MDA - Market Direction Analysis Message Board

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Strategies & Market Trends : MDA - Market Direction Analysis

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Nov 5 4:00 PM EST

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To: HairBall who wrote (63352)	11/29/2000 4:46:29 PM
From: Don Green	Read Replies (2) of 99985

CAPITULATION A word you will hear more and more about in the coming weeks. Actually an old war term, referring to the act of surrendering or giving up. In stocks it is associated with "giving up" any previous gains in the stock price. True capitulation involves extremely high volume and sharp declines (oversold stocks), it usually indicates panic selling. After this "capitulation selling" there is said to be great bargains because everyone who wants to get out of the stock for any reason (including forced selling due to margin calls), has gotten out of the stock and the price should reverse or bounce off the lows. Shrewd investors will wait for the capitulation to finish before buying back in rather than trying to pick a bottom. investopedia.com

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