Respect the indices

It’s been puzzling me for some time why some seemingly good shares don’t rebound or don’t rebound well.

I think I’ve solved part of the puzzle. The charts below show the influence of the German DAX (Germany 30). Of course the influence is not direct or always consistent.

Wall Street also has major influence (and not just on any one of the major top shares). In reality the aggregate effect of all shares is what determines both Wall Street and the DAX, so it’s not strictly correct to say that either of them influence a single share. But overall market confidence in the major indices is what determines investors to purchase or not, so it’s an interactive and dynamic feedback loop.  What this means is that the major indices should be assessed for direction to give some indication of the pressure on movement of an individual major share.  This applies more in the medium term than the short term.

Some stocks are more heavily influenced by the indices (DAX and/or Wall Street) than others – and some could not ‘care’ much.

See below.  Priceline tends to respect Wall Street more than the DAX.

DAX v Mallinkrodt 04-30-15 at 01.53 PM

priceline v wall st v dax  04-30-15 at 10.09 PM

3m v wall st v dax 04-30-15 at 10.05 PM

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