This describes a period near the end of a prolonged bear market. In a graveyard market, long-time investors have taken large losses, while new investors prefer to stay liquid by sitting on the sidelines and keeping their money in cash or cash-equivalent securities until market conditions improve.
The term graveyard market is an apt description of this market phenomenon: the investors in a graveyard market can't get out of it, and the investors who aren't in it don't want to be.
Wednesday, November 19, 2008
Monday, July 7, 2008
Downside Protection
This refers to a cushion against the potential loss resulting from a price decline in a security or market. The challenge associated with downside protection is that downside protection needs to be balanced with upside potential for high returns. For this reason (among other more complicated ones), some investors do not believe in downside protection.
Whether or not an investor should consider downside protection depends on several factors, such as how long before the money is needed and if there will be regular withdrawals during that time. The sooner one needs the money and the more often one plans to withdrawal, the more appealing downside protection can be. A common example of downside protection is having a put option on an owned stock.
Whether or not an investor should consider downside protection depends on several factors, such as how long before the money is needed and if there will be regular withdrawals during that time. The sooner one needs the money and the more often one plans to withdrawal, the more appealing downside protection can be. A common example of downside protection is having a put option on an owned stock.
Thursday, July 3, 2008
Ascending bottoms
This refers to a chart pattern in which the lows of the trading range get progressively higher over a given time frame. Ascending bottoms chart patterns can be used to evaluate stocks, commodities, indexes or virtually anything with a price/time chart. Ascending bottoms can be plotted for virtually any time frame: daily, weekly, monthly, yearly or even longer periods of time.
Ascending bottoms are considered an indication of a rising market and are generally viewed as a bullish pattern. Ascending bottoms are considered an especially bullish pattern when combined with ascending tops. Ascending bottoms chart patterns are most likely to be used by a chartist or by a technical analyst. The opposite of ascending bottoms would be a descending bottoms pattern.
Ascending bottoms are considered an indication of a rising market and are generally viewed as a bullish pattern. Ascending bottoms are considered an especially bullish pattern when combined with ascending tops. Ascending bottoms chart patterns are most likely to be used by a chartist or by a technical analyst. The opposite of ascending bottoms would be a descending bottoms pattern.
Tuesday, July 1, 2008
Deer Market
This refers to a flat market. Neither a bull or bear market, a deer market is characterized by low activity, with timid investors waiting for a sign of which way the market is going to end up moving.
The term is used to illustrate when investors who are unable or unwilling to move due to uncertainty - like deer who freeze when "caught in the headlights" of a vehicle.
The term is used to illustrate when investors who are unable or unwilling to move due to uncertainty - like deer who freeze when "caught in the headlights" of a vehicle.
Hammering
The rapid and concentrated sale of a stock thought to be overvalued by the market. It performed by investors and speculators who believe that prices are inflated and that a period of liquidation is imminent.
Hammering the market is achieved through large sale orders or many small sell orders. In some cases, investors may even collaborate on orders to attempt to push the share's price even lower.
Hammering the market is achieved through large sale orders or many small sell orders. In some cases, investors may even collaborate on orders to attempt to push the share's price even lower.
Friday, June 27, 2008
Market Overhang
An observational theory stating that in certain stocks at certain times, there is a buildup of selling pressure. This occurs as a combined result of sales and a strong wish to sell among those who still hold the stock but fear that selling it may cause further declines. Depending on the overall liquidity in the stock, a market overhang can last for weeks, months or longer. Market overhang usually relates to trading in one security but can also apply to larger areas of the market, such as an entire sector.
Market overhang is most often felt and created by institutional investors, who may have a large block of shares they wish to sell and are aware of high selling interest across the market for the stock. Another scenario arises when a large shareholder is thought to be looking at selling his or her stake. This creates an overhang in the stock, which prevents investors from buying the stock until the large shareholder is done selling his stake. Market overhang can also develop in a poorly-performing IPO when the lockup period ends and insiders look to unload their recently-acquired shares.
Market overhang is most often felt and created by institutional investors, who may have a large block of shares they wish to sell and are aware of high selling interest across the market for the stock. Another scenario arises when a large shareholder is thought to be looking at selling his or her stake. This creates an overhang in the stock, which prevents investors from buying the stock until the large shareholder is done selling his stake. Market overhang can also develop in a poorly-performing IPO when the lockup period ends and insiders look to unload their recently-acquired shares.
Chasing the Market
Entering or exiting of a trend after the trend has already been well established. Investors are often unaware of the fact that they are chasing the market, which can dent the value of a portfolio. This type of investing is often seen as irrational as decisions are often based on emotion instead of careful analysis of the value of the investment.
Chasing the market refers to both the entering into highly priced positions after they have rapidly increased and become overvalued as well as the exiting of positions after they have rapidly decreased and become undervalued.
Chasing the market refers to both the entering into highly priced positions after they have rapidly increased and become overvalued as well as the exiting of positions after they have rapidly decreased and become undervalued.
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