Investors should rely more on market trends than news

Markets are driven by news but it is the way the news is incorporated into price activity that is important. Investors have a choice. They can follow the news and react to it depending on their own personal psychology. Or they can put the news into a wider context of the market's psychological behavior and then decide how they will respond.

Investors using news can always make a case for the bear, or the bull. The bearish news this week came from Dubai. The Emirate of Dubai wants creditors of Dubai World and property group Nakheel to agree a debt standstill. This is the conglomerate that has led the rapid growth in the country. The announcement dragged European market indexes into their worst daily loss in seven months. The Japanese Nikkei also felt the effect and the announcement made US markets nervous.

More bearish news came with hot money flow. The State Administration of Foreign Exchange tightened settlement and sale of foreign exchange by individuals to curb non-normal cross-border capital inflow.