Hyperby: I'll try my best here...capitulation is when a stock, on extremely high volume, hits a low, or often breaks below its support, causing rapid panic selling...idea being that after everyone who gets scared sells, then the selling is over. Picking the capitulation bottom if often tricky, often called catching a falling knife! Sometimes there is capitulation and then more capitulation!!! Peter Canello on CNBC says today was heavy into PUT buying, and he saw a lot of panic selling which is good.
Hedge funds are like mutual funds, usually requiring large minimum investments of $100,000 or more, but they are run taking huge bets, often with monster leverage, often in bonds or very volatile issues. When their bets go south, they are so highly leveraged that, on occasion, they can't liquidate and get even, and that causes panic to say the least. Hope that helped, and was not too far from the mark! |
