The Rule vs. The Exception

When you study markets long enough, you realize the most valuable lessons are worth repeating.

And one of those lessons is this: Data is Everywhere.

We’re surrounded by it. Everything from the economy to the number of steps you take before lunch now gets quantified.

Because of that, at any given time, in any market environment, you can find data to support how you feel.

Bullish? There’s a stat for that!

Bearish? There’s one for that too!

But the skill isn’t in shouting the most data the loudest.

It’s in analyzing its behavior to separate noise from knowledge.

The difference between noise and knowledge is knowing what’s typical and what’s not.

What’s the rule, and what’s the exception?

The rule is that it’s sunny in California.

The rule is that Michael Jordan makes his free throws.

The exception, as we know, is just that — an exception.

It doesn’t deserve an overreaction, because good analysis helps us see it for what it is.

Bull Markets have rules too.

One of my favorites? New highs consistently outnumber new lows.

Yet most people focus on the exception.

They cherry-pick a handful of new lows and shout “recession,” or highlight a few new highs and declare “the bears are wrong again.”

That’s not analysis. That’s data manipulation to validate emotions.

Right now, the rule is clear: new highs continue to outnumber new lows.

Not for one day or one week....but for the entire recovery off the April lows.

That tells us buying breakouts is working and selling breakdowns is failing.

It tells us markets are rewarding strength and defending weakness.

That’s what healthy markets do. That’s the rule.

So if an exception pops up, we treat it as one until persistent data suggest otherwise.

And when that day comes, we’ll adapt.

But not before the rule becomes the exception.

Because good analysis can spot the difference.

Anyways, that’s my two cents.