Stock market is similar to a casino and is a gambler’s paradise. The stakes are high and so are the returns too. There is no specific trick that can help in predicting the fate of shares, there are certain factors which when tracked can help in predicting the turn of events to come to a certain extent. But the stock market is always full of surprises and one should be ready for them.

The first thing that affects the price of the stock of a company is the market sentiment surrounding it. The price of a share is very much affected by the market direction in a session. When the market is a bull market, the stock price of companies would rise and during a bear market stock price of most of the companies would fall. Stock indexes can give a clear indication of the market sentiment. Some of the stock indexes are S & P 500, NASDAQ, Dow Jones Industrial Index etc.

The stock price of a company is also determined by performance of the industrial sector the company belongs to. Usually it is seen that companies of the same industry have their stock prices rise and fall in tandem with each other. The reason for this is that market conditions affect companies of same industry in a similar fashion. There can be exceptions to this but they are rare. If this happens then is usually seen between rival companies of the same industry. A bad news in one company can benefit its competitor competing for the same target.

All the companies aim to make profit. Most of the companies are assessed based on their earnings and profits. The traders and investors use Earning per share as the bottom line and revenue as the top line to judge the health of a company and earning potential. Most companies report their earnings as quarterly results every year. Companies with good EPS and Revenue can expect good boost in their share prices and companies with low quarterly results would have a decrease in their share prices. Some companies also issue guidance which is the expected value for coming years. Based on this guidance investors can go for an investment in these shares. Close monitoring is needed for this.

Taking over of a company boosts share price of the company being taken over but a dip in price can be expected in the share price of the company which is taking over. This condition holds true if the company is being taken over at a higher price than its last stock price.  A company can be taken over by cash or by stock or sometimes a combination of two.

When a company introduces a new product into the market there is an increase in its share price. This product introduction strategy can do wonders to an otherwise limp stock demand and price. The kind of companies who use this strategy are pharmaceuticals who announce clinical trials, new drugs etc.
There are many such factors that can help a keen observer decide where to invest and for how long. The trick of the trade here is observation, knowledge and monitoring.

Stock broking is one of the easiest ways to make money. Still people prefer other professions to stock broking because of its risky nature. Once, an individual understands and learns its fundamentals well, it becomes their interest and a recommendable profession too.
Basics of Stock Broking:-

Talking about stock broking, the first thing that comes into mind is stock, market and terminology goes on.

Stock: - In financial term, stock means supply of money raised by a company. Every company allows its employees to invest their money into the company so as to help making their money grow and in turn make money or profit to expand as a company or business.
Market: - A place where stocks are bought and sold is called stock market. For example, “Wall Street” is referred to New York City’s financial hub or the US stock market.

Requirement of stock broking:-

Every person or business cannot issue stock. To issue stocks, it has to be a business corporation which has a special legal status. Legally, a corporation is a separate entity that has special rights and responsibilities and also a unique name.

Role of Exchanges in stock market:-

Stock exchanges deals with the buying and selling of stocks. Each of the exchange follow their respective laid down rules and regulations that administer which companies can be listed on the exchange. For example, New York Stock Exchange (NYSE), National Association of Securities dealers Automated Quotation System(NASDAQ). The stock brokers trade through these exchange.
The exchange records the closing price for each stock by the end of each day. Closing price denotes that the last price of that price of that day at which the stock was bought or sold. The market’s performance is traced down by this closing price.

Market indicators used in the US:-

The experts use three main indicators to predict the performance of the stocks, they are as follows:

Dow Jones Industrial Average (The DJIA or The DOW):- It was first created by Charles Henry Dow in 1896. The table in the index calculation section shows the companies that are included in DJIA. The index is calculated by adding the adjusted prices of the companies listed. The DOW is represented either by points or by percentage, which reflects the seriousness of the change in the DOW.

The S&P 500:- second indicator is the Standard and Poor’s 500. As the names suggests, there are 500 companies in the table index. There are many stocks in this index to list. The stocks here are traded on the NYSE, The AMEX and The NASDAQ exchanges. As it covers many types of business, this indicator is preferred to the DOW.

The NASDAQ Composite: - This index consists of thousands of stocks traded on the NASDAQ exchange. Since, the non-famous companies’ trade here, this index is used to find out smaller company’s performance.

The stockbroker can thus safeguard his client’s finances through proper and wise investment modules that would result in safe and fruitful returns.

The global stock markets rest on the stability of the US Stock market to a very large extent. Today, when countries are gripped by recession, their quivering economies pose a threat to the US stock exchange crash. Now, how would recession be threatening to any of the US stock exchanges and how would it crash the world economy?

