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What Moves the Market:
So let's look at the simple question... What moves the market, and how does it move?... We'll address the factors, variables, and outcomes so the investor can profit from it. Basically it is supply and demand that determines a stock's price, how many shares are being bought versus how many shares are being sold. In any given moment when there are more shares being sold than bought the price begins to drop until the order is filled. And likewise at the moment when there is more shares being bought than sold the share price naturally rises to what the price setter sets to fulfill the order. The stock may or may not be tangibly worth the price in capital. The price is set at what is thought it will sell or be bought at.

Who Moves the Market:
Who is responsible for influencing the market the most? It's certainly not the small investor, or even the day trader who optimistically tries to scrape a small profit off of small inconsistencies and errors. The group that makes the biggest influence is institutional investors, professionals who manage 401(k)s, IRAs, hedge funds, and mutual funds. In fact O'neil suggested that 70% or more of market movements in leading companies (buying and selling) can be attributed to this powerful group.⁵² Even though these money managers keep their trades secret for obvious reasons there are general patterns and rules that they try to follow and base their decisions on. We will cover some of these in the next sections.

Moving Averages:
Most institutional investors use charts and certain technical indicators in determining the timing of their trades. One of the most important of these are moving averages (MA). The four most common moving averages are the 50 day, 200 day, 25 day, and 13 day Moving Averages. moving average. The 50 day MA is found by averaging the past 50 day closing prices together and plotting the values through time. If the line through the values point mostly in the positive direction then it is thought that the market is in a bull season, when looking at approximately 6 months to a year.

The general rule of thumbs is to buy when the 25 or 50 day MA points upwards, and avoid buying when the MA points downwards. When the stock closing price crosses or comes close to crossing the 25 or 50 day MA this is also considered to be a signal to buy or sell especially if their is higher than expected volume.

The 200 day MA is found similarly. If the line points mostly upward when plotted on a graph then the market is thought to be in a bull season (when looking at two to three years). If the 50 day MA and 200 day MA both point in the same direction then the bull or bear market has stability and generally will go on for a longer period of time. But When the 50 day changes and is going in a different direction from the 200 day, this is seen as a sign of uncertainty and the market may be changing direction.

The 13 day MA average when plotted on a graph shows a short term movement and direction of the stock. It is most useful in determining the exact day to make a trade. The theory is that when the 13 day MA crosses the 50 day MA on heavy volume this is also an opportune time to make a trade.

MACD and RSI Indicators:
Moving Average Convergence and Divergence Oscillator (MACD) is also a very helpful indicator in chart analysis that plots the difference in moving averages and uses this information to determine the strength in the market direction and when it will likely change. The signal to buy is strong when the MACD line (usually colored black) crosses the signal line (often colored red) in a positive direction. The signal is also strong to buy when the MACD line crosses the centerline from negative to positive indicating positive momentum is increasing and a bull market is taking shape. And when both conditions take place together this is even better.

There is also the Relative Strength Indicator (RSI), that can be very helpful for investors, which is basically the ratio between the upward price changes and the downward price changes over a period of time on a scale of 0 to 100. A stock is considered overbought (saturated) at a value of 70 or above and is due for a market correction. Likewise the stock is considered oversold of 30 or under.