In various sources you may find different explanation of the engine that is behind the stock market trend. Still the main reason of price movements on free market is supply demand balance. If the buyers (those who demand) are rushing with buying and, in order to buy for sure, are ready to pay price which is higher than the bid price of the sellers (suppliers of the stock shares) then the price of these stock shares are rising. The opposite is true for sellers who could be in panic or have strong desire to sell as soon as possible even at cheaper than the market ask price. These sellers may push price down and they are the main reason of declining markets.Supply / demand balance is the balance between buyers and sellers. If there are more sellers on the market and they are pushing the price of the stocks down then supply / demand balance is in the favor of selling markets. If number of buyers is bigger and their demand to buy is stronger, then supply / demand balance is in the favor of the bullish markets.The other question is what affects the number of buyers and sellers. Here we come to most known and discussed engines of the market moments. It could be economic reports: good reports attract investors to invest and bad economic and earnings data scare traders. It could be dollar trend: In September 2010 decline in US dollar has pressed many investors to pull out funds from the money markets and inject them in the stock market (compare S&P 500, Nasdaq 100 and DJI trends with US Dollar index trend). Taxes, interest rates, price on gold and oil, political announcements - all of this may scare investors from the market or push them to bring more money into the stock market.If you take a look at the main US indexes, you will see that at the current moment we may see strong increase in volume on the S&P 500, Nasdaq 100, DJI, Russell 200 and other indexes. The US indexes are traded at their high levels, such huge volume indicates reshuffling of the trading position by the big number of investors. Big volume surges reveal that the big number of shares is changing hands. If over the last one and a half month the US indexes were trending up and majority of the investors were buying, then, now, we may say that many of these investors became scared of something and they started to sell in huge volumes and that is why we see strong increase in trading volume. That means that we are witnessing the shift in the supply / demand balance and this could be a signal to stay on the alert. Furthermore, if the sellers will take over the buyers we could be heading into the bear market very soon.
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