The stock market chart
If anybody asks me which is the most important tool for making an investment in the stock market, I would say it is the Stock Market Chart. The stock market charts provides the movements of a particular stock, or stock market, which helps a person in ascertaining the moves of the stock market and using it for making profits. A term that is related the stock market chart is Stock Market Chart History.
The stock market chart history
The stock market chart history depicts overall pattern of the stock market over the years. As a typical stock market chart provides, the stock market chart history also apprise a person about the highest and the lowest levels achieved by the stock market over a period of time, the resistance points of stock market etc. To a reader, this information might seem general, but it is very useful. There are many active traders of the stock market that makes trade relating to different types of stocks within definite levels of stock market and once that level is attained, they reverse their positions. Let us try to understand the above by means of example. Suppose any country A has the principal stock exchange B. By looking at the stock market chart history, it is deciphered that the stock market has achieved the higher levels of 500 and lower levels of 200.
Suppose at any time, the exchange is trading at a level of 320 and suddenly, over the period of 3-4 days, the stock market has come down to levels of 210-215. Now, this is the buying time for any trader and if he buys some stocks at these levels, there is much chance of his making good profits in near future. Also, the trader can easily think that, though it would take time for the stock market to go up, it would steadily rise to the levels of 500 and might surpass it. That upper level would definitely be the selling or profit booking level of any person, as it is the upper resistance level of the stock market. Thus, stock market chart history helps a person in many ways in ascertaining the stock market moves and in making right types of moves regarding selling and buying of different types of stocks. The above given fact was an imaginary one and now, let us try to understand more about the stock market chart history by taking as examples the stock markets of U.S in 1920s and 1930s.
Stock market chart history of united states
Any person who is quite interested in the stock market must know what happened in United States stock markets between the years 1920 and 1930. This era raised many people, who were finding it very difficult to make both ends meet, to the levels of billionaires and again made them what they originally were. Yes, we are talking about the extraordinary boom of the stock markets in United States in 1920\'s and era of great depression that started in the year 1930. The principle stock market of U.S, Dow Jones, was raised to a level of 375 by bulls from levels of 100 in few years only and then, on 24th October 1929, the stock market collapsed and eventually after some time, it was again trading on the levels of 100 or even lower than that. It took almost 25 years for the Dow Jones to achieve that level again. Before we discuss the chart history of U.S stock market, it is very important for the reader to understand that the chart history of stock market is repeated after many years, when it again falls. In fact, in some cases, as we would come to know, it happens after gap of fixed number of years.
The chart history of Dow Jones can be started from the year when the stock market activities started to gain momentum. This year was 1920 and at that time, it was trading at the levels of 100. The level remained the same up to 1925, but there were some fluctuations. That is, in that particular period the stock market or Dow Jones rose and fell below this level many times, but the trading level seemed to be hanging around 100. From the mid of 1929, the Dow Jones started climbing new heights, market by the era of bulls that were putting billions of dollars in the purchase of different types of stocks traded at the stock exchange. In the year 1928, the Dow Jones achieved the level of 200. Thus, Dow Jones recorded a 100% improvement over its past level in just 4 years. This means, the money invested was not only doubled but was made 7 or 8 times in some of stocks. As the chart history shows, there was no stopping at this point and the Dow Jones continued its rally. In the beginning of year 1929, it achieved the levels of 300 and made some up and down moves in the same year in first and second quarter. The third quarter showed abrupt rise and the stock market achieved the levels of 375 in October. But on Black Thursday, the stock market fell sharply and this downfall continued in the years to come, which also gave rise to great depression of U.S. The stock market continued to slip down and ultimately, between the year 1932 and 1933, it touched the level of 50, which was lower than the rising point in 1920s.
The correlation
Earlier we talked about the correlation of the stock market chart histories. Correlation of stock markets actually means that a chart history of a stock market can be compared with another. This allows the traders to make anticipated moves and they can balance or square their positions easily. We have already discussed the chart history of Dow Jones. If we compare chart history of Dow Jones for the era mentioned above with the chart history of NASDAQ, another stock exchange in U.S, from year 1990 to 2003, we would come to know that a similar pattern could really be established. Even the returns of both the markets can be compared. The NASDAQ also rallied from years 1995 to 2000, when it was appreciated by about 400% as the Dow Jones did and then, between the years 2000 and 2002, it fell sharply, losing 78% of the appreciation.
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