Market Observation: What to Watch for Success.

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Useful Websites
https://stockcharts.com/
https://www.briefing.com/
https://www.investing.com/indices/major-indices
https://www.multpl.com/s-p-500-pe-ratio
https://seekingalpha.com/
Wall Street Journal
Book
Irrational Exuberance by Robert Shiller
Constant Observation
Always watch things even when the US market is closed.
Time US market is open: 9:30 AM ET until 4:00 PM ET.
Technology
Smartphones, high-speed Internet, useful apps, and easy access to data (much of which is free) allows an investor to keep an eye on things quite easily. The main requirement is having an Internet connection.
Each market participant will develop their own routine, but to be successful, each must include watching the markets as part of their daily activities.
This can be rather effortless by just glancing at a smartphone or computer screen periodically.
Developing a Skill
The point is to always be “in-tune” with what is happening without it being a distraction from “real life.”
This is helpful when it comes time to make actual decisions.
Foresight that allows for pro-action rather than re-action.
Pre-Market Open Observations
Over the last 10-20 years, the markets have become more global.
The Asian markets have already closed for the day. The European markets are near the close or in mid-session.
The US has the largest, most developed, and most influential stock market in the world. It is considered the “king.”
China, the EU, or in any location can impact US stocks, especially at the open.
Asian Markets
China
Japan
Hong Kong
Asian Currency Crisis of 1997.
European Markets
Often, the European markets will set the tone for the US Open.
The main indexes I look at include:
DAX: Germany currently has the most influence in the EU.
Euro Stoxx 50: Eurozone Blue Chips
FTSE: London
CAC 40: France
US Domination
Even with the markets becoming more global, the US remains relatively independent and the true leader.
Asia and Europe may have some initial impact, but US market participants determine what will happen in the US.
Most other countries follow the US, rather than the US following other countries, at least over the long-term.
There are exceptions, such as Brexit (which started in 2016), the financial collapse in Greece (which began in 2010), the continuing trade disputes with China, and the COVID-19 pandemic.
Irrelevant Countries
From a stock market perspective, it may be surprising that certain countries are not that significant:
Russia
Eastern European countries
Most EU countries: now at 27 after Brexit.
South American countries
African countries
Australia and New Zealand
What is more prevalent, and needs to be watched, is the interplay between the European Central Banks, the Bank of Japan, and The FED.
What is watched
The idea is to get a feel for the general ebb and flow of the markets.
The stock index futures are the most important thing to watch. This includes:
The S&P 500 futures (SPX)
The NASDAQ 100 futures (NDX)
The Dow futures (DJX)
Useful Emails
Bloomberg: 5 things to start your day
Business Insider: 10 Things To Know Before the Opening Bell
CNBC Morning Squawk
The Open
Gap Opening:
Either up or down
If the gap is significant, there will often be an attempt to “fill-the-gap” during the first 30-60 minutes.
Look for a possible fade (selling) if the gap is higher.
Look for possible buying if the gap is lower.
Unless you like to live on the edge, NEVER attempt to trade during this time, especially on Mondays.
After The Open
For the remainder of the trading day, I mostly follow:
A 10-minute “real-time” candlestick chart of the SPX and SPY from stockcharts.com
Other Indexes:
DJX
NDX
RUT/$SML
MID
What to Watch?
Bonds
US Dollar: 24 hours
Oil: 24 hours
Gold: 24 hours
Cryptos: for fun
Financial Channels:
FOX Business
Bloomberg
CNBC
TastyTrade
Trading Software
There are two software applications that I use.
ThinkorSwim (TOS)
TastyWorks (TW)
There are useful charts, studies, and tools in both software applications.
Using both is suggested but not required.
Both apps are free but require a brokerage account.
However, for new users, both apps can be overwhelming.
The Close
Enter new long or short positions as close to the close as possible.
The last hour, especially the last 30-minutes, is often critical.
After The Close
Once the market closes, relevant data is available, usually from a broker, website, or by email, for checking the status of positions.
Repeat the same routine each day so it can be easier to execute any plans.
Each day: Apply, lather, rinse, repeat.