Stock Market Groups. It's often been said that the stock market is a "market of stocks." It could also be said that the stock market is a "market of stock groups." Although it's true that most individual stocks and most stock groups rise and fall with the general market | FIGURE A COMPARISON OF SEVEN WORLD STOCK MARKETS FROM 1977 THROUGH 1989. IT CAN BE SEEN THAT BULL MARKETS EXIST ON A GLOBAL SCALE. WORLD STOCK MARKETS GENERALLY TREND IN THE SAME DIRECTION. ITS A GOOD IDEA TO FACTOR OVERSEAS STOCK MARKETS INTO TECHNICAL ANALYSIS OF DOMESTIC EQUITIES. CHART COURTESY OF BUSINESS CONDITIONS DIGEST. 1977 78 79 80 81 82 83 84 85 86 87 88 1989 9 Stock Market Groups It s often been said that the stock market is a market of stocks. It could also be said that the stock market is a market of stock groups. Although it s true that most individual stocks and most stock groups rise and fall with the general market they may not do so at the same speed or at exactly the same time. Some stock groups will rise faster than others in a bull market and some will fall faster than others in a bear market. Some will tend to lead the general market at tops and bottoms and others will tend to lag. In addition not all of these groups react to economic news in exactly the same way. Many stocks groups are tied to specific commodity markets and tend to rise and fall with that commodity. Two obvious examples that will be examined in this chapter are the gold mining and energy stocks. Other examples would include copper aluminum and silver mining shares. These commodity stocks tend to benefit when commodity prices are rising and inflation pressures are building. On the other side of the coin are interest-sensitive stocks that are hurt when inflation and interest rates are rising. Bank stocks are an example of a group of stocks that benefit from declining interest rates and that are hurt when interest rates are rising. In this chapter the focus will be on savings and loan stocks and money center banks. Other examples include regional banks financial services insurance real estate and securities brokerage stocks. The stock market will be divided into those stocks that benefit from rising inflation and rising interest rates and those that are hurt by such a .
