I honestly believe that the market has its very own special language. The real question is, “Can you understand what its saying?”

            The language of the market is primarily made up of three different parts, or components. When you understand the relationship of these parts you have a basic understanding of what the market it trying to say. These parts are:

            - Volatility

            - Price

            - Volume

Sure, there are more parts than these, but these three are the main ones. If a price goes up tomorrow, but the average volume is down, then it is obvious that the price move doesn’t mean very much. A happy, healthy market usually shows upward movements in price with a better than average volume and a lower volatility. A high volatility usually occurs when a market shifts from high to low, and from low to high.

When it comes to determining market speak, there are literally thousands of different combinations and variables. I honestly believe that it is impossible for a person to analyze all the incoming data in a predictable and consistent manner. I also believe that the correct use of a current computer, servers, and programming skills can help us capitalize on our understanding of what the market is saying on a regular basis. A few years ago we never could have imagined that we would have the ability to crunch thousands of different combinations of today’s market data, and compare it to data collected over the last 18 years. What an innovation! This is a good indicator that the modern computer is having a substantial impact on analyzing investments.