In 2005, Steve Jobs gave a famous commencement speech at Stanford University, in which he highlighted the key points in his life that had brought him to leading what, at the time, was a newly resurgent Apple, invigorated with fresh new products like the iPod and iMac.
After walking the soon-to-be-graduates through those key moments in his life, he summarized the haphazard way he came to lead one of Silicon Valley’s biggest tech giants with these words:
“You can't connect the dots looking forward;
you can only connect them looking backwards.”
That bit of wisdom came to mind when one of my co-workers posted this chart in one of our group chats a few days ago:
This chart shows the stock market from January to November of 2008 in orange.
Over it is superimposed the stock market’s rollercoaster ride from January to present of this year (2022) in blue.
As you can see, the shape of the stock market in these two years looks suspiciously similar.
The implication being that the market is about to tank.
But hang on one second, because here’s the thing…
Charts like this certainly are attention-grabbing.
But I’ve found them to be utterly meaningless. I would never in a million years trade based on a chart like that.
So wait, what gives?
If you’ve been following me for any length of time, you know what my thoughts are on where the market is headed — and
it perfectly fits with the implied conclusion of the above chart. You’d think I would be rejoicing, then.
But to me, trading based on something like this would just be irresponsible.
Still, I wanted to show you the chart to make a point:
Because even if the market does exactly what this chart implies, you should know that this approach is a little like trying to connect the dots looking forward.
Rather than looking at crystal balls, I apply a science-based approach.
Every day, I go to the market and listen.
I
listen to the market tell me which way it wants to go by looking at where it’s been.
This tool I use to “connect the dots looking backwards” is the
Volume Profile.
It’s proven to be stunningly accurate for my subscribers and me — our latest big win coming just this past Friday from a quick overnight position shorting the XSP.
And every day when I listen to the market,
I go live in my Prosperity Pub Telegram channel — which is free for anyone to join and watch.
So
join the channel now and you’ll be set to listen to the market right along with me when I go live tomorrow. (Don’t worry if you can’t make it live. I record every session and post it to the channel.)
Once you discover this science-based approach, you can stop relying on superstitious mumbo-jumbo or attention-grabbing, but ultimately meaningless clickbait charts to try to predict where the markets are going.
Because as Steve Jobs said:
“You can't connect the dots looking forward; you can only connect them looking backwards.”
Take What The Markets Give You.
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