Wednesday, October 5, 2011

Is Mob Mentality Healthy For America?

What is it about mobs that make them so dangerous? The problem is mob mentality. Here you have a group of people who individually are regular folks, but put them in a crowd and they lose all sense of what is right and wrong. They justify their actions because of what they see other people doing.

Using social media sites like Twitter and Facebook, mobs were getting together for the Arab spring in the Middle East. Now we have mobs getting together in Greece and other parts of Europe, even my homeland, England! And we have the same problem here in major cities in the United States. This is what I call the dark side of social media, and one that I believe is so very dangerous.

Is it healthy? Is it good for America, or any country? Absolutely not!

One of the most fascinating books I have ever read about the market is Charles Mackay’s, “Extraordinary Popular Delusions and the Madness of Crowds.” It is a history of popular folly, first published in 1841. The book chronicles its subjects in three parts: “National Delusions”, “Peculiar Follies”, and “Philosophical Delusions”. This book has gathered a body of academic support as a work of considerable importance in the history of social psychology and psychopathology. I highly recommend that you pick up a copy.

As you see, 170 years later we haven’t changed very much as human beings. Understanding this mob phenomenon can be a huge advantage and is going to be one of the keys to being successful in the next 12 months. As always, we will do our best to keep you informed and on the right track.

Let's see how the SP 500 is trending today.......

The S&P 500 index fell dramatically yesterday in the first several hours of trading. It was only an hour before close that the market realized it was heavily oversold and rallied dramatically. This rally did not change the overall trend of the market and we expect we will once again see the S&P 500 index roll over to the downside.

Currently the S&P 500 is at an area of resistance and we do not expect it to move over the 1150 area. Look for resistance at 1134 which is a 50% Fibonacci retracement from the lows that were seen at 1073 yesterday. We would not rule out our ultimate target zone for this index which is the 1000 to 950 area. Intermediate and Long term traders should continue to hold short positions in this index.

The U.S. indexes closed higher and near their daily highs again today. If all three stock indexes drop and close below their August lows, that would be extremely bearish for the stock indexes and for most commodity markets. Bulls would gain better upside momentum by producing good follow through buying to end this week, particularly on Friday following the key U.S. jobs report. But bulls still have heavy lifting to do in the near term to suggest near term price uptrends can be sustained.

Here's todays video update on the 6 markets we cover.

Here is a preview of our MarketClub Trade Triangle Chart Analysis and Smart Scan technology

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