Con-tango

The big picture

Again, the concept of speculator or observer is relevant.

It’s common sense to observe and understand the big picture before the specifics; hence, an understanding of the current economy and the direction of the markets precedes analyzing a particular stock or future.

Better said than done, I know, the markets are constanly evolving and rarely show a clear direction; but, we must try to grasp the basic concepts that govern the movements in prices.

On these subjects, I would recommend a couple
of books:

• Secrets of Economic Indicators: Hidden Clues to Future Economic Trends and Investment Opportunities, by Bernard Baumohl.

A basic primer on the meaning of the economic indicators, which are  published by US government agencies on a daily basis. Bloomberg has a great calendar of these events.

• Secrets for Profiting in the Stock Markets, by Stan Weinstein.
  

Stan depicts the markets as basing, advancing, topping, or declining. This is incredibly simple, as well as important, for instance, we should never buy on a down trend, and yet, so many of us have done so, because the price seemed lower and better…

Next, try to participate as much as you can in a few economic blogs; I’ve posted a few excellent links on the sidebar. This way, you’ll start to get a feel of what may happen when you turn the next corner.

Gotta go, happy trading!