Don’t get Caught Up in the Financial News Network Headlines

Tom Gentile

Posted in
Education

By: Tom Gentile
February 27th, 2023

4 mins read

How many of you watch a or multiple financial news networks?

How many of you watch it with the sound off?  That may seem like a funny question or us trying to be funny, but many do as there are time there can be so many people talking all at once and it gets difficult to ascertain the point being made.

Sometimes there are subjects of discussion that may not pertain to what one is investing or trading and so muting the volume cuts off the possibly distracting dialogue.

It is believe by some that the reason for the headline news banners across the bottom of the screen are to get you all to focus back on the channel and maintain your viewership so you stick with the channel through the commercials and the ad revenue from commercials keeps coming.

The thing I want you all to focus on at the end of the day is actually what happened to the markets and make your assessment of your directional assessment for the markets not let the headline news banners or commentary dictate your thoughts on the matter.

What is YOUR Assessment of Market Direction Based on the Day’s Price Action?

Take a day like today.  You area likely to hear a market recap (if you haven’t already) the markets rebounded after its worst week of trade since last December.  Or you might read and or hear the markets rallied toady.  Or the markets had a bullish day.  Or the markets are taking back the losses or SOMETHING to the effect things are bullish or better than they have been.

This could lead to one taking this as an implication things are going great pr great again.

It’s like they fear they will lose viewership if they aren’t putting a positive spin on things.

This all may be the case and it may be all well and good over time, but take the time to SEE for yourself what is going on with price action before you just let the headlines of the day and their market recap announcement(s) tell you what is going on.

Look at the Day’s Price Action

Today the market, the Dow Jones Industrial Average did close higher by 72=points.  This is technically a bullish day in that the markets closed higher than the close of the previous trading day.  It was a better day of trade from the week prior when the Dow-30 ended lower on the week.

If you look at the day of trade though you will see the markets gapped-up in price and ran up to where the Dow-30 was up 300-350 or more points.

The rest of the day off that higher it ran lower and was basically breakeven on the day until a bit buying kicked in the last half hour or so of trade to finish up that 72 points.

The question is this a truly bullish day?

Or is this a sign that a good day to start can finish much lower than its high and that is actually a sign that investors are rejecting these higher prices and there may still be more softness in pricing to come.

Of course, no one has a crystal ball, but don’t let the feel-good headlines geared towards making stick with their channel dictate to you how you perceive the pending market direction.

Figure 1: Intraday Line Chart Dow Jones Industrial Average (^DJI) Yahoo Finance
Figure 1: Intraday Line Chart Dow Jones Industrial Average (^DJI) Yahoo Finance

We would like to see the markets find support and break the downdraft from last week and resume a bullish directional bias for our long positions and bullish option trades, but we need more follow through on a day like today before we have more of an agreement with those headlines.

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