Markets Trend, That's Why Technical Analysis Works

What do we know is fact?

Market prices trend.

Stocks go up mostly together for a while. And Stocks go down together for a while. Sometimes, they go sideways.

It doesn't matter if you're a Technical Analyst, fundamental analyst, economist or whether you look at the moon and the stars to make your buy/sell decisions. You cannot argue with the fact that stocks prices trend.

This is why technical analysis is so powerful. All we're trying to do is identify the direction of the trend. That's it. If we're on the right side of that trend, we're going to be right more often than wrong. This is because there is a much higher probability of a trend continuing in the direction that it's headed vs it completely reversing.

There are signs, of course, that allow us to get out of the way when risk is elevated. But to be perfectly clear, those are much more rare occasions. You guys who have been reading this for a long time already know that. How often am I all of a sudden Mr. Bear and the world is ending? Rarely. And that's because stocks have mostly been in uptrends the past decade.

What's happening today? Consolidations are resolving higher, not lower. Our longs are working incredibly well. Any shorts haven't. That's information.

Our Bull Market Checklist has also been really helpful. I encourage you to go back and go through the list yourself.

There are stocks we want to own. They've been working.

Defensive areas are rolling over: Bonds, Gold, Yen, Consumer Staples Relative, etc...

I think that's a positive for stocks.

And how about the news? Fortunately, I don't watch. But I can only imagine.

Stocks ripping in face of that I think says something.

What am I missing here? Let us know!

JC

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