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.


http://www.thestockbandit.com/capitulation/

Read also:

Parabolic – Parabolic Uptrend Stock

http://myinvestingnotes.blogspot.com/2012/03/parabolic-parabolic-uptrend-stock.html

Parabolic – Parabolic Uptrend Stock

A stock moves parabolic at the end of extreme uptrends, and is seen when panic buying sets in and prices are driven vertical. During a parabolic uptrend, there is almost a complete absence of sellers, which creates a vacuum of buying. This occurs only in momentum stocks as traders rush to just get into the stock regardless of price, in fear of being left behind. Parabolic moves can make the largest price moves in the shortest amount of time, but are dangerous places to buy stock when you overstay your welcome. When a stock moves parabolic, it often marks the end of a move with prices not returning to the ultimate highs again for a long time.

Example of a parabolic uptrend:

This stock went parabolic and gained in volume and price move at the end of the run. What began as an uptrend quickly became panic buying, driving the stock vertically higher.

Capitulation is the opposite of panic buying and parabolic uptrends.

http://www.thestockbandit.com/parabolic/

Read also:

Capitulation – Panic Selling

http://myinvestingnotes.blogspot.com/2012/03/capitulation-panic-selling.html