Wednesday, December 1, 2021

37. Why the stock market is sometimes irrational



Fundamental analysis says its a "BUY", this is supported by strong buying signals from your technical charts!

but when the market opens, the price drops! why is this so?

like any market where there are buyers and sellers, the actual number of buyers buying and sellers selling at any specific time will determine the actual price, no matter what prior analysis shows

so if there are a lot more sellers, the price will drop no matter how strong the fundamentals is, and if there are more buyers, the price will go up even if the company is losing money maybe because it had good prospects or an excellent PR team (he he)

Checking the trading volume (available in the PSE website) and maybe net foreign position on the stock may give some indication

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