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Current Market Description: Capitulation?

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posted on Sep, 18 2008 @ 11:50 AM

"What we're seeing at the moment is classic capitulation," said Roland Nash, head of research at Renaissance Capital. ml


A military term. Capitulation refers to surrendering or giving up.

In the stock market, capitulation is associated with "giving up" any previous gains in stock price as investors sell equities in an effort to get out of the market and into less risky investments. True capitulation involves extremely high volume and sharp declines. It usually is indicated by panic selling.

After capitulation selling, it is thought that there are great bargains to be had. The belief is that everyone who wants to get out of a stock, for any reason (including forced selling due to margin calls), has sold. The price should then, theoretically, reverse or bounce off the lows. In other words, some investors believe that true capitulation is the sign of a bottom.

anyone know just exactly what he means by this? and what the comparison of this to our market implies?

i'm no stock expert, just thought i'd add this to your research on the current economic situation...

[edit on 113030p://upThursday by indigothefish]


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