(4.89 out of 5)So you think you can use fundamentals to predict price?
(1 votes, average: 5.00 out of 5)
Loading ...I just found this cute overview of the relationship between fundamentals and the DOW over at zerohedge:
GM chapter 11 = PRICED IN
125K+ jobs lost from GM chapter 11 = PRICED IN
unemployment @ 9% = BETTER THAN EXPECTED
unemployment @ 10% = DOW SOARS
unemployment @ 11% = GREEN SHOOT RALLY
unemployment @ 12% = ALREADY FACTORED IN
unemployment = 35% = DOW DROPS 100 POINTS
housing price =1% = RECESSION ENDING
housing collapses = GREEN SHOOT
Housing falls 20% = STABILIZATION
Government spends 1 trillion of OUR dollars = STIMULUS
North Korea fires nuke = RALLY
Israel bombs Iran = 30 MINUTE END OF DAY RALLY
world explodes = ASIA RALLIES
PMI crashes = HUGE RALLY
No jobs are created = RECESSION ALMOST OVER
U.S. debt overwhelming = TOO BUSY RALLYING TO CARE
Consumer stops spending = RETAIL RALLY
Banks are insolvent = SIGNS OF STABILIZATION
American auto industry BK = GOOD THING
Banks pass scam stress tests = HUUUUUUUUGE RALLY
Banks “only need 75 billion = OUT OF THE WOODS
Banks pass a real stress test = NEVER WOULD HAPPEN
Banks pay back tarp = LATE DAY SURGE
Banks can’t pay back TARP = EARLY MORNING SURGE
12% mortgage delinquency = GOOD FOR STOCKS
Hundreds of thousands of mortgages underwater = HOUSING BOTTOMED
Dollar rises = RALLY
Dollar crashes = RALLY
Inflation = BULL MARKET
Deflation = BULL MARKET CONTINUES
REFLATION = MASSIVE SHORT COVERING RALLY
Gold rises = STOCKS RALLY
Gold falls STOCKS RALLY BIG
Banks’ fake earnings = SIGNS OF STABILIZATION
CRE stabilizing= 1000 POINT RALLY
CRE CRASHING = STOCKS SHAKE IT OFF TO RALLY
CONSUMER INSOVENT = CONSUMER IS SPENDING
OIL @ 50 = BULL RALLY
OIL @ 60 = GREEN SHOOT
OIL @ 100 = IMPORTANT RECOVERY SIGN
OIL @ 20 = TAX BREAK
As much as I would like to think that you can use fundamentals to predict the market, it just goes to show you how difficult they are to use in reality. But before you jump to conclusions and say “this is why we should use technical analysis”, the real moral of this story is the DOW is quite illiquid at the moment because most big funds are sitting on the sidelines.
August 11th, 2009 at 6:27 pm
Sure makes you wonder..Maybe there is such a thing as the perfect market.
August 18th, 2009 at 3:37 pm
I agree it’s next to impossible to predict the market using fundamentals, but at times it’s easy to predict what the market is predicting. The big boys move price as they price in their own predictions, and we can realize when the payoffs are skewed due to this “pricing in”
Good topic!
Kris
http://www.thegestaltshift.com – A blog about thinking outside the box to profit from FX
August 21st, 2009 at 11:41 pm
Good post. It seems like FX traders are some of the worst at trying to use fundamentals. On forums, the know-it-alls are always saying things like “look at interest rates, inflation, statements from Central Banks and world leaders and you’ll know which way currencies will move.”
When the EURUSD was in freefall last year, most of those “geniuses” were predicting it would end up near parity (1.0000). They never dreamed it would be back over 1.4000 by now.
May 26th, 2010 at 8:53 am
Hey.. I am trying to contatc you about your site and whether you would sell it?.. Your contact form doesn’t seem to work so here is the message again..
Hi
I am looking to buy a blog for posting up market related thoughts and articles and found yours.. It doesn’t look like you have updated the site in a while.. Do you want to sell it?
I am torn between starting one fresh or buying an old one which has not been used for a while.
I don’t have huge budget, but I could offer you XXX for it if you are interested.
If not no problem and thanks for your time
Lee UK
July 26th, 2010 at 11:18 pm
In trading, probably only 5 – 10% are fundamental. The rest are technical analysis which is so damn important.