Thread: Market buying and selling

Originally Posted by Birchtree

Heck, as I see things simplified, it's not people selling that make prices move lower - it's prices moving lower that make people sell.

As politely as i can state it, this is just not correct, and I've already addressed why. You're making a converse statement with no explanation and, to me, that says everything.

(edit) The "price" is a reflection of actual bidding..... negotiating, if you will, between a buyer and a seller. When more people want to sell than buy at a given price, something has to give. What gives is the price. But when the actual transaction eventually happens, the same number of shares are still owned by someone. Or stated a different way, the same number of people + companies are still "in the market".
Maybe explaining it that way will help?

Originally Posted by azanon

We're going to make progress, i'm determined! You cannot have a seller without a buyer. If you want to sell a share and know one's willing to buy it, then guess what? You don't sell it.

I've been reading the bulls/bears ratio as people who have already acted on their outlook. The bulls have already bought and the bears have already sold. With more bears comes more purchasing power. With more bulls comes more selling power. And yes, shares always get sold - just sometimes at a lower price than we would like or at a higher price than we would like. It's the bid/ask spread at work. Plenty of companies have people on the floor buying back shares when there are no willing buyers just to keep their shares from falling to near zero.

Originally Posted by azanon

I'm not attempting to degrade Tom; your words not time. But if he's going to post something publically, then it will be open to scrutiny. And i'm obviously being heard, because the only handle that's mine in this thread is "Azanon".

Whatever you say, Desperado.

Originally Posted by SkyPilot

Whatever you say, Desperado.

If it is Desperado, he can make a killing with the Google AdSense with the huge surge of posts to his threads. I might try it myself. I'll just say something that gets everyone talking.

Originally Posted by fabijo

If it is Desperado, he can make a killing with the Google AdSense with the huge surge of posts to his threads. I might try it myself. I'll just say something that gets everyone talking.

Excellent thought!

I haven't read all the posts in this thread yet so if someone already offered this reponse, I apologize.

The 100 people example was obviously an extreme as I stated as you'd never get 100% of the people on one side or the other. But based on sentiment surveys, the tide does turn. The number of shares bought and sold should go one for one as Az mentioned but the number of buyers and sellers does change. (there are also inventories created as Birchtree mentioned). What happens is that stocks lose bids if there are no buyers and the stock drops.

If 99 people are selling 100 shares each (the herd), and 1 person is buying the 9,900 shares (maybe an insider or money manager), who are you going to follow? - The 99 bears or the one bull?

So while there is a buyer for each seller, they may not agree on price and that one buyer's bid may be lower than the asking price. The 99 sellers grab those bids and the buyer keeps lowering them to see how low they'll go. Hence the market moves down even though there is eventually a one to one transaction.

Originally Posted by Wolverine

Well, let me put it this way then............The sentiment survey shows a Sell signal the last Five Weeks.......being in the market the last Five Weeks has made money. This then is a Contrarian signal based on at least those Five Weeks as a Buy. The Contrarian thing to do then for the last Five Weeks was be Contrarian against the Sell Signal. Buy for the last Five Weeks was where to be with all this.

The way the system is set up, and it proved to get the best results this way during backtesting, is that it will stay in the same allocation (buy or sell) until a new signal is given. The neutral readings of 1.26 to 1 thru 1.99 to 1, just tell the system to continue what it did the prior week - whether that was a buy, or a sell.

So, the system remains on a sell signal next week even though we were very close to moving to a buy with the 1.28 to 1 ratio, which is actually a borderline bearish number (bullish for stocks). Until we see 1.25 or lower, the system remains on a sell.

Once we hit 1.25 or lower, it will remain on a buy until we see 2.00 to 1 again. Like I said, that just seemed to work out best when playing with old numbers.

Originally Posted by azanon

...When more people want to sell than buy at a given price, something has to give. What gives is the price.

This is the same idea behind Tom's simplified explanation (100 buyers/sells) in today’s comments. When more people are trying to sell shares (bears), and few buyers (bulls) stepping in. Share prices fall until new buyers are appear who were in cash, or who have extra cash. When share prices stabilize, program trading kicks in buying the depressed share prices. More buyers who had been in cash appear and share prices start to rise. Until that happens prices on the fixed number of stock shares continue to fall. So when times look bleak the percentage of bears is high. That’s when you want to buy because prices are low. Its the number of buyers and sellers that is changing.

Originally Posted by azanon

...For all practical purposes, there are always the same number of people in the market. That doesnt really change. What changes is simply what the shares are worth on a given day. Folks this is the basics and everyone participating in marketing timing really should know this.

This statement appears to contradict your first statement. I do not agree the number of people in the market says the same. People enter as new investors, and some enter the stock and/or bond markets from a cash position. If the number of people in the market were always the same, then the number of buyers plus sellers is fixed. This assumption means everyone is always 100% in the equity and or bond markets and share prices change as money flows between stocks and bonds, and as dividends are paid. In the long run share prices would change by the dividends paid buying shares. Do you consider cash to be in the market? Perhaps it’s just a matter of definition on what constitutes the “market”. New cash enters market from buyers, new investors and day traders. This cash wants to buy shares if the price is right. It’s this cash entering the stock and bond shares that drives prices upward.