This year, something felt different.
I attended the same conference last year, the Chartered Market Technician (CMT) Association’s annual symposium.
At the time, it was full of highly confident analysts providing their outlooks — which sectors to buy, which stocks they liked and how sure they were about the future.
This year was the opposite.
There was a lot more down-to-earth coaching, I would call it, rather than bragging.
Things like staying humble in good times because the dips in the market can be painful. Hardly anyone there had made a prediction on what they expect the market to do.
This was clearly a result of the rapid market correction we experienced in February — many investors still haven’t recovered.
See, we, as technical analysts, are data dependent.
And the data right now isn’t exactly screaming: “Buy!”
There is weakness, and a lot of uncertainty, as there is whenever we have any market correction.
But you have my colleagues and me to help navigate you through the market noise — and that’s exactly what this is, noise.
It’s important to ignore the noise if you want to be successful at investing.
Reacting to Market Noise
Market noise can come in many forms, with the most common being noise from the news. But a stock’s price can also be noise if it is moving sharply on little to no news.
When it comes to investing, knowing how to react to this noise in the market is key.
I’ve listened to a dozen of the smartest traders present at the conference, and a common theme was to not get distracted by the noise — focus on your strategy and, for us, technical analysis.
Many traders are whipped around in the market by reacting to the latest headlines.
But these headlines are deceptive.
They are designed to get a knee-jerk reaction, to flush out the nervous investors — even if the news is just a tweet from President Donald Trump.
We have seen it over and over again. There’s a major headline about a company, maybe Amazon.com Inc. (Nasdaq: AMZN) and how it takes advantage of shipping through the U.S. Postal Service. After a four-day onslaught of tweets from the president blaming the company, the stock sunk more than 10%.
This was just noise.
It’s likely not going to have a lasting impact on Amazon. By the time the government would intervene, Amazon will have its own delivery service in place, and the Postal Service will be a nonfactor.
The stock has already been rebounding from this noise and will get back to trading on normal analysis, not presidential tweets.
This noise can be difficult to invest through.
Like I said, it is meant to get a knee-jerk reaction from you to sell your stock.
That’s why it’s critical to ignore it. You have to stick to the principles of your trading strategy.
Profiting During a Correction
Here’s a great example…
In Quick Hit Profits, we jump into trades after a company announces earnings. I run all the analysis to use the earnings announcement to tell us which direction the stock will drift over the coming weeks and months.
During the correction, from February 1 through April 1, the system was on fire. Eight of our trades during that time period were open and closed for a quick 50% gain.
Navigating the market from there was a bumpy ride, but the system, and those eight 50% gains amidst a stock market correction, were phenomenal.
And we didn’t do anything to adapt our strategy.
We just stuck to the same one that has racked up gains of 140%, 180%, 200% and even 500% over the past few months.
And that’s the key: Stick to your strategy, and let it take the emotion out of investing.
If you can do that, you’ll be set to rake in tons of profits in the months to come.
Chad Shoop, CMT
Editor, Automatic Profits Alert