Wednesday, June 28, 2023 7:00 AM EDT
Image Source: Unsplash
Contrary to popular belief, the stock market's trend is not determined by interest rates, as some historical data shows.
Throughout 2023 major technology giants such as Nvidia (NVDA), Apple (AAPL), Google (GOOGL), and Microsoft (MSFT) have led the stock market higher. However, a recent financial headline said that the tech sector is under pressure as Fed Chief Jerome Powell indicates that higher interest rates on are the way.
This raises a perplexing question, considering there have been instances in the past few years when the Federal Reserve signaled higher rates, yet the technology-heavy Nasdaq rallied.
Hence it is highly unlikely that interest rate fluctuations are the primary driving force behind the stock market's direction, including the technology sector.
The Dow Industrials experienced an uptrend from March 2003 to October 2007, during which interest rates also climbed. Similar patterns can be observed in decades past where stocks and interest rates rose concurrently.
If interest rates or any other external factors don't dictate the stock market, then what does?
In essence, it is investor psychology and market sentiment that holds the key.
Looking at investor psychology, and other key market indicators such as accumulation distribution, company earnings reports, and forward earnings estimates, you can forecast low-risk buy-long sell-short stock picks that include buy-sell entry, stop-loss, and take-profit area price targets.
In case the market is going against your position use a stop-loss percentage of no more than 8% or more to keep a small loss from becoming potentially a much larger loss.
In doing so you will live to trade another day with the bulk of your funds instead of taking much larger double-digit losses. A stop-loss is a tool. Use it to your long-term benefit.
(Click on image to enlarge)
More By This Author:
Can More Banks Fail?
Optimism Pessimism In The Financial Markets
How To Buy Sell Or Hold?
Disclosure: Financial Markets Risk Warning
U.S. Government Required Disclaimer - Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large ...
more
Disclosure: Financial Markets Risk Warning
U.S. Government Required Disclaimer - Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results.
CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.
No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. Hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading.
All information on this website is for educational purposes. Any statements about profits or income, expressed or implied, does not represent a guarantee. Your actual trading may result in losses as no trading system is guaranteed. You accept full responsibility for your actions, trades, profit or loss, and agree to hold Invest2Success and any authorized distributors of this information harmless in any and all ways.
All rights reserved. The use of this website constitutes acceptance of our user agreement.
Financial Products Services Disclosure
Invest2Success is partnered with and advertises promotes other companies finanical products and services, as well as our own. As such, Invest2Success receives advertising promotion compensation from these other companies in doing so. Invest2Success believes the products services of our own and other compaines listed on our site and blog are very unique and can be beneficial to investors traders because they meet our quality guidelines for good investing trading methods which investors traders can use to help improve their financial education knowledge and investing trading results. We do not warrant and are not liable for any claims or testimonies made by these other compaines products and services. Review each product and service carefully before purchasing and using. The purchase, use, and results of any of the products services on our website and blog is sole responsibilty of the user.
less
How did you like this article? Let us know so we can better customize your reading experience.
No Thumbs up yet!
