| The Way The Stock Market Works. | | | | This "Law" is taken advantage of by the large |
| I have come to the conclusion that the market is | | | | Institutions who are well aware of what happens |
| (dare I say) generally being manipulated/influenced | | | | when they buy or sell huge volumes. |
| by firstly the large institutions, Secondly by full | | | | Some Reasons Why Share Prices Go Upwards. |
| time professional traders and day traders. | | | | It's always a good idea to look at stocks that |
| The general public and the "Mum and Dad" | | | | have jumped in price to see what clues where |
| investors are the last to know what is actually | | | | there beforehand. By gaining a greater |
| happening and invariably the ones that lose out in | | | | understanding of what happened before stocks |
| the long run. | | | | jump in price, it can give you a better chance of |
| The advantage the Institutions have is the | | | | being on board some of the next ones. |
| "Millions" of dollars that they have available to use | | | | When the share price increases, it means that the |
| at any given time. This is usually obtained from | | | | buyers (on average) want to buy larger parcels |
| the public in the first place, in the form of | | | | of shares. When people buy large parcels of |
| Insurance, Superannuation and Managed Funds | | | | shares it generally means that they are very |
| etc.Which we (the general public) all contribute to | | | | confident in the stock and its future prospects. |
| on a daily basis. | | | | A large increase in Smart Money (Traders in the |
| The large advantage they have is the enormous | | | | know) and Buyer Demand can occur before a |
| amount of shares they are able to purchase at | | | | large jump in price happens. This information lets |
| any given time. | | | | you know that other people are very interested |
| What occurs is that even a small movement in | | | | in this stock and are prepared to spend big |
| share price means big profits for them, because | | | | money on it. This can be another good clue. |
| of the volume/turnover of shares which occurs | | | | When you see large spikes in Buyer Demand |
| whenever a share transaction takes place. | | | | when the price is starting to rise upwards it often |
| Now Volume is the "Fuel" driving the market. An | | | | indicates that the stock is set for a much longer |
| uptrend in share price to survive and to continue | | | | bull run. The rushes for stock are caused from |
| must be nourished by new buyers who are being | | | | either news or rumors and (as long as there is no |
| fed by cautious, seemingly reluctant sellers. | | | | bad news) this activity will then start attracting |
| Consistent volume is very important, if there is to | | | | attention from other traders. |
| be any change in the existing trend. There must | | | | Another great clue is to be found when Directors |
| be a surge of buyers or sellers capable of | | | | are buying there own stock. It means that they |
| changing the current share price. | | | | must have confidence in their own company to |
| Remember for every "Seller" there has to be a | | | | invest money in it. You can find out when |
| "Buyer" and vice versa. | | | | Directors are buying and selling by checking the |
| The seller thinks or knows the share price is going | | | | ASX company announcements on a daily basis. |
| down and the buyer thinks the opposite. | | | | Companies are on strict instructions to notify the |
| Now too much selling will invariably force the price | | | | ASX when ever a Director buys or sell shares in |
| downwards as will too much buying forces the | | | | his company. Directors buying are usually based |
| share price upwards. This is the law of "supply | | | | on a profit motive. |
| and demand". | | | | |