The Dynamic nature of the market can take the same news in two different time frames and contexts and do exactly opposite reactions to it.
This makes for an extended study of the market for those who want an unchanging black and white reading of the market.
Looking at this from Two commonly stated market motivations (not emotions) - fear and greed one could make each its own main dynamic.
For instance what is the main motivation of a market which goes down on bad news? Fear. What is a main motivation of a market that goes up on good news? Greed. Work it out for the security or market you are trading and trade with the sentiment and the dynamic of the market, not against it. Down on good news? Fear. Up on bad news? Greed. Conditions exist where news interacts with other news to create its own dynamic. Good news is a good GNP, but that could lead to rate hikes which is worse news. So news has to be in context. Employment up? (good for workers but bad for interest rate sensitive sectors of the market, where on its own good news is bad!) DIfferent interactions exist and have to be examined with some intelligence.
An example was todays market:
A premarket inflation report came in much lower than expected. While the market has generally been trading lower and in Fear (selling off good news on worries about interest rate hikes etc), this changed the dynamic. The market gapped up by the open and ended up much higher at the end of the day. While it is very possible to short this kind of a market, why not trade with it?
A rule of thumb could be to trade with the main motivation evident in the market.
