Do the Markets Discount ?

The U.S. markets rally on Friday. Here are comments from the WSJ blog:
“The worst jobs data in decades was, as it turns out, priced into the market — at least for one day. After an early selloff that never quite equaled the hysterics surrounding the loss of 533,000 in nonfarm payrolls in November, the market started to rebuild, steadily putting together gains in the face of economic weakness. It completes a week where three trading sessions were marked by a resilient effort by buyers despite poor economic reports.”

The same scenario is playing out in India where the setbacks on account of Mumbai have been faced by a resilent market. Friday’s decline could just be a dip before a final breakout from the trading range.

A Bullish head and shoulder is visible on the 15 minute chart of the S&P 500 – the American benchmark index. A similar pattern is viisble on the 60 minute chart for the Nifty. It does appear that markets all over the world are coupled (moving together), with patterns suggesting an imminent breakout that could lead to higher prices. The breakouts have not happened, they could be false – all of these concerns are met by systematic trading principles.