Do we really need the news to tell us what we should do? It seems in times of global turmoil and anxiousness, as we are in currently, our moves are dictated by what we see and hear in the news. But without the right information that could lead to some poor choices. Instead of letting the headlines lead your decision process, use something else - the charts!
We've all been glued to the news recently, whether it's the Russia/Ukraine conflict, the Covid pandemic or inflation in the economy. There are other issues of course but these are the ones we all have our focus on. There is no doubt we tend to make financial decisions based on how well any of these issues are going, as we do not know the outcome and where it will lead us.
In March 2020 the stock market and the economy took a hit as the unknowns from Covid were discussed ad nauseum. What would happen if this was prolonged? We found out in a hurry that investors and traders wanted no part of it, but soon things changed. The market would shoot up more than 100% from the lows to where it is today, even after a modest correction.
We could even see evidence of a 'clearing' on the chart, and even if one were to be patient and wait for some confirmation, the time to buy was no later than the summer of 2020. Of course, that is hindsight but the charts were turning up, the indicators were flashing buy signals and money flow was indeed coming back in a hurry.
The Fed announced drastic measures to support markets and the economy. The rest is history, the S&P 500 recently peaked at 4,800, more than 128% higher than the lows ticked in March 2020. A stunning return over a two year stretch, but if you paid more attention to the dour headlines you probably would have stayed in cash for much of the time.
Trust the charts and technicals as they will provide you with more information to help you make the right choices.