Check out the quote below from one of the world’s most popular market pundits…
“Many people get confused. They think we are trading the actual companies themselves, that the pieces of paper we are trading, investing, owning, are some sort of redemptive right – a coupon that will give you certain cents off, or an ownership right that will allow you to have a chunk of the brick and mortar if not the cash in the treasury of the joint. Untrue. These are, in the end, simply pieces of paper to be bought, sold, or manipulated up and down by those with more capital than others. The fundamentals of the company play only a part in what moves the stock up or down.”
— Jim Cramer
This brings up a very important question…
What moves stocks?
It is a simple question.
But few investors take the time to really think about it.
Most think it is good news like a positive earnings report.
Well, sometimes that’s true.
But not always.
For instance, Tesla (TSLA) grew sales last quarter by 218%.
But guess what?
The stock went down on the news.
The indexes are even more confounding…
In March 2020, the unemployment numbers were through the roof as the COVID crisis hit the economy hard.
Yet, the Dow had its best week in almost a century.
Try to figure that one out!
What Really Moves the Market
You see, despite what most people think, stock prices do not rise and fall based on underlying fundamentals.
Good news can help.
But it doesn’t dictate prices.
Nor does a low price-earnings (PE) ratio or a high growth rate.
Fundamentals don’t move stock prices.
People do… By placing buy orders.
You see, the stock market is an auction.
It is no different than eBay.
And like any auction, it operates on the principle of supply and demand.
Don’t Try to Predict the Future
Only the perception of value can influence people to buy.
This is what creates demand.
All things being equal, higher demand means higher prices.
And that’s what you want to see.
No one can accurately predict where a stock price will be in the future.
It is foolish to try.
Gann Fans and Fibonacci Spirals are just pretty pictures on a chart.
They mean nothing.
An easier and more feasible goal is to predict where demand is increasing…
And identify the stocks institutions are beginning to buy.
This will lead you to names experiencing a surge in demand.
And these are the stocks that are likely to move higher.
Embrace the surge,
Ross Givens
Editor, Stock Surge Daily
The post This is What Actually Moves the Stock Market appeared first on Stock Surge Daily.
