Ignore Economic Reports | Podcast Episode #358

0:07
Hey, I’m Ryan Mallory and this is my Swing Trading the Stock Market podcast. I’m here to teach you how to trade in a complex, everchanging world of finance. Learn what it means to trade profitably. And consistently managing risk. Avoiding the pitfalls of trading and most importantly, to let those.

0:23
Winners run wild. You can succeed at the stock market and. I’m ready to show you how. Hey everybody, this is Ryan Mallory with Swing Trading the Stock Market and today’s episode we are going to talk about whether or not to listen to the economic reports that come out on a regular basis or to just completely ignore them when it comes to swing trading.

0:45
So for this. I’m going to give this guy a good old Florida redneck name. I’m going to go with. Dougie grew up with a couple of Dougies and good guys. Definitely Florida rednecks though. And why do I? Give these guys fake names, because a lot of people don’t want their names to be used in the podcast and it gives them the ability to be able to write openly and honestly knowing that I’m not going to give away their first, last name, date of birth, state that they reside in, etcetera.

1:11
So Dougie writes Hello Ryan. Big fan of your podcast here? Been soaking up all the goodness from every episode? Seriously, it’s like a treasure trove of trading wisdom. So I’ve been wrestling with this question. Should I be glued to the news and economic reports that dodge market volatility or is it better just to tune it all out?

1:29
I know some. Traders who swear by staying up to date minute by minute they have live news feeds and others will just simply tell me that it’s better to stick to my strategy and not get swayed by the noise. What’s your take on this? Is it better to stay in the loop with all the upcoming economic reports like GDP and CPI or?

1:46
Just keep the blinders on and focus on just the charts. Your insights would be super valuable as I try to find to my approach of trading. Really looking forward to hearing your thoughts on the podcast. You’re always keeping Things 100 on your show and I appreciate you for that. Peace out, Dougie.

2:08
So Dougie, good question here that you have. This is something that I’ve actually been involving. Quite a bit on over the years. Over the years, I’ve paid close attention to everything that comes out from an economic standpoint. I can tell you what the last CPI number is. I can tell you what the employment numbers are.

2:25
The PPI? The PCE. Tell you what the Fed said in their last statement, Who voted for? Who voted against? I watch all these things. I stay pretty closely attuned to it, but it can also be pretty overwhelming. Now you guys will Remember Me saying quite a bit on this podcast that I don’t swing trade.

2:42
Through earnings reports I won’t hold a stock through the earnings. I think it’s absolutely lunacy. Still feel that way, but when you’re trading a stock. When you’re swing trading a stock that you like, that is the only four days out of the year that technically cannot hold that stock.

3:07
And honestly, you could sell it before earnings and get back into it the day after or the day of depending on when they report with economic reports if you try to trade based off of. When the next economics reports coming out like, oh, CPI is coming out on Friday, better not trade, you know, any time this week because that’s happening. And then next week you got employment and then the next week after that you got the Fed. And then the following week after that you got like 35 Fed speakers on the slate to talk.

3:22
You can find yourself never able to actually trade and that can be really overwhelming and and essentially paralyzing and that’s really not what you want as a trader. You want to be able to have as much opportunity to trade as possible. To be able to take advantage of opportunities. And so there’s been times in the past where I was like, OK, crap, we got Apple earnings coming out, we got Google earnings coming out.

3:43
So I’m going to avoid all the tech trades and then we got FOMC on the next day. So I’m just going to probably lay low until Wednesday when the everything comes out. But then you also have CPI on Thursday, so I probably shouldn’t trade until then. And then you got the employment number on Friday, you see where? I’m going with all that. It could be overwhelming.

3:58
It could get to a point to where you don’t have any opportunity to trade so. Part of trading is that there is some risk that you have to take on risk you have to hold through some economic reports. Otherwise it’s there’s really going to be no opportunity to trade. There’s economic reports coming out practically every day at 8:30.

4:14
You also have oil reports that come out at 10. It’s nonstop. And I think as everything becomes more enhanced from a technological standpoint, you’re going to have more reports and more influences on the market and it can be really daunting to keep up with all of them, but as I’ve already mentioned.

4:29
I’ve been slowly coming around to the idea of just completely tuning out all the economic reports. And I know that might sound crazy, but as technical traders, is the economic reports really part of technical analysis or is it more fundamental analysis that we’re trying to incorporate into technical analysis?

4:45
And that’s the thing that I’ve been really wrestling with. And from a stress standpoint, there’s been times where I’ve stayed up. A long time at night, you know, because I’m worried about the CPI report that’s coming out or I’m wondering what the Fed’s going to do or what the Fed’s going to say. It causes me to lose sleep.

5:02
And then in the end, when those economic reports come out or when the FOMC comes out, I find out that it was a big nothing burger, that there was nothing to it, that there was no reason to be fretting. And then how many times do we see these reports come out and they go the way that we expected, but then the price action goes the exact opposite way that we expected, kind of like our earnings report?

