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Term of the Day - September 20th, 2004
http://www.investopedia.com
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Term Of The Day: Capitulation
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A military term. Capitulation refers to surrendering or
giving up.
In the stock market, capitulation is associated with "giving
up" any previous gains in stock price as investors sell
equities in an effort to get out of the market and into less
risky investments. True capitulation involves extremely high
volume and sharp declines. It usually is indicated by panic
selling.
Investopedia Says:
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After capitulation selling, it is thought that there are great
bargains to be had. The belief is that everyone who wants to
get out of a stock, for any reason (including forced selling
due to margin calls), has sold. The price should then,
theoretically, reverse or bounce off the lows. In other words,
some investors believe that true capitulation is the sign of
a bottom.
Related Links:
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Article: Capitulation
http://www.investopedia.com/articles/analyst/080702.asp
Article: An Option Strategy for Trading Market Bottoms
http://www.investopedia.com/articles/optioninvestor/02/081902.asp
Article: The Signals of the Next Bull Market
http://www.investopedia.com/articles/01/062701.asp
Related Terms:
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Bloodletting
http://www.investopedia.com/terms/b/bloodletting.asp
Bottom
http://www.investopedia.com/terms/b/bottom.asp
Correction
http://www.investopedia.com/terms/c/correction.asp
Dead Cat Bounce
http://www.investopedia.com/terms/d/deadcatbounce.asp
Falling Knife
http://www.investopedia.com/terms/f/fallingknife.asp
Flight to Quality
http://www.investopedia.com/terms/f/flighttoquality.asp
Panic Selling
http://www.investopedia.com/terms/p/panicselling.asp
Have a Great Day!
The Investopedia Staff
http://www.investopedia.com
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