As investors, the first step in deciding whether to buy something or not is to identify the direction in which price is heading.
So many investors out there choose to skip this step.
I never understood that.
We know for a fact that asset prices trend. We know. We all have the data. It’s just a fact.
So if we know that, then why wouldn’t we begin our process by identifying which direction price is heading?
“Should we buy this stock?”
Well, is it going up in price? Down? Or sideways?
Trend recognition is also really helpful in identifying the type of market environment we’re in.
“Are the majority of stocks going up? Down? Or sideways?”
At the end of every month we get a fresh batch of monthly data that goes a long way in helping us identify these trends.
On Friday we just got the highest monthly close for both the Nasdaq100 and S&P500 in over a year.
This is now the 3rd consecutive month that they do that: [Read more…]