News stories do not change the trend!

News stories do not change the trend!

By Waves Strategy Advisors, For more information visit www.wavesstrategy.com or write to us at helpdesk@wavesstrategy.com to subscribe to daily research report on Equity, Commodity and Currency.

News stories don't change the trend -- only the collective social mood of market participants has that power.

12^th February 2013:

Hindustan Times: Economic recovery hopes dashed as IIP data dips. India's industrial production unexpectedly shrank for a second straight month in December, weighed down by weak investment and consumer demand. The index of industrial production (IIP) fell 0.6%. Manufacturing output, which accounts for the bulk of industrial production and contributes about 15% to overall gross domestic product (GDP), fell 0.7% in December from a year earlier.

Above data was bearish news for the Indian Equity market. However, after the announcement we have observed one spike on hourly chart on downside, thereafter prices recovered and closed near day’s high which is shown below in hourly chart.

14th February 2013:

(Reuters) - India's annual wholesale price inflation slowed to 6.62 percent in January, government data showed on Thursday, 7.0 percent below expected in a Reuters poll of economists.

Above data was bullish from the market perspective and pries should moved higher. But Indian equity markets reacted exactly in opposite way and prices closed near day’s low marked by circle in the hourly chart.

Nifty hourly chart:

We have always mentioned that news do not drive major trends of the markets but can produce short term spikes or trends that lasts for few minutes or hours or probably a bit longer. However, markets move in predictable fashion and Elliott wave theory along with Momentum indicators, Channels and other technical tools… helps us to be placed in right direction.

So do not try to act on news but try to capture the trends and recognize the patterns that will provide logical and objective way to trade.

To know more about Elliott wave counts on Nifty and other equity stocks subscribe to “The Financial Waves” (equity report) published on daily basis. For subscribing write to us at helpdesk@wavesstrategy.com or call on +91 9920422202