Corporate Fin Mgt NDLM.PDF

• The secondary reactions


• The minor trends

Analysis is limited to the primary trend and the secondary reactions.

Following are the 3 moves of the primary trend.

• The trend caused by accumulation of shares by the knowledgeable
  investors.


• Second trend caused by the reports of good earnings by corporations.


• Third trend caused by the reports of financial well-being of corporations

How speculation works?

If there is a lack of sustainability of the earnings level, one may sell shares. Once this
starts, the confirmation of unsustainability will be stronger, and other will join the stream
of selling.

Finally there may be a situation of distress selling. For all this movement, either upward
or downward, the average will be the base. If the averages on the bullish trend are
stronger, there may be a up-trend. If on the other hand, the averages on the bearish side
are stronger, there may be a down-trend. The beginning signal followed by confirmation
will decide the direction of trend.

Indicators :

It is very difficult to guess the behavior of the market in the long run. To some extent
one can expect what may happen in the short-run or in the near future based on the
volume of transactions read with the price.

A. The first possibility is rising price with rising transactions

B. Falling prices with rising transactions.

C. Rising price with falling transactions.

D. Falling prices and entry of new securities

The price of the securities may always move between the support level and the

resistance level. The highest value and the lowest value will be resistance and

support level.