When somebody tries to study the Stock Exchange Equities, and he/she is told that the Stock Exchange is a market and as such it is affected by supply and demand, they will commonly address the economic science, specifically the micro-economy, and try to delve into the laws of supply and demand.

These laws which Mr. Alfred Marshall (1842-1924) so masterfully depicted, for the first time in his book "Elements of industrial economy" and later generalized in his magna opus "Principles of economy" (1890), which factually substituted as a text book for the training of economists, the treaty "Principles" by John Stuart Mill.

In an outline, the graphs and diagrams which correspond to the law of demand and to the law of supply are the following:
 

The graph which represents the LAW OF DEMAND tells us that if we have a determined item, a car for instance, which has a price, and we manage to manufacture the same item at a lower price, the potential demand will increase. This coincides with common sense, as a bigger segment of market will be able to accede to this item.

Given that the price of the item is represented in the ordinates axis (axis Y) and the quantity demanded is represented in the abscises axis (axis X), the form which the graph takes is of a decreasing parabola, by which, lowering the price (descending the axis Y), the demanded quantity grows (the projection over the X axis slips to the right).

Here, the price of the item is also represented in the Y axis, but in this case, in the X axis, the quantity supplied of this item is represented, thus obtaining other parabola, but increasing this time, as going up by the Y axis – increasing the price –, the projection over the X axis should slip to the right (increase of quantity supplied).

The curve of the LAW OF DEMAND tells us that if demand increases, – if we go to the right hand on the X axis –, the price will go down and the curve of the LAW OF SUPPLY indicates that if supply increases, – if we go to the right hand on the X axis –, price will increase. In other words, if DEMAND INCREASES price FALLS, and if SUPPLY INCREASES price GOES UP.

But these two events were not credible either by Hamilton or by anybody working in a market, because the truth is that if DEMAND INCREASES, price GOES UP and if SUPPLY INCREASES, price GOES DOWN, that is exactly the opposite of what the graphs of the law of supply and the law of demand tell us.

This explanation comes from the same genesis of the laws of supply and demand. Remember that Alfred Marshall conceived them in his first book "Elements of the economy of industry" and in industry obviously, the first thing we fix is price and then we wait for the demand and supply.
Thus, entering by the Y axis, where the price is fixed, the graph works and is full of common sense, but in markets prices are not fixed, but are consequence of the force of supply and the force of demand. This compels us, to enter by the X axis, and therefore we collide head on with the problem.

William Peter Hamilton passed away from pneumonia on December 9th 1929, at sixty three, in his home of Pierrepont Street, Brooklin. For 20 years he had been the director of the newspaper of greatest importance in the world, then and now, on finance and markets: The Wall Street Journal

That column became a legend in the paper, as Dow initiated it on April 21st. 1898  – three years before his death in 1902 –, and it was the seed of the present technical analysis, but that column did not resist on the front page the demise of Hamilton, and was symbolically buried with him, inside the internal pages of the newspaper.

Hamilton was also the real constructor of the Dow Theory from which the Technical Analysis was born. The theory bears the founder’s name but it should really have been Hamilton, who developed it twenty years after the death of Dow, putting into it all his experiences and reflections on the analysis of markets and this has been recognized by all the historians of the stock analysis, although the latest insights were kept secret.
Those include the introduction of a scientific spirit, in the style of Marshall, by which he wanted to culminate his Theory, which was precisely accused of lacking rigour.

Among the documentation destined to his column in the journal, it is said that after his death, the famous diagrams created as an alternative to Marshall’s laws of supply and demand, along with a wealth of notes and tips on their applications and how they work were found.
It’s believed and subjected to rumours that among those notes there was one lamenting the fall of markets – Black Thursday on October 24th. 1929 and above all the Black Tuesday on October 29th. 1929 –, which had deprived him of enough time and peace of mind to reorganize the method aiming at getting it published. The publication never happened.