European stocks fell. Asia-Pacific markets rose. Investors assessed renewed Middle East hostilities. That's the headline. You know what that means? Nothing.
Markets go up. Markets go down. Financial journalists write the same article they wrote yesterday but swap out the region and the excuse. Today it's Middle East hostilities. Yesterday it was inflation data. Tomorrow it'll be a speech from some central banker who looks like he hasn't slept since 2008. The pattern never changes. The explanation always sounds important.
Here's what actually happened: European traders sold some stocks. Asian traders bought some stocks. They did this at the exact same time on opposite sides of the planet while presumably thinking about the exact same news. One group looked at renewed Middle East hostilities and thought "sell." The other group looked at renewed Middle East hostilities and thought "buy." Both groups will tell you they made the rational decision based on careful analysis of geopolitical risk factors.
They're both lying. Or they're both right. Doesn't matter which because by Wednesday the positions will reverse and the same journalists will write the same article with the regions flipped. European stocks rise as investors shrug off Middle East tensions. Asia-Pacific markets fall on profit-taking. Profit-taking. That's the one they use when they've got nothing.
You want to know what technical analysis says about renewed Middle East hostilities? It says draw your lines wherever you want and they'll be just as predictive as reading the news. The chart doesn't care about geopolitics. The chart cares about support and resistance levels that were established before anyone in the current news cycle was born.
Retail traders woke up this morning, read this headline, and immediately opened positions based on which market they heard about first.
Photo by on Unsplash
Leave a Comment