Three Laws of Stock Price Movement - Trend Dominance, Intensity Significance, and Chorus Opposition

🎯 Three Laws That Govern Stock Price Movement

Let me introduce the Three Laws of Stock Price Movement discovered through over 25 years of studying the US market. Understanding these laws will help you succeed not only in US stock investing but also in Korean market investing, which moves in sync with the US market.

📌 First Law: Law of Trend Dominance

"In the US market, trends take precedence over news"

This is the first law. No matter what good or bad news emerges, the current trend direction is more important.

Real Case: NVIDIA Earnings Report (November 19, 2024)

• NVIDIA announced earnings that exceeded expectations after market close
• Rose 5% in after-hours trading
• NASDAQ futures also rose nearly 2%
• KOSPI rose nearly 3% the next day

But what was the result?

Because it was during a downtrend, NASDAQ closed down more than 2% that day. Even NVIDIA itself closed lower.

The Relationship Between Interest Rates and Trends

Many people think "rate cut = good news," but the reality is different.

Trend	Rate Cut	Rate Hike
Uptrend	📈 Positive (surge)	📈 Continued rise
Downtrend	📉 Negative (plunge)	📉 Accelerated decline

March 16, 2020 Case: The Fed made an emergency rate cut of 1%, but because it was during a downtrend, NASDAQ and Dow plunged 12% that day.

💡 Key Point: Look at trends, not news. Even good news acts as bad news during a downtrend.

📌 Second Law: Law of Intensity Significance

"When prices move against the trend, the intensity of that movement signals a potential trend reversal"

Generally, stock prices move in the direction of the trend. However, sometimes they move in the opposite direction. When this happens, you need to examine the intensity.

Real Case: Alphabet's Gemini 3.0 Announcement

• US indices rose during a downtrend
• Among them, NASDAQ rose the weakest

Normally, it should have returned to the downtrend, but NASDAQ surged after Alphabet unveiled Gemini 3.0.

What does this mean?

• A signal that the downtrend's intensity has weakened
• Indicates the possibility of an uptrend reversal soon

Judging Market Bottoms by Comparing NASDAQ vs Dow

Situation	Meaning
NASDAQ falls less than Dow	Bottom is near
NASDAQ falls more than Dow	Bottom is still far away

📌 Third Law: Law of Chorus Opposition

"When Asia and Europe move in one direction, America goes the opposite way"

This is a truly peculiar phenomenon. When the entire world reacts to the same news, the US market tends to move in the opposite direction.

Real Case 1: Russia's Invasion of Ukraine (February 24, 2022)

Market	Reaction
Asia	Average -2% decline
Europe	-3% decline
US (NASDAQ)	+3.3% rise

While markets worldwide were plunging, only the US market rose more than 3%.

Real Case 2: London Underground Bombing (July 7, 2005)

• European markets crashed
• NASDAQ futures triggered circuit breaker (-5% limit)
• US regular session ultimately closed positive

From -5% to positive! This is the Law of Chorus Opposition.

⚠️ Important Note

The Law of Chorus Opposition is related to the existing trend of the US market.

• If the US trend at the time was bullish → High chance of rebound
• If the US trend at the time was bearish → Continued decline likely (e.g., 9/11 attacks)

🌟 Conclusion: Summary of the Three Laws

Law	Key Point
Law of Trend Dominance	Trends matter more than news
Law of Intensity Significance	Intensity of counter-trend moves signals reversals
Law of Chorus Opposition	When the world moves together, US goes opposite

Understanding just these three laws can significantly increase your success rate in US market investing. In the next article, we'll explore NASDAQ-centric market analysis and the real impact of interest rates in more detail.