DO TECHNICALS PREDICT THE FUTURE AND āFRONTRUNā NEWS?
Over the last year or two, I think Iāve done a decent job calling out some pivotal moments in the market with a pretty solid hit rate. The top in BTC, the top in quantum/froth, the DRAM crack, among others.
I donāt delete tweets or cherry-pick my calls, and Iām certainly wrong plenty of times and take losses like everyone else. In my course, thereās a full record of my market thoughts, documented in my weekly market prep videos.
So what exactly does that mean? And perhaps more importantly, what doesnāt it mean?
First, no trader knows whatās going to happen. Everything is probabilistic at best and total noise at worst. But there are specific moments in time when the odds can become meaningfully skewed in one direction.
I donāt believe technicals somehow āfrontrunā the news. What I believe is that technicals help reveal the prevailing sentiment of the market, and that sentiment is the lens through which new information gets interpreted.
Think about it.
Why did semis sell off alongside SKHY on its earnings? And why did SKHY respond so poorly to its numbers? To some degree, because sentiment was already rolling over, and that deterioration was showing up in the charts.
Why does the market suddenly sell off so aggressively on a hot inflation print? Because investors have grown increasingly concerned about oil prices, persistent inflation, and what those pressures mean for interest rates.
Why arenāt we seeing the same enthusiastic responses to positive AI headlines that we saw previously? Because investor sentiment has shifted. People are growing increasingly skeptical of the enormous spending and whether the eventual returns will justify it.
As a dumb day trader, itās impossible for me to fully understand any one of these themes, let alone all of them. But what my experience and expertise in technical analysis allow me to do is read the collective footprints of the marketās largest participants, expressed through price action.
Those footprints can reveal changes in positioning, conviction, and risk appetite well before the underlying narrative becomes obvious to everyone else.
And thatās what makes technical analysis so powerful to me.
Price action can tell you that something is changing, even when you donāt fully understand why itās changing. It can reveal that buyers are becoming less aggressive, that good news is no longer being rewarded, or that sellers are gaining control.
None of those observations guarantees what happens next. But when multiple pieces of evidence begin pointing in the same direction, the odds can become increasingly favorable.
I donāt believe technicals predict the future. I believe they provide a window into changing market sentiment, which influences how the market responds to whatever comes next.
And if youāre able to recognize those subtle shifts before they become obvious, you can sometimes find moments where the probabilities are meaningfully in your favor.
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I talk a lot about how dynamic trading is. The probabilities change every bar much like in poker when each successive card is turned over.
Today is one of those pivotal price action days where the likelihood of major sectors having put in a lower high increased significantly.
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