CURRENCY CURRENTS
The first quarter of 2016
has certainly been a
humdinger...
And if anyone was
hoping the worst
was behind us, our
‘esteemed’ politicians and
government officials had
other thoughts, packing
a whole year’s worth of
shock events into just
a few short weeks ...
and keeping the rand’s
rollercoaster ride firmly
intact.
Since the rand’s
spectacular spike in early
January, the body blows
have come thick and
fast.... from the Nenegate
debacle to Moody’s
putting the country on
the alert for a possible
credit rate downgrade,
and the unanimous
Concourt judgement
regarding Zuma’s Nkandla
misdemeanors
With mostly depressing
news hitting the markets
almost daily, logically
the rand should have
weakened, right?
But that didn’t happen.
In fact, the market
seemed to react in
complete opposites at
times, as shown in the
chart below overlaid with
various events that have
unfolded.
If any picture puts paid
to the accepted theory
that news dictates the
direction of the market,
this one does.
The fact is that
news may be a trigger but
it is useless for telling
you in which direction
the market is expected to
head.
The reason is that
markets are not moved
by news, per se, but by
humans...
It isn’t the news that
moves the market, but the
actions (or non-actions)
that people have taken in
reaction to this bit of
news (or any other
information they feel is
important).
And, when involved in
financial market decisionmaking,
the majority of
people act emotionally
and irrationally.
Furthermore, we tend
to do the same thing in
similar circumstances...
and so these emotional
market patterns repeat
themselves in a definable
manner, according to the
laws of (human) nature.
And because of
this, there is some
predictability about the
market.
This discovery (called
the Elliott Wave Principle)
gives us a picture of
market direction like no
other forecasting method.
It is utterly futile to
be looking to the news
to determine market
direction. You need
an objective, scientificbased
roadmap to show
you the way and warn
you in advance of what
lies ahead – so you can
anticipate and take action
in time.
CAPTION
James
Paynter is
the head
market
analyst at
Dynamic
Outcomes
