Markets certainly move for fundamental reasons. There needs to be a purpose for a market to exist, e,g FX's purpose is to facilitate trade between different countries and allow people to hedge their exposure in doing so. Bonds are safe way to protect capital in exchange for lending your money for a specified amount of time even weather futures (yes they do exist) are there for a purpose to allow producers of weather sensitive products to hedge risk. If there wasnt a purpose then we would all be watching computer generated lines on a screen gambling on which way they will randomly tick next (yes i realise the irony of this statement).
All these markets are driven by the people that use the markets for their intended function. Anyone see Euro Yen today? How many support levels did that take out?! This is the carry trade, people using FX for one of its designated purposes and exploiting the interest paid on one relative to another. I dont care how good your support level is in the S&P it wont mean sh*t if a plane flies into wall street, because people will make a fundamental decision that holding stocks in U.S companies that are being literally destoryed is not a sound decision and will cause panic.
However, although it is the fundamnetals that move the market it is possible to ride the coat-tails of these giant and unstoppable fundamental market forces. Ok today the carry trade is a dramatic example of a fundamental move however i sit very near some FX traders that trade FX soley through TA and they captured the whole move down. They dont care about the carry trade all they care about is their technicals gave them a sell signal. TA does work it does allow you to ride big moves but only if you respect that the markets are bigger than your set of lines and diagrams and move as the huge amounts of money are continually reinvested around the world for economic reasons.
The day you hear Jean Claude Trichet announce a rate cut because the Bund has reached a level and then this rate cut have no bearing on the market, that is the day fundamental analysis dies.
All these markets are driven by the people that use the markets for their intended function. Anyone see Euro Yen today? How many support levels did that take out?! This is the carry trade, people using FX for one of its designated purposes and exploiting the interest paid on one relative to another. I dont care how good your support level is in the S&P it wont mean sh*t if a plane flies into wall street, because people will make a fundamental decision that holding stocks in U.S companies that are being literally destoryed is not a sound decision and will cause panic.
However, although it is the fundamnetals that move the market it is possible to ride the coat-tails of these giant and unstoppable fundamental market forces. Ok today the carry trade is a dramatic example of a fundamental move however i sit very near some FX traders that trade FX soley through TA and they captured the whole move down. They dont care about the carry trade all they care about is their technicals gave them a sell signal. TA does work it does allow you to ride big moves but only if you respect that the markets are bigger than your set of lines and diagrams and move as the huge amounts of money are continually reinvested around the world for economic reasons.
The day you hear Jean Claude Trichet announce a rate cut because the Bund has reached a level and then this rate cut have no bearing on the market, that is the day fundamental analysis dies.