Robert Prechter has written a very interesting article about cause and effect in the financial markets: The Stock Market is Not Physics – Part I. In it he discusses how people often mistakenly apply the laws of momentum, action & reaction, and cause & effect to the markets. If you’ve ever been puzzled at why the market, or one of your stocks went down on apparently good news, or vice-versa you should read that article.
While I’m posting, in case you don’t already know, the U.S. markets will be closed this Friday in observation of the National Day of Mourning for Ronald Reagan.
