Question of the Week: 12/22/2010
How do you reconcile (or view) current news events within the context of wave structure and expected, future market action?
It is a mistake, and a waste of time, to "reconcile" news with wave structure. The news you hear on TV (or read about in newspapers) is never all the news, just some of it. There are hundreds, or even thousands, of positive and negative news events going on around the world all the time. Depending on the public's "collective state-of-mind" at a particular time, the media picks and chooses the information it releases. They must sell subscriptions or advertising to stay in business, so they must present us with information that is most likely to get us to spend money. Such information may have nothing to do with what is most important to the financial stability of the world or the physical health of its inhabitants.
For example, when a famous celebrity dies, or commits a crime, is that the most important news of the day, week or month? There are wars constantly being fought around the world with people dying and starving daily; but, in the U.S., when a celebrity dies, it can dominate print and digital media for weeks! Does our interest in that celebrity make that news important (it does to those selling it) and does it have any, relevance to our daily lives, personal safety, financial well-being, or future prospects for prosperity?
A market's price action is the net result of ALL news (even the news we don't hear) and all knowledge (even that which we don't, personally know). As a result, no matter what "news" is beign sold to us, price action reveals the totality of all collectively known news, facts, opinions and expectations. It is that net-reality which market price action reflects. With the aid of wave theory, which describes the ebb and flow of mass-human action, we attempt to compartmentalize and structure the past in order to attempt to predict the future.
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