Markets
move bidirectional (up or down). May it
be stock, indices, futures, individual stocks, currencies, etc. markets trend
to move down quicker than they rise within all time frames (fifteen minutes,
hourly, daily, etc). Yet it doesn't matter to a professional trader in which
direction the current market moves because his only intention is to extract
profit by trading in either direction. But how does the trader know which
shares hit big and what to sell?
There
is no magic or predictions that can accurately guess the rising and falling
markets. Many issues affect the rises and falls. This tendency can be best
understood by studying market fluctuation trends. Many factors affect prices
in the stock market, including inflation, interest rates, energy prices, oil
prices and international issues, such as war, crime, fraud and political
unrest. This article discusses each factor separately.
Inflation:
Inflation is the rise in prices across the board. Over a certain period
inflation is good, because consumers are spending more on products. However, if
inflation persists for long, consumers pull back and avoid spending. When a
consumer spends less investor sell their shares in the companies. As the demand for the stock decreases, the
price of the stock decreases. When this happens to many companies in the stock
market, the stock market experiences a downward shift.

Interests Rates:
Inflation is controlled by increasing interest rates. The Federal Reserve
System increases the interest rates which the banks pay on loan that they from
Federal Reserve. In return banks raise their own interests on the borrowers.
When businesses don't borrow money to develop that new widget, they tend to
grow at a slower rate. When consumers don't buy things and businesses don't
grow, companies' profits decrease, causing a stock price decrease. Quite the
opposite happens for when Federal Reserve cuts down the interest rates.
Earnings:
When a company reports lower profits, investors lose confidence in the company
and sell their stock, which decreases the value of the stock.
Energy Prices: Energy
is a daily necessity. Only major changes in energy costs have a significant
effect on the stock market.
Oil Prices:
The stock market tends to react negatively to high oil prices.
International and
Domestic Issues: War
tends to affect the stock market negatively. The same goes for crime, fraud,
and domestic or political unrest.
All these factors cause changes in the market. Market
tends to rise or fall according to these factors.