Most people think stock prices move because of the news. A company reports strong earnings? Stocks go up. Bad economic data? Stocks go down. Simple, right?
Not quite.
If you’ve watched markets long enough, you’ll notice something strange happens at turning points: the market stops reacting the way you expect.
The “Good News, No Gain” Sign
Near the end of a bull market (when prices have been going up for a while), optimism is high. Everyone already expects good news, so it’s already “baked into” prices.
When the good news actually comes out, there are no fresh buyers left to push prices higher. Sometimes, stocks even drop on great headlines — a sign that big players may be selling into the strength.
It’s like telling someone their favorite restaurant is open tonight — and they shrug because they’ve already made dinner plans.
The “Bad News, No Drop” Sign
Near the end of a bear market (when prices have been falling for a while), pessimism is everywhere. Investors are braced for the worst, so bad news no longer surprises them.
When ugly headlines hit, the market may barely move, or it might even rise. That’s a hint sellers are exhausted, and bargain hunters are quietly stepping in.
Think of it like hearing a storm is coming — but you’ve already boarded up the windows and stocked up on supplies. You just can’t get more worried than you already are.
Why This Matters
The stock market is a discounting machine — it tries to price in tomorrow’s news today. What moves prices most is a change in expectations, not the news itself.
- Good news but prices fall → buyers are tapped out → possible top.
- Bad news but prices rise → sellers are spent → possible bottom.
Important to Remember
This is just one single indicator — and it’s far from foolproof. The market is influenced by countless factors, and even if prices stop reacting “logically” to news, it doesn’t guarantee a reversal is coming.
Sometimes, what looks like a top or bottom is simply a pause, or a setup for the trend to continue. Other times, fresh developments completely change the story.
It’s an interesting signal — but not a crystal ball.
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