Interpreting Market News

Market news is like a long conversation between two good friends. These friends have been close for a long time and talk about everything. They discuss events and share secrets. Talking on the phone, sending email or chatting face to face doesn’t matter; they won’t end the conversation until they’ve said everything they want to say. Now you’re asking, “How could Wall Street news be anything like this analogy?” Actually it is quite simple. From open to close, five days a week, the stock market news is your dear friend, telling you everything that is happening in its life as it happens. How you receive all that your “friend” tells you and how you react to it will go a long way to predicting your success investing in the stock market.

Best Covered Event in the World

More than any movie, more than any sporting event, the business on Wall Street is covered more closely than any single event in the world. Tickers are continuously displaying the market volumes and stock prices for each stock on each exchange. In every newscast for every station on television, a summary of the current market news is given. Newspapers are written to report the daily progress of the market and to offer an analysis of yesterday’s results and today’s hot stocks. Magazines are written to help investors understand the stock market and entire websites such as the Candlestick Forum are sending out stock market newsletters dedicated to teaching investors how to successfully invest.

Listening to Market News

You understand how the resources available to you work but you’re unsure of how the market news “talks” to you? Let’s look at an example from April 2, 2007. Early in the day on that particular Monday, the market news showed a slight downturn, pushed down by reports that US manufacturing had dropped off more than was predicted for March. While the report from the Institute for Supply Management showed the manufacturing index reading of 50.9 nearly reached the predicted 52.0, investors were hesitant as the market news related that the market indexes had opened higher but quickly dropped.

In addition to this news, there were reports of struggling stocks in the first quarter that contributed to the market having its weakest performance in nearly two years. The reaction to this market news erased the early gains and by midday had created a loss, reflecting investor sentiment that the economy was indeed slowing.

But as frequently happens on Wall Street, the afternoon brought different market news and different results. As news of several high-profile acquisitions was announced and started creating hot stocks, the market news changed and the outlook began to improve. The early drop-off was quickly recovered and the market news reported an overall gain for the day.

How to Use Market News

How should you interpret market news and what advantage can you gain from it? This news can help successful traders to identify trends in the market. If the market news is good, or bad, a slight bubble can occur that offers an investor a chance to look for quick gains as the market drops, then rises again.

The Most Helpful Tool

What is the best way for an investor to interpret market news? There is a tool available to the investor for not only interpreting the market news but the patterns and stock market trends of individual stocks and commodities; this tool is Japanese Candlesticks. Candlestick stock trading is a powerful stock trading system that can help the investor identify trends in the market news faster than is possible with other methods of charting and analysis.