Recession:

When the growth of the Gross Domestic Product(GDP) of a country declines for more than two consecutive quarters of a year, then this decline is called ‘Recession’.

Reasons for Recession:

1. Once the economy reaches the brim of a normal economic cycle, it tends to slow down its growth. Generally, the   economy can grow for about six to ten years and then declines into a recession for about six months to two years.
2. When the consumers losses their confidence in the growth of economy, they spend less which leads to less money circulation and generation.
3. The demand for goods and services are thus decreased which in turn reduces the production rate and so happens the lay-offs and a direct inclines of the unemployment graph.
4. The investors are hesitant to invest money into shares, lest the stock values might fall.
5. Lesser money falling in leads to a negative fall in the stock market.

Recession and Stock Market:

The stock market and the economy go hand in hand. The stock market reflects the resilience of the economy. Since most of countries depend on US for their export demands, US fiscal stimulus is thus directly proportionate to the world economic stability graph.

The drastic down-fall of the stock prices worldwide over two trading sessions alone has left the investors haunted by the evil recession.

Though recession has not been formally declared by the BEA (Bureau of Economic Analysis) in the US, however, the investors fear the consequences. Today, the sensex crashed by 13% which leaves the investors worried. If we take the world financial map, India is the hardest hit nation with sensex falling by 7.4% record. Hong and China, the two major stock indexes also fell substantially, leaving them with the only survival option of accepting higher losses from the write-downs of US securities.

US- The Export Leader:

US which makes up most of the export demands for the different nations, now projects a large problem for them which has resulted from the decreased US consumer spending.

The Asian economies are more concerned about inflation in their own countries. This leaves them with a safety measure of buying government securities. European nations were also badly hit. Especially, the insurance agencies, where the investors feared that the insurers would go into default owing of debt that has already been written off.

European and Asian banks owns large quantities of securities based on US subprime debt which are already written off . The investors are now concerned that more debts will be written off as US markets continues to deflate.

Measures:

1. First remedy will be to cut down the taxes.
2. Increase the spending substantially in order to create more job opportunities.
3. Shoot up the manufacturing processes.
4. Service sectors should boost their businesses so as to prop up the economy.

On closely studying the world stock markets, it seems that there is a higher risk of recession in US having overwhelming impact on the export- led nations, which are greatly dependent on US consumer demand. Like we have seen in the past that the Federal Reserve Board(FRB) will cut further interest rates in view to overcome recession which would lead to depreciation of the US exchange rate which in turn would denominate the Asian assets in dollars.

Thus this symbolizes the inadequacy of the fiscal stimulus of the world economy.

A gap is the price level where no trading occurs. The chart can be for a daily basis for swing trading, or can occur in all time frames. A gap usually occurs on a daily chart when a stock closes at one price and opens the next day at a different price. This happens when sell and buy orders are placed before the opening of the market hence the price would be higher or lower than the previous days’ closing price.

For example a stock closes at $26 on Tuesday. The report of earnings is higher than expected. This increases buy orders. The next day the share opens at $27. This difference in price creates a gap on the chart.
All gaps are not equally created. There are two factors of significance that has to be considered while trading gaps. The gaps are caused by either professional traders or amateur traders. It is important to recognize the cause of the gap.
There is sometimes filling of the gap created. This means that the share price is traded at the price of the gap. Taking the above example further, the share after gapping up, climbs down and is traded at $26.50. Thus it filled the gap where there was no trading previously. This filling of gap is a very common term in the stock market and being well versed is important to understand the nuances of stock trading. Sometimes gaps created by certain stocks never get filled. Or they might take years to fill.
There are few different types of gaps depending on where they are positioned on the chart.

* Breakaway gaps occur after consolidation or some price pattern. Sometimes a stock after trading sideways for sometime suddenly changes track and trades at a different price causing a gap.

* Continuation gaps are also known as runaway gaps and measuring gaps. These are known to occur due to a huge advance in price of stock.

* Exhaustion gaps occur in tandem and direction with prevailing trend. It is indicative of surge in buying and selling before change in trend.

As mentioned before it is of utmost importance to identify the cause of the gap. When looking at gaps on the chart it is important to be able to identify the gap caused by amateurs and professionals and also be able to distinguish them. Amateur trading is largely dependent on emotions and professional trading steers clear from it. Thus identification is the key word here.

