Market Technique – 14M
IMPORTANT POINTS
I. Supply and Demand is the basic economic law governing price fluctuations –
a. When demand is greater than supply, prices rise.
b. When supply exceeds demand, prices decline.
c. When supply and demand are balanced, prices remain steady.
2. Technical Position –
a. Weak technical position on the bull side is when the buying power is exhausted.
b. Strong technical position arises when liquidation is completed.
3. Oversold and Overbought Positions –
a. Oversold Condition is caused by failure of normal corrective rallies or too rapid an acceleration on a decline.
b. Overbought Condition is caused by too rapid an advance or the failure to have intervening corrective reactions on an advance .
4. Rallies and Reactions –
a. A reaction smaller than one-half is an indication of strength.
b. A reaction greater than one-half is an indication of weakness.
c. A rally greater than one-half is an indication of strength.
d. A rally less than one-half is an indication of weakness.
5. A springboard condition arises on the bull side when the Composite Man has completed his accumulation and the mark-up is to follow; a springboard condition on the bear side occurs at the completion of distribution.
6. Volume relationships: an unusual increase in volume generally indicates the end or approaching culmination of a move. Dull periods (low volumes) generally indicate lack of interest except perhaps at the top of an advance.
7. Sponsorship and Price vs. Quantity: these factors should be considered in your market operations.