3 ms·
How do you know that +10% is after the bottom and not a temporary bump on the way down?
by dennisgorelik 15y ago
How do you know that +10% is after the bottom and not a temporary bump on the way down?
- d2vid 15y agoYou could look at trading volume to determine whether the stock has "settled down". That would at least indicate decreased volatility.
- fauigerzigerk 15y agoI don't, but at that point the fundamentals matter again. The decline isn't self feeding any longer. Most investors set stop loss levels for themselves. So when a stock crashes through those levels it triggers a lot of sell orders which makes the stock go down more triggering more stop losses, etc. Once the cascade has stopped, the game changes a little bit and fundamentals are reconsidered. [Edit] And I didn't mean a 10% bounce immediately after the fall, but rather a gradual move up over the course of a few weeks.