How Stock Market Trends Work

Trading floor of New York Stock Exchange

You've seen movies in which frantic stock trader are buying a thousand shares of a hot stock or dumping shares of a plummeting stock. You've seen commercials for brokerage firms that claim to have exciting prospects and strong portfolios. And you've probably heard a hundred different ways to predict the rise and fall of the stock market.

How do these traders and firms predict which shares will hit big? How do they know when to sell?

The truth is there is no magical way to predict the stock market. Many issues affect rises and falls in share prices, whether gradual changes or sharp spikes. The best way to understand how the market fluctuates is to study trends.

In this article we will discuss stock market trends, which help investors identify what stocks to buy and when. Keeping track of upswings and downswings over the history of individual stocks, as well as being aware of market-wide trends, helps investors plan buying and selling.

Many factors affect prices in the stock market, including inflation, interest rates, energy prices, oil prices and international issues, such as war, crime, fraud and political unrest.

Go to the next page to learn about the whims of the stock market. You'll also find out what market analysts mean when they talk about bull markets and bear markets. Which animal is fiercer?