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mafahiim asked in Business & FinanceInvesting · 6 years ago

Why the US stock market is down today?

Despite the improvement in labor market and the unemployment rate that was announced that it was improved, stock market are going down. why is that?

3 Answers

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  • David
    Lv 7
    6 years ago
    Favorite Answer

    It's rare to have the market open higher on a Fed announcement and close lower, especially in the past five years. It's what a trader calls a whipsaw, and in technical terms, a reversal day. It's a sign of distribution.

    The "why" attributed by the news after the fact is unimportant, even if accurate, because you still can't trade the news after the fact. If you "know" in advance what the Non-Farm Payroll number would be, you still wouldn't "know" how the market will react. To "know" that would require knowing the reason for trading for every market participant, which of course is impossible. It's like trying to "know" the future. No future in it. Ridiculous as "why."

    It's a game of probability, not something that is "known" or known in advance. Being prepared in either direction with a written trade plan cares little about the daily "why," unless it is a game-changer. Any single day is just an unremarkable and unrecognizable blip on a one-year chart, and shouldn't concern you unless you're a day trader. The overall trend is still up until the Fed lets it's foot off the gas (until further notice), but the increase in volatility is troubling; indicative of a topping pattern (lasting weeks or months). There is no need for concern over any single day or "why." (unless it's a big exception, and then you will know "why", but it still won't help you trade it).

    Your trade plan, if and when you decide to develop one and test it and write it down, and follow it to the letter, will have nothing whatsoever to do with "why," except for about 50% of the time (not good odds).

    No matter what the reason, you can expect to be wrong about 50% of the time. Not good odds.

    No matter how much you "know," you still cannot predict the future or any market reaction with even a modicum of accuracy, because the future will ALWAYS be unknown. That's why managing risk and liquidity are paramount. Good method and strategy get you in front of the market with high probability of profit (POP), and good money management will save your bacon. Trading the POP is the key. Your POP is determined by your trade plan, tested, known POP and risk. Read David Nassar's Rules of the Trade if you want to get serious and develop a trade plan (available at your local library for free).

    Manage risk instead of the future.

  • 6 years ago

    Ah the big question? If any body new about that he won't sit in front of the computer writing to other people about the market, or try to sell something that will make you rich. He would be the richest man in the world he won't try to explain anything to any body.

  • Biff
    Lv 7
    6 years ago

    it's been up and down so much recently its impossible to predict or know why

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