In the last few weeks the media has gone ‘all in’ on recovery. All is rosy. The Dow is up. Good times are back! And when the media goes all in many love to point out (me included) that the magazine cover indicator is often great contrary evidence to where we are really headed.
That said, the cover indicator is more fun than substance. Meaning, trend followers don’t build into their technical trend following systems the cover indicator. So it sounds great, and the psychology behind it makes sense, and sometimes it works out, but if the numbers of your system don’t say to do something — sitting still is the best course of action.
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