Market Indicators

Happy Learning!!

Clues on how the market would behave in the future can be provided by the following two main indicators. These indicators are the breath of the market which is measured by the volume of transactions during the time. The other parameter to be considered is the market index or price. When the two parameters are studied together an investors will be in a position to make a judgment about the market behavior. The investor can then be enabled to form a suitable strategy to meet his objectives.

Volume data is supplied by the country's stock exchanges. Therefore it is possible to gather information about the market index/prices and volume traded for the market as a whole and for individual securities.

• A rising index with an increasing volume would indicate a bull market and a  buy signal. This type of market situation indicates that there is demand in the market that needs to be met with and prices are expected to increase.
• A rising market index accompanied by decreasing volume indicates that it is a bull market but losing its steam. A fall in prices is therefore likely.
• A falling market index with increasing volumes is another type of market index. Under this situation the prices can be expected to fall further. This is also known as a bear market.
• A falling market index accompanied by dwindling volume indicates a bear market that is getting fatigued. This situation will lead to a fall in price.

An investor will do well to be able to use this information which is available in the stock exchange. The availability of charting software has become popular. Information about the market index and volume data is provided and the charting software is designed to make a realistic calculation about market movements.