A recent study shows the news have little or no effect on the stock market trends

A study by Alexander Nikolov from TrendRecognition.com shows that the stock market news have little or no effect on the price trends.

Lulin district 238, Sofia 1336, Bulgaria (prHWY.com) September 20, 2012 - Contrary to what most people believe, the uptrend rarely changes on bad news and a downtrend rarely reverses on good news. Usually the tops are found on plenty of good news and bottoms are formed on panic, i.e. on some extreme bad news. In a published study, Alexander Nikolov shows how the bad news can be used as technical signal in a rising market and good news as signal in a declining market.

He used a recent example of Apple stock to show the usefulness of the technical analysis. In the first instance (April 2012), the stock was in a small downtrend when a positive earnings surprise came out. The stock gapped up but only for one day. Then it resumed its previous decline and soon new lows were made! Then in July 2012 the company released a negative earnings surprise. By that time the stock was in a small uptrend. And guess what happened? - the stock gapped down but only for one day! Then it resumed its advance and made new all-time highs in less than a month.

These examples are typical for the Stock Market and are good illustration of what usually happens when the market is at or near a top and some bad news comes at the marketplace. If the news is really bad, it sparks a sharp but usually short-lived panic decline that simply brings the next buying opportunity for position traders. And when the market is in downtrend, some positive news may have little or no effect. Usually the market gaps up for a day or two and then the prevailing trend resumes. And this is exactly the opposite of what most people believe and that is the reason why most of the people lose most of the time. Using technical analysis can be really helpful when spotting trading opportunities on stock market.

About Company:


Trend Recognition (http://www.trendrecognition.com/) is a Bulgarian based market forecasting firm. Its goal is to provide valuable analysis to investors and traders that can help them in their decisions. The firm also supports its readers with knowledge how to be successful on the financial markets.

The full article of this study can be found at:
http://www.trendrecognition.com/education/articles/199-using-technical-analysis-to-spot-trading-opportunities-in-stock-and-forex-markets

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Tag Words: forex, stock market, technical analysis

Categories: Business

Press Release Contact
Company's name: Trend Recognition Ltd
Person's name: Alexander Nikolov
Email id: info@trendrecognition.com
Address: Lulin district 238, Sofia 1336
Bulgaria

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