This paper applies the kinematic and kinetic theories of physics to derive two important price behavior equations for the stock markets: the equation of motion and the work-energy equation. Daily data of the Taiwan Stock Exchange index, trading values, and total units of buy and sale orders are used to test the theories. Empirical results indicate that these two equations provide a powerful and good description of the behavior of stock prices. The contribution of this paper is to formally theorize some phenomena that are often heard from the practitioners of stock markets.
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