Category: Money Tips Date: 2006-11-12
1. The basic elements of Dow Theory
According to Dow theory, there are three trends in the stock price movement, chief among them is the basic trend of the stock, that stock prices rise or fall of a widespread or comprehensive changes in the situation. Duration of these changes is usually a year or more, the total price up (down) by more than 20% of the
. For investors, the underlying trend continued to rise on the formation of the bull market, continued to decline to form a bear market.
The second trend of price movement is called the secondary trend of stock prices. Because of sub-trend is often with the underlying trends of the movement in the opposite direction, and have some of the constraints of their role, and therefore the amendment, also known as price trends. This trend continued in the time ranging from 3 weeks to several months, its stock price increase or decrease in the share price is generally the basic trend of the 1 / 3 or 2 / 3. The third trend in price movement known as the short-term trends, reflecting share price movements within a few days. Amendments to the trend usually 3 or 3 or more composed of short-term trends.
Of the three trends, the long-term investors are most concerned about is the basic trend of stock prices, the purpose is to as much as possible in the bull market, buy shares, while in the bear market in a timely manner before the formation of selling the stock. The amendment to the stock speculators more interested in the trend. Their aim is to derive the short-term profits. The importance of short-term trends in small and vulnerable to manipulation, and thus inconvenient trend analysis objects. It is generally impossible to manipulate stock prices of basic trends and amendments to the trend, only the country's financial sector is possible with limited modifications.
Basic trend
That is, from the perspective of a large rise and fall movements. Among them, as long as the next higher level than the previous high. Each drop in a secondary wave at the end of its decline as compared with the previous wave at the end of the high, then the main trend is rising. This is called a bull market. On the contrary, when each intermediate decline will be brought to a lower price level, but then bounced up the price can not be brought to bounce high in front of the main trend is down, this is called bear market. Usually (at least theoretically, as the object of discussion) the main trend is long-term investment trends in the only consideration of three objectives, its approach is in a bull market as early as possible to buy the stock, as long as he can determine the bull market has begun to launch and has been held to determine the bear market has been formed. For all major trend throughout the fall and short-term changes in the secondary, they will not go unanswered. Of course, for those who make frequent transactions, the secondary change is a very important opportunity.
(1) bull market, also known as the major upward trend. It can be divided into three phases, the first stage is the purchase period. At this stage, some far-sighted investors are aware that while the present is in a downturn, but it would soon change. Therefore, those who do not have confidence to buy, regardless of original capital stock sell-off, and then, when the sale to reduce gradually the number increased buying prices. In fact, the market environment at this time is usually pessimistic. The people hated the stock market in general so completely from the stock market. At this point, the number of transactions is modest. However, when the short-term changes in the bounce began to increase. The second stage is a very stable rise and increased trading volume, this time rising trend of business sentiment and corporate earnings increases have attracted the public's attention. At this stage, to use technical analysis of the transactions are typically able to obtain the maximum profit. Finally, the third phase appeared. At this point, the whole transaction of boiling over. People gathered at the Stock Exchange, trading results often appear in the newspaper, "the first edition of" rapid replenishment in progress, at this stage, my friends often talk about is "You see, what to buy better?" People forget that the market economy has been going on for a long time, the stock has risen for a long time, and is now achieving more appropriate to say "It's a good opportunity to sell," the time has come. At this stage, the last part of the atmosphere along with the upsurge of speculative trading volume continued to rise. "Unpopular stock" transactions were frequent, there is no investment value of the cap, lower the price to rise rapidly. However, there are a growing number of good stocks, investors refused to follow up.
