Stock Market Cycle Development

The market is an opponent of care that will use all the subtleness it can in order to confuse us, but at the end it will not be able to avoid leaving at sight its marks on the price, revealing in this way its intentions. It will try to confuse us in the development of its cycles, extending the changes of tendencies at the end of the period, bringing about strange oscillations; but finally it will not be able to elude past each one of the stages of its inexorable cycle which consists of its birth, development, maturing, expiration and falling stages. The development of the cycles follow the following dynamic: let’s suppose that the stock exchange market is depressed and the market rates have gone down very low, after a previous booming period. The cause could have come about because of an overheating in the economy and the economic authority would have determined to control the unmeasured growth through rising of the prices as an anti inflationary measure, given that, behind excessive growth there is always hidden inflation around. There is not much money left available in the system to buy stocks and amongst the investor’s pessimism rules as far as the development of the country and the activities of the companies. The shares, due to their fall, have now been placed at a sale price by the clever group. In this situation, if negative news were to be announced and the price of the stock did not go down, it would mean that practically all the stock is in clever hands. Then the market could go into lethargy at that level for a determined amount of time, excluding little unimportant movements caused by news of dividends that were already foreseen and would not have any major influence on the situation.