5:21
Now, the reason why I don’t equate economic reports to earnings reports is because for one, economic reports pretty much affect the majority of stocks, almost all of them. Now, yeah, you could have some oil reports that aren’t going to affect necessarily the financials or technology stocks. But when you have like the CPI report, that’s going to affect the stock market, especially in the times that we’re living in right now where inflation’s really on the forefront of the markets, other times, the CPI.

5:44
Won’t mean that much, but right now it does, and so unlike. Earnings numbers where it’ll only affect one or two stocks or maybe it just infects that industry that is trading within. That can be pretty much avoided. But when you have these big massive economic numbers that are coming out, it’s hard to avoid those.

6:01
Plus the level of impact that economic reports has on the overall market. Yeah, it can create some big sell offs, especially when you’re in turbulent times. For the most part, you’re not looking at 20 or 30% declines off of a economic report. In fact, rarely ever happened. I think the only one I’m really thinking about is the 1987 crash.

6:17
And I couldn’t even tell you if that was because of an economic report or not that started that whole sell off. But by and large, you might get like a really bad sell off of like 2 or 3%. If you’re in some stocks that’s recoverable okay, you can come back from that. But if you’re holding Tesla through our earnings report and they dropped 2530% as a result of a bad quarter.

6:37
That could be much different. That’s avoidable and that’s something that we got to steer away from. How many times have we seen bad, bad earnings reports that completely crush the stock? Specially those that aren’t necessarily thing related, but it might be a lot smaller company. Maybe they’re a billion dollar company or a or a $500 million company.

6:54
They can get destroyed off of 1 economic report. You can see a stock crash 50 or 60% because of an earnings number and there may be a couple of times in this podcast right accidentally. Swap out economic reports and earnings reports and vice versa. But you guys get what I’m saying. Earnings reports, there’s a lot more volatility for that individual stock.

7:12
Economic reports, there’s not as much volatility when it comes to how they affect the individual stock. Not like the earnings numbers when they come out, those can wreck complete havoc on a stock. So this podcast episode here is not about ignoring earnings by any means.

7:29
It’s really just focused on the economic reports, the FOMC statements that come out. All these other economic numbers that we’re just inundated with on a daily basis, because I also think too that the economic reports can shape your mindset and that’s not a good thing.

7:52
You can see that housing starts are dropping, you can see that oil inventories are dropping and oil prices are going up. You can find that inflation is soaring, that is reversing or going back up. You can see that the Fed is raising rates again. And thinking, oh, this is really bad, We should be really getting short. This is really bad for the economy. But then in the end, it’s not. The market doesn’t care about that stuff.

8:07
And we’re. Like, oh man, I wish I would have thought about it from that angle. And so if we’re just focused on the price analysis, if we’re focused on the charts and we’re ignoring that, then we’re not letting the economic reports shape our mindset because it’s very easy to, especially right now where everything just feels inflated, everything feels like a bubble.

8:24
I look at the NVIDIA chart from a weekly standpoint. It looks nutty. So who’s to say the market can’t go up another 1520%? And if it does, do we really want to be shorting it? Because what the Economic Report suggests that a slow down is looming. No.

8:40
And another thing I would tell you is to check out swingtradingthestockmarket.com. Guys, this is a phenomenal service that goes hand in hand with this podcast. And with it you’re going to get all of my daily watch lists. Okay the stocks that I’m looking at each day to possibly trade. Then you’re also getting my Bullish and Paris watch list this week.

8:57
It’s a much more comprehensive list of stocks. Usually there’s like 50 or 60 on each one and then you’re gonna be getting updates on the overall market. That’s going to include the SP500, the Russell, the Volatility Index and some other indicators. The SP500 also. On top of that, you’re getting all of the Faing stocks updated for you a couple times each week.

9:16
That’s going to include your app or your Amazon, your Netflix, your Google, Microsoft, NVIDIA, Tesla, meta. I think I got them all. But in any case, I do videos on those, so it’s really good videos, Some really good charting. I highly recommend it. It’s my research, so of course I would so check that out.

9:32
swingtradingthestockmarket.com. So then my next question comes to you with this. If we’re following the technical, if we’re following the price action, does the economic reports matter? We’ve talked a lot about the differences between economic reports and earnings reports. Why you avoid the earnings reports?

9:47
Both. Why it may not be a bad idea to ignore the economic reports, not even really care about what they say, but how are they similar? Well, for one, how many? Times, have you seen the revenue come in, the stock beats revenue, the stock beats earnings per share, they guide higher, everything looks really good and then the stock just sells off, sells off all day long.

10:10
We saw that just recently with NVIDIA. You know, the previous earnings report, it beat everything and it got it higher and the stock just went absolutely 8 to the upside. So then logic would say that if they beat again and they guide higher that the stock’s going to take off. And initially it did.

10:26
Went from like the four 70s to like 520 and then the next day it only finished 1% higher, spent the entire day selling off and then the following day and even in after hours that same day, it went into the red. So that happens a lot with earnings, but we also see that happen with economic reports. You’ll see a economic report that’s really good, but then all of a sudden you realize oh it’s the bad news is good news theme.

