Research (Investicniweb.cz)
World markets  |  August 22, 2012 08:19:56

What contributes most to growth stocks and why does not earn a lot of retail investors



There are various opinions on what's caused that stock markets are rising, despite various bad news, which emerged in recent months. Trading volumes are below average since the beginning of the year, which is more evident in recent weeks, when the divergence between the price (increasing) and volume (decreasing) apparent. What's going on? Cease to apply the laws of logic, when the low demand for shares should lead to lower prices? / SOURCE: FINECHARTS.CZ /

Indeed, it seems that the partially changing phase patterns. In classical technical analysis books, such as from John Murphy, you will read that falling trading volume accompanying the rise in prices is an unhealthy phenomenon, and that has to stop the fall in prices.So what keeps prices so high? Virtually all U.S. indexes are at their four-year highs.

I think that in it also reflects the failure of the European Central Bank's intention to galvanize the European economy. The money lent by the ECB to European banks or that bought troubled bonds, instead of ending in the European economy in the U.S. stock and bond markets.

Here are some other factors that I consider essential.

Price evolution of U.S. government bond

In late July, the prices of U.S. bonds at maximum. Bond yields started to rise. Obviously, central banks managed to raise inflation expectations among investors. The decline in bond prices implies a need for forced liquidation of long positions and moving the capital elsewhere, apparently just in equities and commodities.The chart shows the price of the stock futures, ES (S & P 500). It can be seen that whenever the price of the bonds in the past began to fall more, it meant a boost for their shares and price growth. The current sale of bonds shows that the decline in bond prices is likely to be more serious. It should continue to favor stocks.

U.S. stocks and U.S. bonds

Price developments in the Japanese yen (futures contract)

The relationship between the price of the Japanese yen and stock indexes is inverse. When growing price yen, mostly falling share prices. This is due to the fact that the declining price of the yen, banks can borrow cheap money in Japan, without running the risk of exchange rate losses. These can then borrowed money to invest in risky assets - equities, bonds or commodities.

Rising price of the yen is therefore detrimental to the markets. Japan's central bank does most everything that the yen relative to other currencies knocked down. I think she's doing now. Just falling down, which is favorable for the stock market. This trend may continue. Blue is reflected in the graph again price of the S & P 500

U.S. stocks and the yen

As the U.S. dollar affects shares and mutual fund investment? Learn more   HERE:

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