What is the stock cycle?
The
hunch cycle concerns the behavior of shares prices when an institutional investor buys and sells a large number of shares. An institutional investor is a financial institution such as a mutual fund or a bank that has financial resources to use a large amount of capital. The stock cycle is usually divided into four phases: accumulation, marking, distribution and marketing phases. Individual investors often look for signs of these phases to maximize their own investment gains.
The first phase in the storage cycle is the storage phase. Accumulation concerns a period in which an institutional investor slowly buys shares. If these institutional investors ask all their required shares at the same time, the stock price would be increased and thwarted their profits. The behavior of the stock during the storage phase is characterized by fluctuations between the amount of base and the ceiling, without long -term profits or losses. Although it is not an idea time for individuals to invested, recognition of the symptoms of this phase can help investorsspeculate on future price movements of shares.
The second phase in the storage cycle is the marking phase. During the institutional investor, the institutional investor will stop buying new shares for shares. The stock price then begins to rise. Individual investors often try to define trends during this period to lead their own investment decisions with shares. As long as the price stays above the trend projections, they will continue to ride the trend.
After an important period of marking comes the distribution phase. The distribution phase is similar to the storage phase, except for the fact that they are sold instead of purchased shares. As during accumulation, the institution is trying to maintain a stable stock price while it deals with shares. Sometimes it is difficult to distinguish the betting of accumulation and distribution, but some signals indicate distribution. The peaks of prices that are permanently under trend predictions can pretend to the arrival of the next phase.
The last phase in the warehouse cycle is the phase of Mark. During marketing, shares prices show a stable decline. At this point, the institutional investor has sold its shares and the shares can return to a similar level of accumulation phase. Individual investors usually want to sell their shares until the marketing phase began. Markarization phase is characterized by peaks that are permanently lower than previous peaks.