From an outsider’s perspective, predicting the stock market ecosystem can seem vastly perplexing. The constant fluctuations of the graphs, the real-time changes in numerical values, and the various intricate formulas attached to these movements can be dizzying, to say the least. And we’ve yet to mention the real-world factors that may influence these stock movements.
While the whole system may seem confusing at first, there are ways you can make following the stock market an easier task. While there’s no guarantee for anyone to predict a stock’s movements with 100% certainty, there are ways you can bridge the knowledge gap by using data-driven insights and market psychology.
If you’re looking to cultivate a more adept and well-informed mind to follow stock market trends, you’re in the right place. Read on for some useful tips on capitalizing on stock market trends.
Keep Your Eye on Chart Movements
The first thing that pops to mind for most people when they think of following stock market trends is the chart.
A stock market chart is a visual representation of how well a stock (or fund) is performing over a period of time. Each public stock has a corresponding chart associated with it, and the patterns in the chart can differ based on the performance of the stock.
For instance, a stock likely faces its fair share of uptrends, downtrends, and price consolidations over some time. The chart may also differ visually depending on the time period that you set for the specific graph.
This chart is incredibly useful as it sets the framework for technical indicators. These indicators use information derived from the graph to make predictions on future graph movements.
These quantifiable pieces of information can be used to strategize the best time to enter and exit, among other deciding factors.
Financial News Websites
Another tool you can use to follow stock trends may not immediately come to mind—but it can be just as important in influencing your stock market decisions. And that is news websites.
News websites can give current information about how certain industries, sectors, and businesses are performing on a local and global scale.
While most mainstream news coverage doesn’t specifically focus on business news, some financial programs like MarketWatch offer deeper insights into how well certain stocks and industries are faring as of late.
In addition to providing current news, these news websites may also feature expert analyses highlighting potential investment opportunities for investors to consider.
While you don’t have to mirror these investments to a T, they can provide you with a deeper insight into what stocks or indices are predicted to perform well over a period.
This can strengthen your investment knowledge and lead you down the rabbit hole of further research, which can ultimately up your chances of scoring sustainable growth in the stock market.
Yearly Economic Indicators
The market isn’t an isolated entity; it’s deeply intertwined and influenced by broader economic factors, such as a country’s GDP per capita.
As such, if you want to predict how a stock (or industry) is faring, it’s often a good idea to look into the economic indicators surrounding it.
For instance, rising GDP growth and declining inflation rates can be a sign of a strong market. It signals a robust economy, which can mean more market activity due to increased investment activities.
Conversely, if inflation is high and economic challenges are persistent for months, this can cause people to hold onto their cash and refrain from investing in the meantime.
Regardless if they’re rising or falling, economic indicators show the health and trajectory of the present economy. This, in turn, can give you a contextual understanding of why stock market movements are moving as they are right now.
Look into Geopolitical Events
Current geopolitical events can trigger massive shifts to the stock market equilibrium.
For instance, international conflicts and political upheavals can influence investor sentiment and a person’s financial status quite considerably, causing a rapid pull-out of funds from the market.
One example of this in action is the reduced market cap of many Russian companies because of the ongoing Russo-Ukrainian war. Many overseas investors are pulling their funds out in fear of their portfolio’s value declining rapidly.
Not only are public companies based in Russia suffering from their war-torn nation, but the country’s own currency, the Ruble, is feeling the impact too. This, in turn, has branded the country as a big red flag in terms of future investment opportunities, at least for the time being.
While it’s unlikely for other first-world countries to face a dramatic geopolitical force (and consequently affecting their local public companies), it’s best to stay abreast of new developments so that you can take corrective action as soon as you can.
Check Your Portfolio Regularly
In many cases, if a particular industry is doing well (say the oil & gas industry), then notable players in that industry, such as Karoon Energy are likely to ride that rising tide too.
The opposite is also true; just take a look at the amount of tech layoffs over 2023 and see how it tends to coincide with decreasing stock value.
As such, if you follow sound investment practices and diversify your portfolio, take some time to review them regularly. Not only will you know your current stock portfolio’s value, but you’ll also get a glimpse of how certain industries are performing through your chosen investment.
Besides that, reviewing your portfolio regularly can also help you recognize whether your investments are performing according to your goals and risk tolerance.
If they’re underperforming, you should consider doing shifts in your investment strategy. This way, you can reach your financial objectives readily.
Set up Market Alerts
If you can’t be bothered to constantly open your stock tracking software or application, then you can have it sent to you via email or through the notification bar on your phone through market alerts.
Market alerts are a good way to get real-time updates on stock price movements and critical market shifts. They’re fully customizable—meaning you can get real-time information on stocks you’ve specifically chosen to track.
Given how fast-paced the stock investment ecosystem is, market alerts provide you with specific information to help you focus on your target stocks without getting sidetracked by a barrage of irrelevant data points.
Check on Market Sentiments Online
The figures often precede what people talk about online, but let’s face it: you’re not going to see every comment and opinion of every stock guru out in the wild. Nor will you see what expert investors put in at all times.
However, the next best thing is to review discussion boards and social media pages. The latest posts and discussions typically indicate a demographic’s position on ongoing market movements and news.
These discussion boards offer real-time insights made by everyday investors on how they feel about a stock or the market as a whole. There are usually top comments that can strongly indicate how a stock is viewed by the broader market.
Using these qualitative points can be useful in gauging the emotional climate of a certain stock. This, in turn, can also predict potential shifts in stock prices.
That said, it’s important to use these qualitative factors alongside quantitative analysis. It’s common for people to hype up a stock temporarily only for market sentiment to come to a grinding halt later on.