I’m looking for the Dow Theory when I came across this article in Investopedia. It’s authored by Cory Mitchell, an independent trader specializing in short- to medium-term technical strategies. He states that learning how these major factors shape trends over the long term can provide insight into why a trend is developing, why the trend is there, and how likely the future trend will be. It’s very interesting to find the big picture as he explains it very well.
Here are the four major factors:
- Government. Fiscal and monetary policy put deep influence on market and they are surely long term.
- International transaction. Flow of transaction between countries shows the flow of funds and goods/services, and thus the currency. This reflects economy’s health.
- Speculation and transaction. As integral parts of the financial system, these two create sentiment in the market.
- Supply and demand. Either in products, currencies, or other investments, they create dynamic in prices.
Read here.