How the Market Reacts to the News

The reaction of the market in face of the bad or good news will depend on the technical set up, in other words, if the stock is overbought or too expensive, or if it is under bought or cheap. This is actually the other way around of what one could believe. The news does not guide the market, but the market, which is overbought or oversold, will use the news to express itself, making the prices of the stocks go up or down to then adjust its price when it is in the extreme ends of the cycle. If the stocks were in the hands of the na?ve, particularly good news would not produce a big effect, but if bad news were to come out it would be stock exchange catastrophe. On the other hand, if it were the clever ones that had most of the stocks, good news would cause there to be a reaction of euphoria and the bad news would not cause any reaction. Sometimes people wonder why the stock market does not go up, despite the set back of an unfavorable moment, and why it goes down in a favorable period. The explanation lies in that, even though the tendency of the stock and tendency of the moment are, in some way, interdependent and are subject to the same laws, they do not go in the same way but rather in different phases of time. The coming events of the occurrences of life cannot be predicted nor be made shorter with rigid predictions. Life demands the most amount of freedom to express itself. In this way, the occurrences will happen freely and the market will respond with its own oscillations inside of its channel, but will always be guided by collective consciousness that will take it to the extreme positions of its cycles. The stock market behaved and develops fractal movements that are similar to those put forth in the theory of chaos. At simple view, they almost seem like chaotic movements but they respond to a pattern of oscillations that are “organized” to achieve and go through the typical stages of the cycles.

The affirmations about the effect the news has on the market have a few exceptions. As can be seen in practice, news that always brings about a cheering effect in the market is when a company makes an announcement that it will split up into various companies and the stock holders will go onto to automatically having new stocks in each one of these companies. It is a curious thing, but it works. In practice, a very interesting phenomenon that is guided by the reaction that produces in people the only fact that in almost a magical way, its stocks multiply in amount, which is seen as a type of hallucination by these multiplying stocks that end up seeing off a fever of high demand, impelling its price to very high amounts. Logic would indicate that the value of the stocks of the mother company would need to be divided initially in the stocks of the newly formed companies, and then maintain their own oscillations according to the evolution of the results of each company in an individual form. But in practice, most of the times the new stocks tend to evolve at prices that are very above their starting out price. Another one of the exceptions in the reaction of the market is the almost instantaneous response to the raising of interests, but if it does not advance, it takes on the oscillations and ineludible cycles.

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