Main Channel of Evolution

The prices of the stocks rarely express their real intrinsic value and generally limit themselves to reflecting the relation between the supply and demand. It does not matter where the supply and demand comes from, when it is vigorous; the prices go up and down. For example, let us suppose that the price of a stock has reached its estimated value beforehand as being expensive to the public. From that very moment, that price does not have the same attractive power over the speculators. There will only be a few naïve ones interested in buying it and those that have the stocks in their power will try to get rid of them now that it has reached the hoped for maximum price to make sure its margins are beneficial. With the increase of the supply, as is natural, the low comes around. When the price has gone down to a level that is unanimous for the public as a bargain, its descent will stop because nobody will be wiling to sell their shares as such a nasty price. In this situation, the analysts will get to the conclusion that it is actually cheap and is a good moment to reinvest. When a buying power starts to accumulate market stocks, a restriction of the supply comes about and the price starts to increase. In face of the initial price the buying euphoria of the public begins, increasing its demand, which will make it deploy to its maximum price level, in other words its stage of maturity. The phenomenon that has been described is much stronger than the logic of the fundamental facts, showing that the purchases and sells are not only done by impulses of fundamental reflections. As a consequence, the market rates oscillate under the pressure of the supply and demand, defining a wide channel of advance to the rise or low, clearly established.

Defining the main channel of stock market evolution
In order to define the main channel of stock market evolution, the movement of the data of price of a certain period of time of at least one year will be required. If the main channel is descending, to define its path, its maximum priced will need to be placed together in a straight line and another one will be drawn parallel to it which will consist of the minimum prices. If the main channel is ascending, to define its path, the minimum priced will be placed together in a straight line, and another parallel to it which will consist of the maximum prices.