Beware the positive news articles.

This is what concerns me about the SRL share price. All the news is good and has been for years, but the SP doesn't reflect it.

A good Sunday read.

DYOR


Beware of the News!
Taking too much notice of incoming news stories on television or news is one of the main reasons why so
many traders get the markets all wrong!
Quite simply, most news is hype, and is not really for your benefit. The sooner you can accept this point,
the quicker you will make your transition to approaching your trading in a cold, detached way, working on
the facts of supply and demand, and not what other people are telling you. News is often dressed up in an
emotional way. This is the very last thing you want when trading.
The problem is that a journalist cannot tell you the whole truth and never will. The first reason for this is
that the journalist is not on the ‘inside-track’ and really has no idea what is going on in the professional
syndicates. The second reason is that journalists are frequently fed with incorrect information
(deliberately) which they duly report, live, unable to check the authenticity. It’s not the fault of the
journalists. They are not aware that they are being manipulated like puppets, ready to pass on the fodder
that is designed to mislead the unwary lambs (uninformed traders).
Here’s an example:
Mr Greenspan, the chairman of the Federal Reserve appears on the television and makes what appears to be
a bearish statement – the market falls alarmingly in response to this news.
Newscasters appear grimaced on television, reporting why the market has fallen today: “The market has
fallen dramatically today, on negative statements made by the chairman of the Federal Reserve”. To add to
the impact and drama of the announcement, any other negative information is collected to support the story.
Now why is this news release leading you astray and harming your trading? Because this is how the news
should have been reported:
“The market has fallen alarmingly today. Bearish statements made by Mr Greenspan, the chairman of the
Federal Reserve, caused the professionals to mark the market down, in a manoeuvre to discount the
negative news. This had an effect on weak holders and uninformed traders, causing them to panic sell their
holdings to professional traders, who have been waiting for this opportunity to buy at lower prices.
Professional traders were aware of the forthcoming press release well in advance of the announcement,
and were ready to absorb a huge amount of stock. They stand to profit handsomely in the days ahead, as a
result of this successful and expertly timed operation”.
Listen to the news by all means, but always ask yourself, "Have professional traders used this news to
mark the market either up or down, as a moneymaking manoeuvre?"
As a trader, you would be well advised to look at news and newscasts in a completely new light. When you
see or hear a story that affects your interests, you are going to have to ask yourself three questions:
1. What does this story mean (if it is true) in the overall context of my prior analysis of the market?
2. What use can be made of this story by others working against my interests?
3. Can I use this news story to better my own trading position?
You have been brainwashed from a very early age and are now very receptive to news. When you first
enter the stock market arena and still a little 'green', you will naturally think it will help you in your
activities if you are a keen reader, enthusiastic to assimilate information, and be well informed of current
affairs. This is perfectly OK if you remember to read between the lines.
You may also want to take advantage of 'news‘. This is where your troubles start, you are assuming that
the market will go up on good news and down on bad news. To become a true professional, you have to
start thinking and acting like one. You have to turn away from running with the herd and become a
predator, buying on great opportunities, caused by ‘bad news’. You will find this extremely difficult to do.
As a guide, you need to:
• Buy on bad news which has produced a 'shake-out' in the market and
• Sell on good news after you have already seen a substantial bull market.
Frequently, when very high volume appears in an Index or stock, some sort of story appears in the media
explaining it away. Do not listen, or allow any news to influence your judgement. These news stories are
mostly half-truths and rumours.
Here are some typical rumours well worth ignoring.
"A large block of shares has been traded in one company. You would do best to ignore
this, as it has distorted the true market volume“.
Rubbish. Trading is trading!
"This is trading by the market-makers amongst themselves and not real trades”.
More rubbish – for the same reason.
"The market rallied strongly today, not because there was any good news, but because
there was no bad news”.
Yes, this was seen in a newspaper. Always remember, specialists are not going to miss
any moneymaking opportunities. News is frequently one opportunity to shake traders
out of the market, which also has the side benefit of catching stops.
"The volume has been low today because traders are going on holiday”.
There may be some truth in this one. (It is a good idea to double the volume figures for
half-day trading periods)
Study any long-term chart in relation to news and you will see that the market may momentarily go up on
good news or down on bad news, but the trend of the market or stock is never changed by 'news’.
Generally, good news is seen at the tops of markets (to draw buyers in, helping the distribution phase) and
bad news is seen at the bottoms (to shake weak holders out, helping the accumulation phase).
Always go by what you know to be fact; fact based on cold detached logic. Never get lazy and use other
people's explanations. It is very difficult for the average trader to act like a robot, trading on facts alone,
because we are all innately emotional when faced with making a decision in threatening, or other stressful
circumstances. We are like this to ensure our survival. However, emotion will not help you to survive in
the difficult and stressful world of trading. In fact, it is a major disadvantage.
You may be wondering how a specialist encourages newspapers and television to come out with good or
bad news over a weekend or a holiday.
This is simply (and ingeniously) done by marking the market either up or down late in the trading session,
during Friday, or the day before a holiday commences. Newspaper reporters then have to create a reason
for the move. This 'news' will then impair your trading judgement. Professional operators, given any sort
of opportunity, will attempt to put you on the wrong footing. A trader is likely to spend the weekend or
holiday worrying about his or her position, or even worrying about having no position. By Monday
morning, a trader is vulnerable to acting impulsively. It is never just coincidence that sudden moves late on
a Friday frequently seem to be in the opposite direction to Monday. If this sounds a little paranoid, go over
your charts carefully and check it out.