Investment Barometers

Source: Encyclopedia of Banking & Finance (9h Edition) by Charles J Woelfel
(We recommend this as work of authority and you can order it here)

Statistical indicators that have a particular bearing on the trends in security prices.  High-grade bonds, for example, are primarily influenced by the trend of interest rates; thus all data pertaining to factors affecting interest rates, both on the supply and demand side for funds as well as on Federal Reserve policy, would be relevant for analysis of the "real" factors having a causal connection.  the fundamental approach to forecasting of stock prices concentrates on aggregative and particular data having a bearing on stock earnings.  The technical approach concentrates on data developed by security markets themselves, such as price patterns and volume of trading; short interest; proportion of stocks advancing, declining, or making new highs or lows; behavior of odd-lot buyers and sellers (volume of odd-lot buying and selling, orders, and net buying or selling on balance), etc. ranging from fundamental to technical in nature.

See DOW THEORY as an example of a technical technique for determining primary trends of stock prices based on interpretation of price trends of industrial and railroad stock averages.

BIBLIOGRAPHY

JOINT ECONOMIC COMMITTEE (U.S. CONGRESS).  Economic Indictors, Monthly.

U.S. DEPARTMENT OF COMMERCE.  Handbook of Cyclical Indicators, 1984.

Back to Information