Question

Yesterday, the Dow Jones industrials gained 54 points. However, 1,704 issues declined in price while 1,367 advanced. Why might a technical analyst be concerned even though the market index rose on this day?

Solution

Verified
Answered 2 years ago
Answered 2 years ago

When a technical analyst sees the Dow Jones gaining 54 points but a bigger number of are stocks declined than advanced on the day, the technical analyst will be concerned because this doesn't mean the market has broad base support. We have to take into account the breadth of the market when looking at why indexes are moving. When only a small number of stocks are propping up the overall market this is a cause for concern if you are a technical analyst. You want the majority of stocks to mirror the index at the closing bell because this insinuates that the market is in sync.

Create an account to view solutions

By signing up, you accept Quizlet's Terms of Service and Privacy Policy
Continue with GoogleContinue with Facebook

Create an account to view solutions

By signing up, you accept Quizlet's Terms of Service and Privacy Policy
Continue with GoogleContinue with Facebook

Recommended textbook solutions

Essentials of Investments 10th Edition by Alan J. Marcus, Alex Kane, Zvi Bodie

Essentials of Investments

10th EditionISBN: 9780077835422Alan J. Marcus, Alex Kane, Zvi Bodie
887 solutions
Principles of Macroeconomics 6th Edition by N. Gregory Mankiw

Principles of Macroeconomics

6th EditionISBN: 9780538453066 (1 more)N. Gregory Mankiw
436 solutions
Principles of Economics 8th Edition by N. Gregory Mankiw

Principles of Economics

8th EditionISBN: 9781305585126 (2 more)N. Gregory Mankiw
1,337 solutions
Cambridge IGCSE Business Studies 4th Edition by Karen Borrington, Peter Stimpson

Cambridge IGCSE Business Studies

4th EditionISBN: 9781444176582Karen Borrington, Peter Stimpson
467 solutions

More related questions

1/2

1/3