Hey friend,
After yesterday’s positive retail sales surprise, we got consumer sentiment data this morning.
This latest Consumer Sentiment Index also surprised to the upside, rising to a five-month high on lowered inflation expectations.
The Daily Direction
Note: All indexes closed higher yesterday and opened higher today as well – although they’ve been moving lower throughout the day. No change in any index directions.
The Daily Nugget
Human psychology doesn’t change.
Jeff Bezos said, in a fast-changing environment, look for what doesn’t change.
In the markets, the companies change.
The technologies change.
But human psychology – it stays the same.
And fundamentally, markets are nothing but the collective behavior of all its participants.
That’s why “time-tested” trading wisdom is so effective.
Sure, you have to be up to speed on all the latest happenings…
But if you get too caught up in them, and forget the underlying constant – human psychology…
You’ll always be playing catch up.
The best traders have a strong understanding of the psychology of markets – because that doesn’t change.
They can glance at a chart and immediately tell you what the buyers and sellers are thinking…
And how that’s showing up in the price action.
This is immensely valuable.
So, here’s something that can help you with this practice.
The next time you’re studying some sort of price action…
Ask yourself this question…
What does the price action tell me about the behavior of the buyers and sellers?
Enjoy the weekend.
The Traders Agency Team