Capitulation

This is also known as a selling climax, when investors rush to sell their securities in panic. Some people believe such panic selling marks a market bottom. This is probably true to a certain extent, but panic selling could occur even when the worst has not yet occured. It is hard to identify when a selling climax marks the real bottom of a bear market, or is just a brief stop along the way. Therefore the old Wall St adage, “Never try to catch a falling knife” is appropriate in most situations.

Related Terms

Popular Articles