Why does the stock market move in waves?

Some technical analysts try to profit from wave patterns in the stock market using the Elliott Wave Theory. This hypothesis says that stock price movements can be predicted because they move in repeating up-and-down patterns called waves that are created by investor psychology or sentiment.

How does the weather affect the stock market?

Empirical research shows that stock market returns (and volatility) are associated with temperature effect (anomaly). For example, bad weather is inversely related to market volatility, while sunny weather increases volatility (Symeonidis et al., 2010).

Which stock analysis is similar to weather forecasting?

Technical Analysis is the forecasting of future financial price movements based on an examination of past price movements. Prices are set by supply and demand, fear and greed. Like weather forecasting, technical analysis does not result in absolute predictions about the future.

What is Wave Trading?

The Elliott wave principle is a form of technical analysis that finance traders may use to analyze financial market cycles and forecast market trends by identifying extremes in investor psychology, highs and lows in prices, and other collective factors.

How much does wave 4 retrace?

4) Waves Personality Wave four is typically clearly corrective. Prices may meander sideways for an extended period, and wave four typically retraces less than 38.2\% of wave three. Volume is well below than that of wave three.

What is affecting the stock market?

Economics. Macro-economic factors such as interest rates, inflation, unemployment and economic growth often move stock markets. Declining interest rates often send markets higher, because they are seen as a harbinger of economic growth.

Do snow storms affect the stock market?

Research on the correlation between weather and stock market has been done for many years. They find a significant relationship between sunshine and daily stock return but say rain and snow do not have a significant correlation with stock return (​Hirshleifer & Shumway, 2003)​.

What do all waves have in common?

All kinds of waves have the same fundamental properties of reflection, refraction, diffraction and interference, and all waves have a wavelength, frequency, speed and amplitude. A wave can be described by its length, height (amplitude) and frequency.

What causes waves in sea?

Waves are most commonly caused by wind. Wind-driven waves, or surface waves, are created by the friction between wind and surface water. As wind blows across the surface of the ocean or a lake, the continual disturbance creates a wave crest. The gravitational pull of the sun and moon on the earth also causes waves.