William J. O’Neil Webinar Review Part 2: Market Psychology


It’s always an honor to have MarketSmith founder and Chairman William J. O’Neil in the studio. Not many people have access to an investing icon, particularly one as committed to sharing his deep knowledge of the market.

In the most recent Master the Market webinar, Mr. O’Neil sat down with MarketSmith President Scott O’Neil and Product Coach Scott St. Clair to discuss the current market.

Last week’s blog post covered leading stocks in the market (available here). This week, we will cover another topic discussed in their conversation, Market Psychology.

Contrary to popular belief, market corrections are not always bad thing. Often times, stocks form bases and set up to break out during corrections. As long as you can recognize the condition of the market and stay on the sidelines, a downtrend is the perfect time to run your screens, look for ideas, and start a fresh watchlist. To learn more on why we love corrections, you can watch "Why MarketSmiths Love Corrections".

Market psychology also comes into play when the market is in an uptrend. Mr. O’Neil reminds us of buying stocks the right way. Investors love to buy, but the objective should be to buy at the right price rather than buying at the lowest price. This includes not buying a stock while it is in the middle of building a base or when it is already extended beyond 5% from its pivot price.

You have to be able to bend with the market. In order to be flexible in that way, you must know where you are in the market cycle: Am I in a Bear Market now? Or am I in a Bull Market now?

With all of the different media outlets fighting for your attention, it is easy to be influenced by outside opinion. The solution to this is simple; we must let the charts tell the story, because the charts never lie. All other news and opinion should be tuned out.

The market will tell you when it’s starting to have trouble. Don’t let your ego get in the way; trying to outsmart the market is a critical mistake. Keep your rules in place and stick to them.

To learn more, listen to the entire conversation here.


Learn more about starting your free trial at MarketSmith.com