How TV “Experts” Are Killing Your Trades

All the financial networks are the same…

You have the never-ending ticker scrolling across the bottom of the screen while the pundits scream at each other. But they never seem to offer any specific ideas on how to profit from what they’re yelling about.

Here’s the truth: the mission of financial television isn’t to help you make money.

For most, the financial networks are simply a distraction from the discipline needed to be successful.

Infotainment on CNBC, Bloomberg, and Fox Business is big business as the major players raise the emotion to epic levels on even mundane market developments.

Think about it — when was the last time a TV contributor or guest told you what, when, and at what price to buy or sell?

Instead, all we see are “breaking news” alerts to keep viewers engaged and fearful that they will miss crucial developments. It makes sense. After all, the network needs your eyes glued to their advertisements in order to pay their bills — regardless of what’s happening in the markets.

News is often noise as it is more times than not factored into price. Unless the information is different than expectations, the impact on markets is minimal. But the networks will continue to build up every report as a can’t-miss event. Meanwhile, the talking heads talk their book or opine about ideology. Of course, those positions and politics should have little impact on any individual investment decision.

Then there are the incessant crash callers and their daily predictions of a market meltdown. Like guessing dates and places of earthquakes, calling market breakdowns is an equally inexact science. Yet this crash chatter always attracts unfounded attention — no matter how long the pundits have been dead wrong.

The solution? Turn off the TV!

The strength to tune out the financial network noise is often a function of confidence. An investor with a plan is not subject to the bulls, bears, dreamers or believers that are on our airways.

Discipline is key, and the ability to block out the never-ending nonsense and noise from the magic picture box.

Keep it In the Money,

Alan Knuckman

Alan Knuckman
Editor, In-The-Money

Chart of the Day: All-time highs are in sight

Greg Guenthner

We’ve experienced a huge performance gap in the major averages this year.

While the Nasdaq Composite soars to year-to-date gains topping 22%, the Dow Jones Industrial Average continues to fight toward breakeven.

Then there’s the S&P 500. Last week, the large-cap market barometer finally snuck up on its all-time highs before backing off…

SPX

Every investor on the planet is now watching the S&P as it flirts with a new record. So I’m not surprised that it’s having some trouble getting over the hump. Remember, we’re smack in the dog days of summer trading, so it will probably take more than a few tries (and maybe some sharp pullbacks) before the S&P finally extends higher and posts some new record highs.

Don’t let these summer trading shenanigans get you down! A little sideways consolidation doesn’t mean that this pandemic rally is over just yet…

Trading Tip of the Day

To book consistent trading gains, you must learn the forces at work behind breakouts — the short-term momentum moves that cause quick spikes in stocks.

When it comes to short-term market moves, traders and the financial media like to toss around the term “breakout.” But no one ever talks about why breakouts work — and why identifying strong breakouts is one of the cornerstones to trading success.

Short-term traders study the supply and demand of a company’s stock. These are the two forces responsible for the movement of every single stock that is traded on an open market. We study a stock’s price action to determine where those supply and demand levels lie.

In fact, supply and demand are the only factors that directly impact a stock’s price. Even though fundamental factors typically cause an increase in demand (and in price), those fundamentals can often become out of sync with market prices.

Think of the big crash we witnessed earlier this year. Both “good” and “bad” companies saw their share prices drop as the major averages declined. Even in so-called “normal” market environments, you will find stocks belonging to companies with strong fundamentals that are completely ignored by investors when the market is moving higher.

These disconnects tend to baffle and frustrate most investors. After all, why should “bad” stocks go up while “good” stocks suffer?

That’s why we focus on price. When you’re trading, results are all that matter. You want to sell your stock for a higher price than you paid for it in the first place. In the stock market, the only facts are prices, which are affected by buyers and sellers — supply and demand.

Everything else is just noise.

— Greg Guenthner

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Alan Knuckman

Alan hails from the home of options trading in Chicago, where he began working as a clerk on the floor of the Chicago Board of Trade (CBOT). Beginning with his days on the floor, Alan’s worked with all aspects of the options markets for the past 25+ years.

Transitioning from a clerk to a floor...

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