Capitulation - Panic Selling
Capitulation is best summarized as panic selling. Capitulation is the
final phase in an extreme downtrend when stock owners are willing to sell out at
any price. Capitulation is the end of a
downtrend as a result of this
panic selling. During capitulation, there is almost a complete lack of
buyers, which creates a vacuum of selling.
Example of
capitulation:
This index saw capitulation as prices moved
lower and accelerated in their descent. Capitulation ends with a volume
climax as price moves virtually straight down.
Capitulation is the opposite of a
parabolic uptrend, and often marks a lasting low on extremely heavy
volume.
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