A shareholder is an individual or a company that legally owns shares of stock in a joint stock company. The shareholders, also knows as stock holders, of a company own it collectively so it is important to them to increase their value. Shareholder Value is the part of a company’s market capitalization that is equity rather than a company’s long-term debt, for a publicly traded company. This would be approximately the number of outstanding shares multiplied by the current share price, in the case of only one type of stock. Dividends stocks actually augment shareholder value while issuing of shares lower it. (Stock options)

Shareholder equity is a firm’s total assets minus its total liabilities.  This type of equity represents the amount by which a company is financed through preferred and common shares. The formula used to calculate a firm’s shareholder equity is the retained earnings plus the share capital minus treasury shares. This type of equity comes from two main sources.  The original source is the money that was originally invested in the company including any investments made afterwards.  The other source is the retained earnings accumulated over time by a company.  The second source, retained earnings, is typically the largest factor in long term investing.

Shareholders have rights under the Commission Action Plan which deals with company law and improvement of rights of stockholders of companies.  Such rights include the right of stockholders to be granted timely access to complete information that is relevant to general meetings and facilitates the rights by proxy. This was imposed by a directive that was adopted in June 2007. This directive provides the replacement of share blocking through a record date system.

Stockholders are given special privileges depending on the class of stock. One of these privileges in the right to vote on matters such as the right to share in distributions of the company’s income, the right to purchase new shares issued by the company, elections to the board of directors, and the right to a company’s assets during liquidation of the company.  It is typically one vote per one share that the stock holder gets to cast, but it may differ in some situations. As a rule, all the shares are of the same class known as ordinary shares. All these ordinary shares carry one vote each. This clearly demonstrates the majority shareholders control the company.

A Shareholder agreement is a set of points within the structure of which two parties decide to conduct business that is used to ensure smooth functioning. It is mandatory for stockholders to have in that it contains matters related to the ownership of the business among the partners. This agreement will ensure that changes in partnership will be determined before the event takes place, thus no surprises, investing errors, or interruptions in the company’s ability to function.  The agreement will include information such as the principles and investment philosophy regarding company functions and individual agreements with information like sharing of profits and the partners’ stakes in the company. Very sensitive information about the partners as well as the organization is contained is this agreement.

Shareholders are the first to be considered when management makes business decisions for a company however we unfortunately have those CEO’s and other managers who are clearly taking action in direct opposition to the interest of shareholders. Understanding the rights and responsibilities along with an ethical attitude should hopefully prevent these instances from occurring in the future and will lead to better investing.

Market Direction:  When prices start moving fast and hard, either to the upside or to the downside, what should you anticipate is influencing prices? Emotions! Fundamentals of a company or a market do not change rapidly. It is the perception of those fundamentals that can change rapidly. Dramatic changes in investor sentiment can occur very rapidly. Quite often, sentiment can change just because prices have changed. Candlestick signals illustrate the accumulative results of everybody involved in buying or selling a specific trading entity. The signals can distinguish between a full-scale reversal versus a mere bounce.     

Candlestick signals illustrate a change. That change can occur with one major reversal signal or a series of signals. Recognizing more than one candlestick signal over a short span of time can have very significant profitable information. Witnessing more than one bullish signal, especially when the market in general is selling off hard, provides some valuable insights. Different candlestick signals and patterns work better in specific market conditions. The Jay-hook pattern works extremely well when the markets in general are in a steady uptrend. The fry pan bottom pattern also works well if the market is not showing any severe pullbacks.

Watching for candlestick buy signals at a support level works more effectively in an up-trending stock price when the markets are in a steady uptrend. Obviously, looking for candlestick sell signals work extremely well at resistance levels if the markets are in a steady downtrend.

When the market sells off hard, the emphasis on specific confirming indicators becomes more crucial. A steady uptrend will render better profits utilizing candlestick patterns. The patterns can be utilized more effectively than trying to find stocks where stochastics are showing oversold conditions. After weeks or months of uptrend, there may not be very many individual stocks that have stochastics in oversold conditions. Common sense analysis should also raise a red flag when seeing a stock in oversold condition when the markets have had a long and steady uptrend.

If the markets are selling off hard and a stock chart is producing more than one buy signal, what should be assumed? Obviously the stock is being bought in spite of vast negative investor sentiment in the rest of the market. Finding a stock chart that is severely oversold and starting to show buying signals has some inherent advantages in a strong declining market. First, the candlestick signals produce the evidence that the severe selling is over. The possibility of a potential bullish move is that much greater, especially if buying is occurring in bear market conditions. Next, the stop loss level becomes very obvious. The price should not move back below the levels where the bullish signals were appearing. As illustrated in our last newsletter, WCG was severely oversold. Yet it was showing the potential of a bullish move. The simple rules applied to each of the 12 major signals made for a very simple entry. At the same time, the obvious stop loss level could be established.

WCG

Currently EPAX is producing a chart pattern that illustrates the potential reversal of a severe downtrend. It is not hard to assess that buying might be coming into this position when the price has remained relatively flat, producing Dojis. At the same time, both the Dow and the NASDAQ have sold off severely. Many investors require charting or graphs illustrating relative strength. Candlestick chart analysis produces that evaluation with very quick visual analysis.

EPAX

Will buying EPAX produce good profits? That becomes a process of having the Dojis confirming correctly. As in the WCG chart, the bullish signals required confirmation. The position could be bought immediately upon seeing a bullish open. That same assessment can be applied to the EPAX chart.

Where do you want to buy? When the candlestick buy signals appear in oversold condition. Being ready to buy at the right place at the right time is merely understanding what each candlestick signal represents. It allows the candlestick investor to take advantage of immediate profits upon the confirmation of a reversal signal. It also allows the candlestick investor to recognize the level that obviously shows the Bulls did not gain control of a trend. This creates small-loss stop levels. Utilize the knowledge built into candlestick signals. The Candlestick Forum is now providing special prices on information packed candlestick signal training CDs. Click here for Candlestick Forum training CD specials. Use the dark dreary days of winter to learn the most tested and refined technical investing methods ever devised. Understanding the psychology that moves market prices is the most powerful investment tool you will ever need. Why does the smart money buy at the bottom? Because they understand what made prices move to the oversold conditions. When is the smart money selling? When they see what the exuberant investor sentiment is doing to make prices overbought.

Market direction - The selling did not slow down in the NASDAQ. It is now very close to the first major support level, the 200 day moving average, just as stochastics are approaching the oversold condition. This would warrant watching for a reversal signal at this level in the next few days.

NAS

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