Dramatic market action that is common at tops and bottoms is known as blow offs and selling climaxes.
Blow offs occur at tops, they usually occur after prices have moved higher over an extended period of time. At the end of the upward moves, prices rally sharply accompanied by a large increase in volume. Typically, all of those that were going to buy at this level have done so. Profit taking occurs and prices reverse, often suddenly, to the downside.
Selling climaxes are simply the opposite of blow offs. They occur at the market bottom after prices have been declining for an extended period of time. Bargain hunters then jump in buying, reversing the trend, and sending prices higher.
Through the years, investors have searched diligently for ways to identify important market bottoms. And the selling climax has been one of the major focuses of that search.
A selling climax is generally defined as that capitulation of investors near major market bottoms, in which stocks are dump or abandon. The selling is no longer based on perceived values but rather simply on the desire to get rid of stocks. Once everyone who wanted to sell stocks has sold, there is no one left to drive the prices lower. And the resultant deep discounts in equity prices produce the BARGAINS that stimulate the beginning of the next bull market.
The fundamental definition of a selling climax is a period of panic behaviour and panic is not a matter of activity but intensity.
The world capital market has been experiencing this phenomenon of selling climax, which initially started with the activity of profit takers who perceived that most of the stocks have reached their peak. The effect created, however, continued to drive the prices to their lowest low which is believed would gradually reverse into bullish market .
Blow offs occur at tops, they usually occur after prices have moved higher over an extended period of time. At the end of the upward moves, prices rally sharply accompanied by a large increase in volume. Typically, all of those that were going to buy at this level have done so. Profit taking occurs and prices reverse, often suddenly, to the downside.
Selling climaxes are simply the opposite of blow offs. They occur at the market bottom after prices have been declining for an extended period of time. Bargain hunters then jump in buying, reversing the trend, and sending prices higher.
Through the years, investors have searched diligently for ways to identify important market bottoms. And the selling climax has been one of the major focuses of that search.
A selling climax is generally defined as that capitulation of investors near major market bottoms, in which stocks are dump or abandon. The selling is no longer based on perceived values but rather simply on the desire to get rid of stocks. Once everyone who wanted to sell stocks has sold, there is no one left to drive the prices lower. And the resultant deep discounts in equity prices produce the BARGAINS that stimulate the beginning of the next bull market.
The fundamental definition of a selling climax is a period of panic behaviour and panic is not a matter of activity but intensity.
The world capital market has been experiencing this phenomenon of selling climax, which initially started with the activity of profit takers who perceived that most of the stocks have reached their peak. The effect created, however, continued to drive the prices to their lowest low which is believed would gradually reverse into bullish market .
Comments