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Market Lab Report - A warning to today's front page MarketWatch article "This Bullish Signal Has Never Been Wrong"

Published : February 22 2017 at 11:35 ET

This story today appeared on the front page of MarketWatch.com http://www.marketwatch.com/story/this-bullish-signal-has-never-been-wrong-and-its-about-to-flash-for-2017-2017-02-22 

Keep in mind the following:

1) The only thing that never changes is change when it comes to markets. The post-election market is quite different from the way the market behaved in recent years. Granted, quantitative easing is still present at major central banks such as Bank of Japan and European Central Bank which continue to help artificially prop global and US markets since everything is interconnected. But QE is winding down even in such countries... slowly. And the current administration's tax favorable policies among other policies are providing a strong headwind to US markets.

2) The article implies a continuation of strong US markets given the strong performance of the S&P 500 for the first two months this year. But notice in the MarketWatch article that years such as 2011 and 1987 are included in the list that meet this criteria. Remember the great crash of October 1987? And 2011 was hugely volatile, where the S&P 500 finished the end of 2011 lower than where it closed at the end of February 2011. 

3) Such articles do nothing do help one's profits. Getting bogged down with such useless statistics is investing noise you don't need. Focus on your stocks. Keep a dynamic watch list. Some of our VOSI members use our Focus List which changes as needed in real-time. One example: http://www.virtueofselfishinvesting.com/reports/view/market-lab-report-focus-list-review-for-the-week-ended-february-10-2017 Not surprisingly, the list has grown appreciably since the elections. Only those stocks that make it through our rigorous screening process appear on the list. Such stocks must have reference standard risk/reward characteristics, and continue to show constructive price/volume action. 

4) The number of stocks on our Focus List can be used as a barometer for internal strength in the stock market. Indeed, our list grows or shrinks in real-time as US stock markets grow stronger or weaker. 

So keep attention grabbing headlines in context with actual facts. Better yet, pay them no mind. It can save you money and help boost your trading profits in the end. 


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