The Stock Market
The stock market is said to “fluctuate” because prices respond to cycles, or rather investor moods are influenced by cycles of different magnitude which results in price shifts of different amplitudes and duration. Because they are fairly constant, individual cycles may be identified primarily by the time span between their low points. This is an over-simplification because cycles of various lengths are constantly interacting. Nevertheless, cycle lows normally cause price accumulation (buying) patterns, and cycle tops create distribution (selling) patterns. These show up best on Point & Figure charts and can be used to determine the extent of the next rally or decline. Cycle tops and bottoms can also be identified with various technical
tools such as trend lines, oscillators, etc. While these are seemingly simple concepts, years of study are usually required to master them. Helpful books on these subjects can be obtained from Traders Press, Inc.