Category: Money tips Release Date: 2007-01-20
L bull market on behalf of the city or city on behalf of a bear market, I believe that people who have never set foot in the stock market will be slightly heard.
With Dow Theory (DowTheory) to analyze the main trends in the stock market, when it is "bull" when it is "Bear", to understand the present in a large city, at what stage will be more favorable for investment.
Dow Theory includes the following three major principles: 1) The prices reflect all market behavior; 2) prices followed a particular trend change, rather than completely random; 3) a repeat of history
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Dow said the trend of change can be divided into three kinds, namely, the main trends, secondary trends and small-scale trends, which three kinds of movements simultaneously co-exist. For example, Hong Kong stocks from early 1995 until August 1997 As a major Shenglang is the main trend. Main trends generally consists of 1 to 2 years, the Dow compared to flow patterns among the "loop" (Cycle); in this Shenglang the adjustments (ie Shenglang the opposite direction), it is called secondary movements, usually to maintain ranging from 3 weeks to several months, and adjust the main trend of 1 / 3 to 2 / 3 increases (or decreases), he described as waves (Waves); during the daily rise and fall is referred to as mini-trend, namely, ripple (Ripples).
To determine a "bullish" or "bear market", it depends on the main trends in stock prices go up or down, each of the major trends can be divided into three stages to a bull market for the illustrative example below.
The first phase of the bull market: Suspected period of long-term economic hardship, people are pessimistic about the stock market despair, not hesitate to blindly sell, but some far-sighted investors began to look forward to an economic upturn in the low to absorb shares, prices began to rise moderately, but the volume is weak.
Second phase of the bull market: the market optimistic about the period of assessment of the economy to gradually turn for the better, the company's profits also see the improvement in investor confidence in the future began to recover, with the stock price began to rise in volume, but will appear from time to time on and off the city, the stock market often rise after a period of time, there will be a period of consolidation.
The third phase of the bull market: fanatical view the economy has fully recovered, the stock market in a variety of good news stimulated a thriving, even if the favorable short message appears, it can easily be digested, speculative mean thick case, the amount of borrowing transactions is also will increase the volume of transactions also greatly increased. This sale and purchase of hot atmosphere will eventually push up stock prices to a level beyond high corporate profits.
Dow Theory secret investors to make good use of the Dow Theory, 3 points to note:
1) The trend with the Dow with the volume that the volume is a secondary auxiliary indicators for trends to determine when the volume depends on whether the tie. If the bull market, rising prices, should be compatible with volume increases, prices should be accompanied by a drop in volume down.
2) anticipating the Dow to be a clear idea of the three stages of the theory appears to be simple, but very often able to confirm the broad market trend, the stock market has been up or down a lot. In addition, since the completion of the whole trend require a lengthy, and some investors lost in transit. Such as the bull or bear market has lost the ability to analyze the theoretical benefits will be weakened.
3) The third phase to be vigilant when investors miss the first phase to the second phase of the upward trend, the consequences could be I lose a little profit, but missed the opportunity to ship the third phase of the bull market, to the big city into the first phase of bear the consequences will be very serious, because the third phase of the bull market, the stock market plunge usually appears. In fact, the turning point of each period is not very clear as to Hong Kong equities bull market began a year ago as an example, I visited a few name of the stock market experts, all expressed the Hong Kong equities bull market has entered the second phase, but when the second phase divergent views. For this reason, investors should be vigilant in the third stage. (Huang Junlan reproduces abridged)
Edited in the gold-line
