Do psychological barriers exist in Latin American stock markets?
Keywords:
Latin American markets, psychological barriers, stock market indices, market psychology, round numbers
Abstract
We examine for the first time the major stock markets of eight Latin American countries for indication of psychological barriers at round numbers. We test for uniformity in the trailing digits of the indices and use regression and GARCH analysis to assess the differential impact of being above or below a possible barrier. The Chilean stock market seems to be significantly different from its counterparts as it is the only one that showed virtually no signs of psychological barriers. There is mild to strong evidence of barriers in the remaining markets. These findings challenge the notion that most Latin American markets are unpredictable and lend credit to the claim that technical analysis strategies can be useful in some of these markets.
Published
2020-10-04
How to Cite
Lobão, J., Fortuna, N., & Silva, F. (2020). Do psychological barriers exist in Latin American stock markets?. Economic Analysis Review, 35(2), 29-56. Retrieved from https://www.rae-ear.org/index.php/rae/article/view/608
Issue
Section
Articles
Upon submission of an article, authors are asked to indicate their agreement to abide by an open-access license. The license permits any user to download, print out, extract, archive, and distribute the article, so long as appropriate credit is given to the authors of the work. The license ensures that your article will be as widely available as possible and that your article can be included in any scientific archive. Please read about the Creative Commons Attribution License before submitting your paper.
Except where otherwise noted, content on this site is licensed under a Creative Commons Attribution 3.0 License