Savvy traders and investors understand the stock market is looking ahead 6 months or more into the future. When the market starts to improve during a recession, there is a good chance the recession will be over in a few months. When the market starts to falter during great economic times, one can look for a possible recession or economic trouble down the road. Historically, the stock market has been one of the most reliable forecasting tools there has ever been. The stock market also places much greater value on expectations than on current reality, when it comes to individual stocks. Stocks tend to make their price highs when the greatest number of people visualize a stocks greatest value at the same time. The main point is the stock market discounts pretty much everything. Top traders use this knowledge to their advantage.
Top stock market traders will look at the lists of "new highs", and "new lows". If the stocks they own are making new highs, it tells them they own the right issues for the current cycle. It is a big positive when stocks make new price highs on much heavier than normal volume. Most of the new leaders of an advance, are the stocks that make new highs before the general market averages start to really take off.
The very best traders know that every trade has an uncertain outcome. They also know the key to success is to think in probabilities. Consistently successful results will be achieved, if you put the odds in your favor on every trade, and there is a large enough sample size. Basically, you are like a casino, and we all know they tend to do pretty well in the long run. Always put as many factors in your favor as possible before taking a position in the market. This, along with solid money management, are the absolute keys to success.
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