You're camping deep in the woods. No phone reception and no data. Yet, you still want to know what the weather will be like today. So you dip into your scout training and look for some weather indicators...things like temperature, dew point, barometric pressure, stampeding deer, etc.
Market indicators work the same way. They allow you to test how the market is performing. Each one provides a part of the picture...taken together, you can often figure out what's on the horizon.
Market indicators include things like the advance-decline line, a measure of how many stocks are moving up versus how many are moving down. Or moving averages. These flatten out day-to-day volatility in a stock's (or index's) performance and shows the longer-term, more stable trend line.
Related or Semi-related Video
Finance: What is a Country Basket (Index...30 Views
Finance, a la shmoop. What is a country basket index fund?
All right we're picking daisies, marigolds, lilies so uh how do we [Pictures of flowers]
rephrase in Italian? Like, we want to fill a portfolio basket with just stocks [Pouring a glass of red wine]
representing the overall financial health of Italy. Is Italy healthy? While
they smoke a lot they drink a lot of wine they eat a bunch of pasta but there
always seems to be a woman from some small village who's celebrating her [Old woman at a birthday party]
117th birthday over there. Well a country basket is just an index fund of
stocks representing a country. Like we're doing Korea... South we're gonna have
in that basket dunno some Samsung, a load of Daewoo, a hunk of Hyundai and some [Company stocks being added to the basket]
nice barbecue on the side. That'd be our Korean country basket and it's a good
basket to fill if you're just bullish on a country but not really sure which
flower on which to place your bets. It's like instead of trying to decide between [The stocks in the basket turn into flowers]
roulette or poker or slots... Well you just buy stock in Las Vegas
Sands you know you bet on the entire casino, and bueno Fortuna you know good [Someone checking their cards in a casino]
luck there pal, doesn't the house always win? Yeah so why do people keep going there?...
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