Virtually everything that has to do with numbers can be charted. From heart beats to frogs in the forest a chart can be drawn to describe how fast or how far they go. Price change over time is charted for every stock. A chart is really a picture of price "history".
The emotions that drive people have not changed since the Garden of Eden. Fear,
passion, greed, hope and denial have been and will continue with us. It is the
emotion of people that drive the stock market. If market participants are
hopeful and optimistic they buy. If they are fearful or unsure of the future,
they sell.
What caused the markets to stop bleeding out? Certainly there was no more assurance about what would happen in the future. In fact the word war had been used by those who were in position to initiate it by then. Here is what cleared the way for new buying... "Greed". Investors saw that an overblown selling reaction had caused even very good companies to see their share prices slaughtered. These people began a buying stampede as others could not resist the possibility of making quick money. Such cycles repeat themselves over and over again on the short term, long term and every where in between. In the following video, Stephen Cooper discusses the study of price and volume charts.
When you gaze on a stock chart you are seeing a picture of how people who were
participating in that market were "feeling" on the days that chart
shows. Trends of prices are also trends of thinking and feeling.
Why then are there patterns that appear over and over on the charts? Here is a
good example. On September 11, 2001 a horrendous set of acts rocked America and
in differing ways, the world. When the Stock Exchanges opened on the following
Monday huge numbers orders to sell, sell, sell flooded in causing individual
stocks and the broad indexes to drop like stones in a pond. The Dow Jones
Industrial Average saw its largest one day point drop in history. Why did this
gigantic sell off take place? Because people were unsure of what would happen
the next week, or month or year. This instability caused them to worry about
the safety of their assets. In a weeks time the price plummet slowed and then
turned around.What caused the markets to stop bleeding out? Certainly there was no more assurance about what would happen in the future. In fact the word war had been used by those who were in position to initiate it by then. Here is what cleared the way for new buying... "Greed". Investors saw that an overblown selling reaction had caused even very good companies to see their share prices slaughtered. These people began a buying stampede as others could not resist the possibility of making quick money. Such cycles repeat themselves over and over again on the short term, long term and every where in between. In the following video, Stephen Cooper discusses the study of price and volume charts.
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