t because they really knew, nor will it be for the reasons they stated.

If we do make a new low over the coming months, how will the news experts explain things? The answer is simple. They will write the news to fit the price action. ๐Ÿ™‚ If you do not yet know how to read a chart, you can indeed learn, and then you can become one of the smartest guys in the room when it comes to discussing financial markets.

Click Here To Find Mack's Price Action Trading Manual!

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Comments

Jason July 28, 2022 at

Thanks for the well written post and examples here Mack!! Much appreciated!!

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tcmoster@yahoo.com July 28, 2022 at

So true. I was a floor trader at the Chicago Board of Trade for thirty years. The reason that I was able to survive so long in one of the biggest, busiest, and most brutal markets in the world, the 30 yr T-Bond pit, was because I always fell back on the fundamental rules that were pounded in to my head when I started my trading career in the early to mid 80’s as a house trader for a company that trained new traders for floor trading. The number 1 rule was NEVER read a business article or watch business news before the day began. If we got caught doing so, we were in trouble. This was for the same reason that Mack explained, unnecessary useless bias that will mess up your thinking and trading and steer you on a path of hoping, wishing, and praying that the market goes the way of what some guy on TV said instead of staying disciplined and sticking to your system. The reality of the market is the current bid and offer.
I really appreciate and respect Mack’s system and teachings, very similar to methods that I was taught by traders who were taught by traders from generations past. For me, Price Action Trading is the closest thing there is to being a pit scalper, which always worked as long as there was a liquid market.
Thanks Mack!

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roywes July 29, 2022 at

Thanks so much for the great insight gents. This information will help me in the weeks ahead to improve.

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Zeno of Citium July 30, 2022 at

Thank you Mack !

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