The #1 Reason Stocks Move → Sentiment.
Stocks move for a reason. It all depends on supply and demand. If there’s more supply than demand, then the stock price will fall. Conversely, if there’s more demand than supply, then the stock price will rise. But what causes the amount of supply and demand? I’d argue that supply and demand is caused entirely by sentiment.
Investopedia Defines Sentiment as the overall attitude of investors toward a particular security or financial market. It’s the feeling or tone of the market, as revealed by the activity and price movement. What we should be taking away from this definition is that attitude determines value. Optimism causes demand and pessimism causes supply. Short-term traders often utilize technical analysis, more specifically – Candlestick Charts, in order to break down sentiment. Catalysts can cause changes in sentiment as well (events, press releases, news, deals, etc.). In the end, all stocks move based on the underlying sentiment of the market, sector, and the particular security in question.
Related Page: What is Top Stock Picks? Learn the Secrets to Swing Trading
Leave a Reply