Market On Open, Wednesday 11 June
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The Grand Reveal
by Alex King, CEO, Cestrian Capital Research, Inc
Well, as you know, markets usually run up in advance of the news and then sell when the news is printed. There’s nothing magical about this; if you are price-moving investor then it is obviously your job to understand what is happening in the world a little bit before it appears on CNBC. There is also nothing inherently illegal about that. The reason that watching stock prices tells you more about the world than does the news is because those same price-moving investors leave a breadcrumb trail showing where they think the world is heading. It’s called a stock chart, and it’s free for anyone who can make their way to an internet connection.
I would speculate that a lot of index and some sector strength (particularly semiconductor) lately has been in anticipation of a warming of the trade relationship between the US and China. Sooner or later there will be some news about where this stands. For now we have a placeholder-type announcement.
Anyone waiting for the news to buy has missed out on the runup enjoyed by price-setting investors. This is situation normal and it is yet another example of why trying to invest or trade off of news is futile; better to learn to read market movements, be that through technical analysis or the use of quantitative analysis tools.
Alex King
As to whether this will be a sell-the-news event? I don’t know. But if it is, the market reaction will tell us, and for anyone that had used technical analysis or quantitative services to benefit from the runup - they will have plenty of profit cushion to be able to sell after the market reaction is seen, rather than having to guess what the reaction will be.
Let’s check in on how markets stand right now.