I am in my fourth decade of being a student of the markets and I still marvel at how much remains for me to learn. My academic and early career background focused on financial analysis and macro economic analysis so naturally that is the lens through which I saw the financial world. There were many times, particularly after the Federal Reserve started to become more activist in the late 1980's in manipulating interest rates, when my lens became a little out of focus, to say the least, with the realities of the market.
When ego dominates our thinking it is hard not to become frustrated in such a situation, and believe me, I did. "Why isn't the market doing what it is supposed to do? Why doesn't the market see what I see? That is our ego talking and it is preventing us from seeing what is.
But it wasn't until I developed a keener interest in amateur sports that the market's message started to sink in. I decided to compete in duathlons (running and cycling), a sister sport to triathlons. As a result I came to know a number of very talented athletes, some who excelled, some who struggled despite their talents. The athletes who succeeded were not the best runners, or the best swimmers, or the best cyclists; they were the best at putting it all together in a coherent, balanced package.
A coach I know was training a very talented, young triathlete. The coach had a cycling background so he kept emphasizing cycling training for her. But she was already very good at cycling and relatively weak at swimming. Anything she gained from extensive cycling training was minimal whereas she could do much better overall if she increased her emphasis on swim training. Alas, because cycling was all he knew that never happened. She became the fastest cyclist to lose all her major triathlon races.
We each like to focus on the thing we know the best and often assume that is the driving force of the market. For the markets there are times when we need to emphasize news and data flow (last Fall), times when we need to emphasize sentiment and technical indicators (now) and times when we need to emphasize fundamentals (likely coming soon). The challenge is to become good at all disciplines and know when they matter.
This is more art than science. It requires us to be open to what the market is telling us. Last Fall when Euro-summits were a weekly occurrence and we were glued to the TV watching arcane parliamentary votes in Greece; the resistance and support lines were best used as fake-out signals rather than breakout signals. That is because the market cared deeply about the to and fro of these news developments. Now, for reasons I don't pretend to understand, the market doesn't care as much about these still unsolved problems and so trend/sentiment signals have become more reliable. But this will change and eventually everyone will become hyper-focussed on profit margins, gross margins and signs of economic slow-down.
I don't know when this will happen, but it will. So in the meantime if you are a great cyclist, perhaps it's time to become a better swimmer, and runner. That way you will be able to compete when the landscape changes.