March 5th, 2010 | 
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There are numerous factors that affect the price of a stock. It can be hard to actually know exactly what drives the market, but there are factors that can drive a price up or down.
We know the basics. The more demand there is for a stock, the higher the price will be. Lower demand usually equals a lower price for a stock. But what drives the demand?
Let’s say that stock LKJ closes on Wednesday afternoon at 26. What will it open at on Thursday morning? There is no real way to predict the future price of a stock. Oh, there are analysts that will try, but there are no guarantees put forth on the predicted price.
What could happen between Wednesday afternoon and Thursday morning? Well, perhaps a major product that the company produces was pulled off the shelves due to labeling problems? Maybe the President of the company was arrested for embezzlement of company funds. Perhaps the company found a cure for the common cold. They could have finalized a deal with a major competitor for a grand merger. You can go on and on about what could happen.
There are so many factors that push a price up or down. But remember, in the end, demand still says what a buyer and seller will accept. This demand is affected by the market, politics and industry news.
Every morning on the stock market is a new day. Consider it a clean slate. Demand can be entirely different than it was yesterday. Stocks that closed really high yesterday could be dropping quickly today. The market goes up and down constantly.
Keep in mind that the price of a share is dependent on what someone is willing to pay for it. A stock might be a great buy for you at $45 per share, but a terrible buy at $68 per share. However, another investor might jump at the price of $68 per share. Who is right about the price of the share? Only time will tell. Many investors once thought Microsoft was overpriced at $10 per share. Time told that they weren’t exactly accurate about that.
Successful investors take the time to recognize what the fair price for a particular stock is. They don’t jump on cheap stocks just because they are cheap. But they don’t rush into overpaying for stocks either. They also keep their investments in check. If the stock is falling along with the sector or overall market, they might sit tight and keep their eye on a good price.
Good investors look at the company and other factors when determining price. As you invest, you will learn the strategies and techniques that will help you establish the fair price for stocks. You learn that you can either find that price or simply move on to another stock that meets your investing goals.
Martin Lukac
http://www.articlesbase.com/investing-articles/what-determines-the-price-of-stock-86736.html
Posted in the price is right
What causes stock prices to rise and fall? Who determines the price?
I know my question may be a bit ambiguous, but I’m curious as to what actually causes stock prices to rise or fall. Does a corporate controller determine the stock price, is it based on demand, does the market controller set the price? What makes the price go up and down?
While there are more complicated causes specific to different kinds of stock or companies, the basic force at work that makes the price of stock rise and fall is that of supply and demand.
If there are a lot of people selling a given stock- more than want to buy it, then the price will fall until those buyers are willing to purchase. On the other hand, if there is a hot stock that a lot of people want to purchase, the price will rise until some of those owners are willing to sell.
Like I said, that’s a highly simplified version, but it’s the basic underlying mechanism of the stock market.
Hope that helps. :0)
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Accountant.
Stock prices are also related to the company and industry news. Good news may result an increase while bad news cause it to decline. It also reflects the company earnings. When the company announce good earnings look for the price to increase. However, if they announce poor earnings the stock price should move in the opposite direction. Investors are attracted to stocks with good news and good earnings.
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It is really not complicated at all. Supply and demand cause the rise and fall of stocks. The stock market is really a forecaster of future earnings. That is why stock market recoveries typically happen before economic recoveries. If investors think that earnings are going to increase at an accelerating rate, stock prices will rise. The same is true in reverse.
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Simple.
Stock prices rise when more people are buying a company’s stock.
They fall when more people or selling, or if one investor is trying to dump lots of shares, thus driving the price down.
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You’ll hear many people say supply and demand, but that does not explain the fluctuating price movements between a range of prices.
It is really all about perceived value. All the investors in a companies stock take a look at all the available data that they consider relevant and then decide how much they believe the stock is worth.
This is why stocks typically trade within a range, trading between a high (resistance) and a low (support). When a stock reaches the high range, people/traders re-evaluate the perceived value of the stock…if nothing significantly has changed to make the perceived value higher, then the stock will start to sell off.
The opposite happens at support, i.e. as the stock approaches support people/traders evaluate the perceived value of the stock and if nothing has changed then they start buying because they perceive the stock to be priced at it’s lower range.
When this perception changes, usually due to some news event, is when these ranges break and the stock starts to trade higher or lower than the range previously defined.
Steve J.
References :
http://www.bettertrades.com