Investing In Stocks - Three Market Trends You May Not Be Aware Of
It's a no brainer that there is money to be made investing in stocks. But then it is just as likely you can lose money. The key is to pick stocks that will perform as you want. There are three terms that you may not have heard of and why they are important to you.
DEAD CAT BOUNCE: This is the temporary recovery of a stock price during a general downward trend. Often it is caused by rumor or market talk ups. People believe the stock has reached its lowest price and begin buying. The dead cat bounce effect means the price will drop again and they are likely to lose money.
Why this is important for stock trading: No one can really predict when a market or stock recovery will happen. It can however provide an opportunity for investors to buy or sell quickly to take advantage of the temporary price increase.
A BELLWETHER STOCK: This is a stock (or security) that usually signals the direction the market will take.
Why is this important? These sorts of stocks usually have a history of correctly indicating which way the market is going to go. They on themselves may not be attractive in terms of gains to be made, but will be useful to watch to get a general feel for the market sentiment.
THE JANUARY EFFECT: This is the effect that sees the beginning of a new year heralding higher stock prices in January. It has been attributed to tax factors and to investor sentiment. People often unconsciously expect prices to rise in a new year.
Why is this important? The effect has historically happened and continues to do so. What has changed is that it has become harder to capitalize on this effect. The most important fact may be just being aware of it. If you are aware and watching you may give yourself the chance to take advantage of an opportunity that comes up. - 23196
DEAD CAT BOUNCE: This is the temporary recovery of a stock price during a general downward trend. Often it is caused by rumor or market talk ups. People believe the stock has reached its lowest price and begin buying. The dead cat bounce effect means the price will drop again and they are likely to lose money.
Why this is important for stock trading: No one can really predict when a market or stock recovery will happen. It can however provide an opportunity for investors to buy or sell quickly to take advantage of the temporary price increase.
A BELLWETHER STOCK: This is a stock (or security) that usually signals the direction the market will take.
Why is this important? These sorts of stocks usually have a history of correctly indicating which way the market is going to go. They on themselves may not be attractive in terms of gains to be made, but will be useful to watch to get a general feel for the market sentiment.
THE JANUARY EFFECT: This is the effect that sees the beginning of a new year heralding higher stock prices in January. It has been attributed to tax factors and to investor sentiment. People often unconsciously expect prices to rise in a new year.
Why is this important? The effect has historically happened and continues to do so. What has changed is that it has become harder to capitalize on this effect. The most important fact may be just being aware of it. If you are aware and watching you may give yourself the chance to take advantage of an opportunity that comes up. - 23196
posted by X - Men @ 12:13 AM
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