Grant Noble Reads Mass Media for Contrarian Signals

Futures trader and author Grant Noble looks to the mass news media in order to garner signals of major market bottoms or tops. Only, he looks to the media with a contrarian perspective.

Noble gained his first introduction to the futures industry when he worked as a retail commodity broker in the late 1970s. "I saw every which way people could lose money, and I thought not enough people were making money. I've spent the last 15 to 16 years trying to figure it out," Noble said.

Noble currently said he is not conducting any futures trading-"there are times when I relax from trading?" But he still has plenty of current market opinions. He authored the book Traders Fdge, published in late 1994.

His basic strategy is to act in a contrarian fashion to the messages of the major news media. "If the American media is screaming it's a horrible time to buy stock-I buy stocks," Noble said. "The media seem to unfailing know when there is a top or bottom-it is the best contrarian indicator," he added.

"My trading approach is that ... I think the markets are relatively easy to call over a three- to five-month period ... people have to find a system that will take advantage of long-term trends," Noble said.

"The New York Times came out at the end of April with a big front-page story on wheat. That was the topping day in wheat ... The media had turned very bullish on the grain markets at the end of April ... and the media was telling me that it was time to look for a top," Noble said.

"You want to see the USA Today that has a cover about coffee," Noble said, explaining the type of media story he looks for. "In April 1994 there was a big article in Newsweek about high technology stocks ... so many media publications were saying how terrible the stock market is, and you've seen a 50% rise in a two-year time." Noble said.

"What I'm trying to do with the media is to pick tops and bottoms ... you can do this with a couple hours a day and you don't have to watch the screen," Noble said.

Currently, Noble has turned bullish on the U.S. bond market, which has tumbled sharply for most of 1996. "Bonds are starting a six-month rally," he said, "with a minimum objective of 117 even (in the bond futures contract) Basically, we've had a lot of thrashing of the bond market. There have been at least 10 to 15 negative stories in the past few weeks,"' Noble said, explaining his rationale.

On the U.S. equity market, Noble said, "we continue to have the Wall Street Journal talking about the stock market- there have been 30 to 40 stories talking about how overvalued stocks are ... short term, this is a good buy signal, and over the next two to three months we should see stocks move higher," Noble speculated.

Advice Noble has for beginning futures traders? "Save your money, forget the seminars, forget the expensive software and try to do a lot of reading. Education is the first thing. The second thing is to try to keep your expenses in trading as low as possible. Look for the longer-term trades. The smaller the money (trading capital) the less they should day-trade," Noble concluded.