Last time we looked at how 3 features revealed value in stocks. But, stockholders do not limit themselves to some fixed number of features in their collection buying decisions.
Here, the market considers at least 4 features simultaneously. It entertains 1) book value per share on one horizontal axis, 2) market capitalization on the other, and then, if it sets 3) EPS to 20 and 4) stock volume to 10 million, it produces the surface at left. If it resets the stock volume to 1 million, it shifts that surface upward. [This analysis excludes Amazon.]
Stocks support higher prices with higher earnings and book values per share. But prices climb as market capitalization goes up and volume falls. Accounting for opposing forces is crucial to market analysis.
This S&P 500 study only examines stock parameters. As the world reacts to COVID-19, we see the impact of global market factors. Stocks fall with uncertainty.
In markets such as the S&P 500, with a sufficient number of entrants, several measures of demand come into view. The slopes of 2 important demand curves start to converge with enough market participants. See the next post for a discussion of their differences and similarities.