10:46
So anything that’s bad, the market goes up, anything that’s good, the market goes down. We’re actually in that kind of a situation right now with the market where. Any time the the market shows that everything is going well and the economy is growing, people get nervous because that means higher interest rates, so everything sells off and vice versa.

11:03
It’s bad. Everybody thinks that they can’t raise interest rates anymore and as a result stocks go up. They don’t really ask themselves is the stocks really need to be going up if everything is falling apart. Because the fact that we have to lower interest rates sooner than expected would suggest that the economy is not doing that good and as a result those earnings numbers are not going to be good when they come out, but.

11:23
A lot of times we try to give the market the benefit of the doubt of being like all knowing and always pricing and everything. The market’s kind of stupid and I have another whole podcast on that and you can check that out. But when we try to make sense of what the market’s doing, it’ll frustrate us. And in the end, we kind of have to just come to the resolution that the market’s stupid.

11:40
But who are we to argue with? Because we can argue with it all we want. If we think, guys, this was a good number, hey, this should be going up. Is the market care? No, the market’s just going to do what it wants. And so you have to respect the market. Doesn’t mean that you have to hold it in high esteem. And so I respect the market.

11:57
What it does, I have nothing to do with whether it finishes higher or lower on the day. I can only respond to what it’s doing. And so we can try to trade off of what we think these economic numbers are going to be about inflation coming down or inflation going up and how we’re going to trade that accordingly.

12:13
And then when the market does the exact opposite, even though we might have been right about what their economic reports were ultimately going to say, we’re going to get frustrated. We’re going to be like this is rigged. Everybody wants to say the market’s rigged. There’s probably there’s bad characters in the market, I give you that. But I think often times that our failures in the stock market isn’t a result of a rigged market, it’s a result of us making bad trading decision.

12:35
And yet it’s very convenient to just blame the market as being rigged. If you look at things like COVID or the economy essentially shut down for pretty much a solid year. You would think that the market would be down sixty 7080% and yet.

12:52
The market sold off for 5-6 weeks and then it just went on this epic ramp higher the rest of the year. Nobody saw that coming. Nobody thought that that would happen. Then you got the STEMI checks and all these other things and on the surface, yeah, the market should have gone way down.

13:08
But the for the next two years it just went 8, 2020-2021, never looked back. 2018 quarter 4, you had a pretty significant sell off that lasted for about 3 months. 2019 the market went right back up again. And So what we expect the market to do when we’re trying to understand and digest these economic reports and these macro events and these these elements that should drive price higher or lower, we’re often bethuddled by the fact that it doesn’t actually do that.

13:34
It does the exact opposite of what a rational thinker would think. So going back to Dougie’s e-mail here is, should we be ignoring all this? Should we be tuning out the economic numbers and just focusing on price and volume? Focusing on the Technical Support resistance and like I said, this has been kind of an evolution for me.

13:55
But the more I think about it, and I’ve been thinking about it a lot recently, especially this year, the more I think about it, the more, yes, I do think that we, if I’m going to be a pure technical trader, I need to ignore a lot of what’s going on. If I ignore that, then I’m not going to be as influenced by the macro conditions and being fooled by the market to do something that I would never expected it to do if I just focus on what’s going on.

14:18
With the market as a whole and what the technicals are and the charts are saying, I think I’m going to be a whole lot better off. And one thing I would say too is think about the times where you’ve not made trades just because things that were happening in the market were too nerve wracking for you. You’ve seen too many things on the news or on economic numbers are released or on Twitter.

14:37
Twitter’s can be a really bad source, guys. You start reading these news and you will get bearish very fast. And that’s because the bearish news sells. That’s the things that people will click on it. You know five reasons why the stock market’s going to crash in 2024. You do a video on that, you’re going to get hits.

14:53
You do one on how to trade breakouts or how to swing trade or how to do something up. It’s not going to get nearly the hits. But man, you say stock market’s crashing in 2024. You’ll get a lot of hits. My YouTube channel did its best in 2020 when the COVID shutdown happened and and people were afraid that the market was crashing.

15:12
Also did pretty good in 2022 as well. When people are nervous about the market, that’s when my YouTube channel usually does the best because they’re searching for answers. When things are really good, they’re not really looking towards the YouTube channel as much because they’re not looking for answers off of YouTube because they’re feeling pretty good. They feel like they got things in control, but as soon as things get out of control, that’s when they start panicking and start looking for for answers to their pressing questions.

15:35
If you enjoyed this podcast, I would encourage you to leave me a 5 star review. Those things really do mean. A lot to me. Check out the YouTube channel. You can go there by going to youtube.com and type it in SharePlanner and make sure to check out swingtradingthestockmarket.com. Send me your questions.

15:51
Tell me your stories. I want to hear all about them. I love them. This podcast exists because of your questions, so keep sending them to me. Even if you’ve written the show book and I’ve done a podcast for you, do another one. I’d like multiple questions. Thank you guys and thanks for listening to my podcast Swing Trading the Stock Market.

16:11
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16:30
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16:46
All the best to you and I look forward to trading with you soon.