| The Whitney Theater (Hamden, CT) marquee | | | | No support means the market index has potential |
| advertised movies for children ("Gidget"..."The High | | | | to keep falling until it finds a support line/base or |
| and the Mighty"). Every kids matinee, the | | | | bottom. Markets stall when reaching a high price |
| manager would pick a ticket out of a large | | | | on average daily stock trading volume. Bulls |
| popcorn box. He would give the winner candy, | | | | (buyers) will strain to push the markets upward, |
| free soda and popcorn, or a toy connected to | | | | but Bears (sellers) thwart the momentum. An |
| the movie. | | | | excessive number of sellers (many more than the |
| One afternoon he read the numbers on my ticket | | | | average) can force an index/stock to new lows. |
| stub. The prize was an air-pumped rocket. My | | | | "Make it go higher!" My toy rocket did not reach |
| friend Elly and I went to an open field, pumped it | | | | heights too fast. Elly and I were ten or eleven |
| as hard as we could, and let it go. It went straight | | | | years old; we wanted that rocket to disappear in |
| up, stalled, lost momentum, nose-dived and hit the | | | | the clouds. Many investors act the same way; |
| sidewalk. | | | | they want the markets to go up and up because |
| Stock Markets soar and crash too. Stock Market | | | | it means more money. When markets hit |
| traders sometimes become kids with a toy. | | | | successive days of positive returns, investors get |
| Every day the market pumps itself up. Indices | | | | starry-eyed. We like it when Neil Cavuto (among |
| spiral upward making many giddy with kiddish | | | | others) reports new highs for the Dow (read " |
| delight; nobody wants this rocket to fall from its | | | | The Dow Jones Industrial Average: Failing the |
| lofty heights. With little notice, the market stalls, | | | | Average Investor [ by Steven Selengut). |
| momentum is lost, and markets crash. | | | | Dizzying heights cause most investors to miss |
| Simple laws of gravity inform us that upward | | | | subtle market moves. Stocks/indices must move |
| moves of any force require energy and | | | | higher on strong buying volume. When markets |
| momentum. The stock market is ruled by the | | | | reach a bench-marked high level, getting past it |
| same laws. Markets cannot, will not, and have not | | | | will take three times the average number of daily |
| moved in one direction without correcting. This | | | | buyers.If the price stalls at the bench-marked high |
| means that bull markets are not forever, and | | | | and the buying volume is less than the daily |
| bear markets are bearable. | | | | average, index prices decline. |
| "What happened?" My toy rocket did not give me | | | | "Don't worry." Elly never worried; I always |
| any warning when falling to reality. Stock markets | | | | worried. When that rocket went off, I feared it |
| project warning signs when upward momentum | | | | would break a window or hurt someone. Elly said, |
| stalls. You never want markets to go up forever. | | | | "Just pump it Ray and let it go!" Some stock |
| It is best when markets move up, pause, | | | | investors never worry. Wise Wall Streeters know |
| contract, and build a base before making their | | | | that "The market needs to climb a wall of worry." |
| next move. | | | | War, high oil prices, poor consumer sentiment, and |
| A base-line provides support for a market index | | | | Federal Reserve rate increases are walls of |
| like the Dow or the S&P. Long support lines | | | | worry. Euphoric investors topple markets. |
| give investors solace because it takes a lot of | | | | Something to Fear The Vix Index is the "fear |
| sellers to break through it. A support line or base | | | | index" When the Vix spikes, worry increases; |
| (see image) is a trading pattern of stock buying | | | | when the Vix is down, optimism is excessive. |
| and selling with little price change. | | | | Today, May 22, 2006), the Vix spiked. |