Why is the market up when there is bad news 🤔

Happy Friday Folks 🙌 !

Just a quick note JW has a special presentation about Market Navigator today at 1pm EST → this is a great service for traders of all levels, so I recommend checking it out today in this room if you’re not already in there with him.

And…It’s a question as old as time, and in my experience it’s usually fundamental investors that are asking it.

The question goes something like this: Why is the market up if there’s so much bad news?

Now, as a trained economist, I can say this because I know firsthand how so many of these academics ignore market technicals.

Folks, on Thursday we learned that the U.S economy is not growing as consumers, the lifeblood of our economy, are putting away their wallets.

In a consumer-based economy, that’s not good.

One of the newer gauges of corporate sentiment, cloud services company Workday, saw its shares crumble the most since 2020 after cutting its subscription revenues annual growth forecast, citing an uncertain economic environment.

Also, while you might think it’s not important, volatility in China’s property market is ongoing.

Oh, and did I mention that our highly competent elected leaders (insert sarcasm) are taking the country dangerously close to a government shutdown?

Yet 10 of the S&P’s 11 sectors ended the day higher.

So why was the market higher in the face of adversity?

Market technicals.

And I’m not just talking about price action, support levels, and momentum…I’m also talking about value at risk (VaR), stock and options positioning ahead of upcoming weekly and options expiration, and sentiment.

Whether or not the academics want to believe it, THESE are the items that drive prices.

Sure, economic data and sector fundamentals drive long-term trends, but it’s the technicals that we traders must understand in order to capture the best opportunities.

After 20+ years of trading, I have a firm grasp of this concept.

Heck, I closed my best trade idea of the week (I bought QQQ puts on Monday) just before the market started its recent two-day rally on Wednesday.

And boy, were my members happy about it:

But does that mean the bottom is in?

Heck no.

How can I say this with such confidence?

Because I’ve spent a lot of money using AI trading tools to enhance the trading rules that I’ve two developed over 2+ decades (right now I’m a big fan of BlackBox*).

And so far, that AI tool still has not signaled that it’s time for bulls to “GO.”

Bottoming is a process, and we’re just not there yet.

So why did I take profits on my short position on Wednesday?

Well, that’s an entirely separate discussion that is best left for the kind of LIVE training that I do each and every week.

And right now, I am gearing up to have a very important discussion about something traders need to be watching VERY closely right now.

You see, QQQ reversed sharply higher on Wednesday and Thursday after slipping below the the 08/18 low AND below the 2023 uptrend line.

That’s a POSSIBLE false breakdown, but a lot more work needs to be done before we know.

Now, I’ve traded a lot of these setups over the years and I know exactly what I am looking for.

This will be top of mind as I train my Alpha Hunter members in the coming days, because, if it is indeed a false breakdown, the implications could be very bullish.

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