Many people struggle trying to understand the market. The behavior at times are in congruent with your opinion and your opinion is a result of your analysis. So when the market perform in accordance with your anticipation than you are happy and feel greatly delighted. When market behave contradicting your analytical opinion you will either end up frustrated and dejected. This is what I can the "MISBEHAVING" market.
So we got a behaving and misbehaving market situation. Actually it is about the direction where it is going.
Market is more than merely about textbook analysis. Market is actually a very simple creature that goes it own way or DIRECTION independently. That is why at time it goes in the direction we anticipate and at times it goes against us!
The reason why it is difficult to understand market is due to US ... our inner software that process in the realm of the LINEAR path. Almost everyone tread this path due to our educational system and our personal experience.
If we are looking at trying to MAP the market direction, we should adulterate and mix it up with other "contaminants".
The key word is DIRECTION and we just need to find the appropriate tools to define the market direction.
Do not mix "VALUATION" with "DIRECTION". They are 2 different and separate matter completely.
At time market direction will be in sync with valuation and at times the market direction will not sync with valuation.
Valuation can be "fixed" but direction is NOT fixed as it is MOVING and changes direction anytime the CONSENSUS changes.
So what tools are you going to use to map ... track ... market direction. This has nothing to do with finance ... not a single bit .... so don't waste your time trying to use financial analysis.
After you have selected your tool(s) than you need to define what is the directional CHANGE and what are the parameter(s) to confirm this change. Again let me repeat... THIS HAS NOTHING TO DO WITH FINANCE.
Lastly... do back testing on your set system above.
Simple .... straight forward
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