Often, we see markets rally on bad news and drop on good news. And, it leaves people scratching their heads for a "reason." But, when you see a market rally on good news or drop on bad news, not only do market participants "know" the reason for the move, they are absolutely certain that it is always news that moves the markets. This is why when a market moves in the "expected" direction after a news event is announced, everyone begins to post "so I guess news must matter."
This is a very superficial and short sighted perspective of markets. Participants are so certain that news caused the rally in a Newtonian sense (cause=affect), they have forgotten the times when markets move exactly opposite their expectations on other news events. But, if you want to use such Newtonian "logic" as your determining factor (ex. world turmoil is a direct cause for gold to rally), then you must apply that logic consistently. If it is not applicable consistently, then it is clear that it was not the true logical "cause" to begin with.
So, as we have seen markets move in the opposite direction of our expectations on certain news events, it is clear that the news was not the "cause" of the move, but simply a catalyst for the move. Therefore, if you are attempting to apply "logic" to the markets, if you are intellectually honest about it, then you should be coming to the conclusion that it is not the news itself which "causes" a markets move. Rather, the announcement of a news event is a coincidental catalyst for a market move, rather than a "cause." And, if you really think about it, it should make a big difference in how you view markets.
This is a very superficial and short sighted perspective of markets. Participants are so certain that news caused the rally in a Newtonian sense (cause=affect), they have forgotten the times when markets move exactly opposite their expectations on other news events. But, if you want to use such Newtonian "logic" as your determining factor (ex. world turmoil is a direct cause for gold to rally), then you must apply that logic consistently. If it is not applicable consistently, then it is clear that it was not the true logical "cause" to begin with.
So, as we have seen markets move in the opposite direction of our expectations on certain news events, it is clear that the news was not the "cause" of the move, but simply a catalyst for the move. Therefore, if you are attempting to apply "logic" to the markets, if you are intellectually honest about it, then you should be coming to the conclusion that it is not the news itself which "causes" a markets move. Rather, the announcement of a news event is a coincidental catalyst for a market move, rather than a "cause." And, if you really think about it, it should make a big difference in how you view markets.
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