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NO NEWS IS GOOD NEWS

It holds that if news in itself is so often associated with market
traps, then all market movements on the absence of news may very well
be more significant than if accompanied by news. Widely predicted
advances for the market are not as bullish as are the unadvertised
advances. Put another way-an advance on news is not as bullish as an
advance on no news. This observation caution against following the
crowd on a sharp advance promulgated by supporting newspaper headlines
and lead to the general advice to sell on the good news.

When the market is going up and the majority opinion wonders why, then
that is a reliable signal to buy. Stocks are often best bought while
there is a general selling stampede promulgated by bearish newspaper
headlines. When the market is going down and nobody in general seems
to know why, sell. The public is more often led by their emotions, but
the technical indicators are unemotional . Trust the indicators and
distrust the emotional appeals which sway the public. A market going
up on good news cannot sustain itself as long as a market going up on
bad news. Conversely, a market going down on bad news cannot sustain
the decline as long as a market going down on good news. It is all
connected with belief or disbelief as the case may be.

Think for a minute about the hundreds of million dollars involved in
the total media effort of publishing magazines, publishing newspapers,
putting on TV broadcasts, the costs of radio time, etc. in order to
inform the people about business and the economy, and IT ISN'T WORTH
=46IVE CENTS as far as telling the public when to buy stocks. Not only
is that heavily bankrolled media effort totally irrelevant to what the
stock market is saying. But it results in keeping the public
constantly on the wrong side of the market. it is the biggest single
enemy the public will ever have in their generally losing efforts in
the market game.

 An equally appalling amount of money is wasted each year by Wall
Street brokerage houses on their research departments, most of which
are devoted to fundamental research. It can be proven over and over
that such fundamental data comes down the tube too late to do most
investors any good. Most corporate good news has long since been
discounted by the stocks, and the same anachronistic feature exists:
technical data and those who follow it exploiting fundamental data and
its followers every time.

If you doubt this in any way, I would suggest that you go to your
local library and take the time to match up the market and the news by
going back nine months with the news and matching it with the Dow
Jones Industrial Average. By doing that you will then generally find
that the market and the news agree! It otherwise can't happen.  It is
the handmaiden of the fundamental crowd. Once you become completely
oriented to the technical market approach you will view all major
economic developments as traps. When weighing such developments, give
them the nine month test. Go back nine months and see if technicians
and fundamentalists would then have agreed on the probable course of
the stock market, checking out what the market had done in that
nine-month period. If the economic development was bullish and the
market had generally gone up for the previous nine months, the
development had already been discounted and technicians would sell on
the news as the fundamentalists bought. If the development was bearish
and the market had generally gone down for the previous nine months,
then it had been discounted and the technicians would be buying stock
from the fundamentalists impressed into selling on the development.

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=46undamental analysis 19-09-1998