Analysis of the Stock Exchange Market

To make a correct investment, you must not only study the evolution of the institutions quoted o the market, but it is also necessary to know when to choose correctly the time in which to operate on the market. For it, it is necessary to have conscience on the climate of the market and of all the important factors that can influence it.

The climate on the market reflects the actual atmosphere of the stock exchange market. Basically two cases are distinguished: the rising climate and the falling climate.

A favorable rising climate, can be detected by the following types of signs:

  • Rising of the stock market indexes.
  • Existence of more securities rising in these quotations than those that fall.
  • Favorable commentaries about the stock exchange market by the media: press, radio, television, magazines and stock exchange reports, etc.
  • Positive reaction of the market before the good news if followed by non-negative reactions before the bad news.

If the symptoms mentioned are sign of the contrary, the climate of the market will be negative.

It is of common knowledge the existence of cycles in the stock exchange market, that is, after a rising climate, a falling climate will follow, and so on.

When there is a positive climate, the investors fill the market, which provokes the rising of the quotations. This increase better the expectations of profits in the investments which, brings even more investors to the stock exchange market and foot it the market keeps on rising. While this happens, some shareholders take advantage and sell their shares obtaining greater profits. These sales makes that the rising of the market will be accompany by small falls. If these sales are very important then, the quotations will start to fall this creating a negative market climate.

At the moment in which the fall of the quotations are excessive, the low prices of the securities attract again the investors and the quotation begin to rise again, thus beginning a new positive cycle.