The following is what happens ALL the time in the stock market, its what makes the charts we look at again
quite predictable other than being tough to accurately judge/predict the prices things peak or bottom out at.
The part that could get interesting is, suspect many held onto their shares hoping:
a. it would keep going, the momentum hasn't been stopped
b. if that didn't happen, pause, but no sell off
c. If a sell off happened, that it wouldn't be very deep
d. shares will look cheap now, don't worry the buyers will step in
But then something happens and the next phase called CONSOLIDATION kicks in:
e. a didn't happen
f. b did happen, but thats to be expected as holders, buyers and sellers wait to see what happens next
g. c did happen, momentum was broken, new buyers weren't present, and some holders started to decide to take profits
h. d did happen, there was 'nibbling' on the 'cheap' shares relative to the price it recently peaked at, but not enough to restore
the momentum.
i. and now with the slipping price, the loss of gains, the profit taking or in some cases, those caught chasing LATE
and paying more than than say 30 cents, start to realize losses
j. and the sell off gets a little more serious and has the POTENTIAL to get nasty UNLESS something is said
to stimulate a new round of buying.. because each drop in price, has the potential to turn another holder into a seller
k. this is the consolidation phase that shakes out a lot of the non-believers, the momentum traders.
the only question now is, where does it 'stop at' and we won't know that till it does for its own set of reasons.
