The markets is a magician. The goal of the markets is to distract you from what is really going on. MMT tells you what is really going on. But not daily or weekly and maybe monthly.
EUR is a perfect example. 8 years now we know the EUR is doomed under the current system of austerity. 8 years later we still have not seen parity. But we have seen drop from 1.50 to 1.05. Had you gone balls deep short you would have been blown out.
Another example is the S&P in 2009. 10% deficits 70% decline in price. It took 8 years to play out.
Now think about it, how many “important” news events occurred during that time? How many “market moving” key Data info came out?
MMT tells you which way things are and will go. Knowing the direction of something is extremely important on a Macro level. But it does not tell you what do to daily weekly or even monthly in most cases. Chart patterns are more reliable shorter term. But not the conventional patterns you read in a book per say. More on that oin a different post. Chart patterns that indicate a move in the Macro trend direction is what is most potent. That’s where the money is made. Counter trend rallies and corrective moves is where people lose money. That’s “The magic trick” the markets play. Let’s look at the Gold chart. Deficits have been shrinking the entire time, as MMters we know this is not bullish for Gold. Look at all the corrective moves over the past 6 years. Now look and compare that to the Oil Chart over the last 2 years. It’s the same story. Does a strong dollar mean higher oil price? No! Is the oil supply still too high? Yes! Chances are oil will once again head south. Learning how to differentiate actual moves and corrective move patterns with the aid of MMT is vital to successful long term investing. 😉
Hope this helps. Have a great weekend.
Author Jim Boukis