Within the major movements of stock prices, there always are several minor movements, which are caused by various influences. One of the important causes is the technical condition of the market. Another cause might be called a psychological one. When stocks are moving up steadily in a bull market, people closely connected with the market expect a reaction and watch for it. The newspapers predict it. Consequently, there is sufficient let-up in buying to allow the pressure of selling by the bears to bring it about. However, the desire to buy during reactions is so general, many people rush in to buy and this buying, in addition to the covering by the shorts, puts the market up again; and if conditions are favorable for a bull market, prices will go up much higher than they were before.

In like manner, we have rallies in bear markets. Of course the professional bears sell during these rallies, with the expectation of buying later at a cheaper price.

These minor price changes mean more to the majority of traders than the major movements. The major movements are so slow that people get out of patience, and yet those who are guided only by the major movements are operating on a much safer basis. We believe that a greater amount of money can be made, with a minimum risk, by being guided principally by the major movements, while taking advantage of the minor movements in a minor way. However, stocks do not move uniformly and there frequently is an opportunity to buy some particular stock at a bargain when nearly all stocks are selling too high. We try to pick out these opportunities for our clients.

Reports of earnings by various companies influence stock prices, as does also the paying of extra dividends or the passing up of dividends. A peculiar psychological influence is noticed when a company declares an extra dividend. The price of the stock usually goes up, while as a matter of fact the intrinsic value of the stock is decreased by the amount of this dividend; and sometimes it is advisable to sell a stock shortly after an advance in its dividend rate.