My daily routine: WHAT I am looking at and WHY
I will try to explain in a very simplistic way my daily view of the market.
I hate to disappoint those who think that there’s one specific way how to look at the market since every day it’s different. So, you have to adjust accordingly, viewing different metrics etc. A lot depends on specific news, political events and so on. The world’s economy is changing constantly and so should you too adjust accordingly. Natural disasters, political upheavals, scandals, comments from the Central Banks, and even Donald Trump’s tweets. Some of these events are unpredictable yet they have a great impact on financial markets and overall economic sentiment.
However, I stick to the certain guidelines, though.
I usually start with a "Top down view", trying to get THE BIG PICTURE: reviewing production figures, services sector, real estate market figures, Federal Reserve protocols (their forecasts and “Dot plot” protocol). World Bank forecasts, International Monetary Fund (IMF) forecasts and materials. Sometimes I also look at the labor market indicators as well as big companies' reports and their economic forecasts. When I am looking at economic performance in general, I also look at it in the long run, where they are relative to historical highs and lows. In this way, I try to understand the market trends, direction, and overall mood.
Often I look at different correlations to assess current market situation.
Correlations can be viewed in many different ways. Gold prices against S&P500, platinum against S&P500, gold to silver ratio, Yield curve (A graph depicting yields on U.S. Treasury bonds at multiple maturities. An inverted yield curve is a situation in which long-term rates are lower than short-term rates, thus suggesting that market expect a recession). Gold to U.S. dollar correlation, oil to Canadian dollar, etc.
Then I move to the COT data (Weekly publication showing up-to-date information on futures market operations) where I primarily focus on "Non-commercial" (speculators, money managers, hedge funds). This data supplements my view of market sentiment and trend.
After that I look at the graphs by going through various instruments, usually starting with currencies, commodities, metals, and stock indices. Then I look at the stock markets., usually trying to find charts that allow me to trade "Technically." So, that TA (Technical Analysis) coincides with the FA (Fundamental Analysis) view.
TA is a good tool for "Timing". Often you make mistakes in your FA and then TA saves you from making the wrong decisions. I look at TA very simply, even with a "Top down" approach. I usually look at the "bigger" charts by drawing countable lines and try to understand where we are at the moment. Very important is not try to notice something that simply isn’t there! And I don’t look at the "small, short-term" schedules either. On rare occasions, and only in some instruments, I look at “H4 graphs”. I usually stick to the Daily schedules.
I'm not a big fan of indicators. I used to look at moving averages and the RSI. I usually look at RSI both "classically" and looking for divergences. However, I do not consider indicators to be taken too seriously. There is certainly no need to cover the screen with indicators all over the place since indicators, by their very nature, reflect the same price only in another outfit.