The first thing to remember is that professional buying occurs after a wave of selling and selling occurs after a wave of buying. Amateur trading follows exactly opposite pattern. They buy when the price is increasing afraid of missing out and this is the time when professional traders are ready to sell. Thus to identify it has to be made simpler:

o Stocks gapping up after buying waves indicate amateurs buying stock.

o Stocks gapping down after selling waves indicate amateur selling.

Gaps provide profits for swing traders though they are tricky.

Renting out of shares is fast becoming a popular investment strategy in the stock market. Stock market investors are always on the look out for more lucrative ways to increase their income from shares and gain capital growth from property. Renting of shares is slowly making its presence felt in this scenario. Its legalities and strategies involved are still not very commonly known.

Renting out of sharers is similar to leasing out property. The very basic strategies to be followed while renting out shares is explained here.

1. The first and foremost thing to be done is to purchase a parcel of shares. This can be done in lots of hundreds in the US.
2. From this it is best to sell a month call option. This would amount to one strike price out of the money. Call options are sold for hundred shares meaning one call option is equivalent to buying call options for the whole lot i.e. hundred shares.
3. After a week the price has to be monitored and detected for its position. If it is above or more than the price you bought the shares at then you have profited from the deal.

To understand this more clearly it is important to know what a call option is. A call option is a predetermination of right to buy a set number of shares. It does not hold the buyer under any obligation to do so. The price, time and date is set for the deal to go through. Take for example a stock ABC being traded at $100 and a call option was bought at $105 for one month. This gives the right to buy the stock ABC at $105 anytime during the month irrespective of the prevalent market price. This right is attained by the payment of premium amount to the seller.

People renting shares are paid by people who buy the call options. Thus for selling a month call for $105 the renters receive around three to six percent of the price of shares. This can be assumed to be $5 in this case. There are many factors to be considered to calculate the profits. These include the price of shares in the market. Whether there is an increase, a decrease or sideways movement. Explaining further using the same example, if the share price increases to $108, then shares would have to be sold at the call option price of $105. This isn’t all that bad; we bought shares at $100, sold them at $105 and got paid $5 for the month. Therefore the profit made per share was $10 as compared to $8 that would have been made if renting had not been done.

If there is no share price change then per share the profit on renting would be $5 which would not have been possible if renting was avoided. In the event of a drop in share prices to $95, the payment per share is $5 which saves us from losing money. Here of course there is no profit but thanks to renting there is no loss also.

Stem cell stocks are the new kids on the block. They are drawing huge attention in this year. Many investors are considering them to be hot stocks of the year. The stocks belong to companies that are involved in research for further development of stem cells so that they become more available to the hospitals and doctors. Most of the stem cell stocks are penny stocks which might increase in value manifold.

Stem cells are cells found in the fetal stage of an organism before differentiation. These cells possess the property of differentiation which is unique and is not present in other adult cells of the organism. These unspecialized cells can give rise to cells specific and specialized to carry out various functions in the body. This property of these cells can be utilized for curing diseases that require regeneration and reparation. Stem cells are very powerful tools for the future of medicine and health. They can revolutionize the entire medical field and change the way diseases are being treated.

Stem cells can be found in two different types. That which can be derived from animals and those from humans. Embryonic stem cells are a controversial topic and are research on it is facing many hurdles. Recently a bill on research funding for embryonic stem cell projects was vetoed.

As for the stock prices, it is a mixed bag with some moving up and some down. But with the new government in place things are about to change ad investors are eagerly waiting for this turn of events. The Bush administration was totally against stem cell and thus the downtrend in the stocks. There was severe lack of policies and funding support that has caused damage to the industry in the past several years.

It is expected that stem cell stocks would be the highest priced once it finds adequate support and funding for research. This doesn’t seem to be very far off since, President Obama is a supporter. The White House has become pro stem cells.

The President had released a statement on stem cells, their advantages and his support for research on the same on his Senate page before the election itself. According to him embryonic stem cells, cord blood and adult stem cells should be used for the betterment of mankind and to keep it away from disease and misery. Both the Presidential candidates were pro stem cells and thus there was no doubt of it gaining support after elections. The Presidential nominee Mr. McCain is a supporter of embryonic stem cells which are discarded in fertility clinics and assisted reproduction clinics. But he was pressurized into dropping this support for embryonic stem cell from the Republican Party during his campaign days.

Investment managers can hoard up stem cell stocks for hedge funds and mutual funds since they would definitely be the future of stock markets. Investors are still speculating about this treasure trove called stem cell stocks. Analysts and strategists are also advocating the opinion of a strong stem cell stock future.