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Support and Resistance 101   

What causes price movement?  Why don't stocks just sell for what they are worth according to the "fundamentals", you know, those earnings that we keep hearing about?

In truth, stocks have no more "real" value than do any other items.  The price of anything is determined soley by what a buyer and a seller can agree upon.  There is, however, a critical difference when considering stock market transactions.  In the case of the sale of a loaf of bread or an automobile this agreement concerns the present value of the bread or the Chevy while in the case of a stock sale the traders are attempting to predict the future price of the item.   The one entering the trade hopes to be able to exit at a better price in the future.

Prices move up and down due to differences in opinion about just what these future prices might be.   of