Investors check trends for market direction by knowing economic and market signals. Knowing how to read the signals exposes key economic and market forces. The combination of forces plays a big role in determining market direction.
Economic trends give stock market direction. Up trends equal rising stock markets; down trends produce falling stock markets. Buy up trends sell down trends.
Digging deeper into economic data can refine the results but there is little practical reason to do so. The basic approach works well. Trending up produces a rising stock market; tending down produces a falling stock market.
Market direction tend indicators
This lesson 8 of the Monitor Markets to Protect Wealth course concludes the discussion on market direction pointers. When the trend is up, confidently take stock positions. Go long by buying shares. Purchase stocks that benefit most from economic growth.
If the trend is down, get out of the market by selling stock positions and going to cash. Alternately in a down market, sell short to profit from falling stock prices.
Even when all looks good, remain on watch. Be alert to observe any early warning signs of a slowdown or a change in trend.
In my experience this simple method of predicting the stock market direction has proven be be very reliable for a very long time.
We spend when we can
Our normal spending behavior only changes for a reason. So does that of our family, friends and neighbors. That is what makes this such a reliable approach. We only buy when confident. We hoard cash when there are financial concerns.
When we have concerns about the future of our business, job or finances, we slow or stop spending. A car gets replaced when we feel secure. We certainly don’t start a renovation or consider buying a larger house unless we think we can afford it.
Our behavior and that of our family, friends and neighbors cascades through the community and economy. Keeping aware of any changes in such behavior puts us in great position to move as required when the stock market changes.
Your economic research will give you a good understanding of the economic outlook. You will be amazed how such basic research gets missed by many who should know. That includes far too many political and business leaders.
At your next BBQ or cocktail party you can speak with authority about “your” research. If you get up on a soapbox and hold forth, do let me know how that goes!
What is your economic outlook? What do you think will come next? Questions and comments welcome here.
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Monitor Markets to Protect Wealth:
Introduction to Monitor Markets to Protect Wealth Lesson 1
4 Indicators muffle noise Lesson 2
4 Market direction drivers Lesson 3
Daily buyer-seller battles Lesson 4
3 Risk or opportunity signals Lesson 5
Look forward with data Lesson 6
5 Star market compass Lesson 7
Check market direction trends Lesson 8
Headline news market risks Lesson 9
Next lesson 9: Headline news market risks
Have a prosperous investor day!
Bryan
White Top Investor
[email protected] WhiteTopInvestor.com
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