You live alone in a cabin in the woods. You hear rustling outside. Sometimes that means a serial killer has come to slaughter you. Sometimes, it’s just the wind whistling through the trees.
Same with the declines on Wall Street. Sometimes, when the market drops, it means bad news for the economy. Lower earnings...higher unemployment...mass hysteria. Other times, it doesn’t mean much of anything at all. Those more benign drops count as technical decline.
Technical declines don’t happen in response to anything fundamental. Shares of a company fall. But the slide didn’t happen because earnings were bad, or because bad news about the company was released. The decline took place because of people responding to the movement of the stock. The chart showed that the stock hit some resistance. That triggered some automatic trading. Meanwhile, other people just moved to lock in recent profits.
Whatever the specific cause, it doesn't signal that anything has changed for the underlying company. It's a stock market thing alone. Something technical, not fundamental. A technical decline.
Related or Semi-related Video
Finance: What are Triple Bottom and Trip...2 Views
Finance allah shmoop what are triple bottom and triple tops
All right well this is a triple top It wants
to break out The stock was trading down here around
five bucks a share in and glam o it went
up And yes blam o is the name of the
company's new anti constipation drug a huge hit So it
went up up up to hear it Fifteen bucks tripled
in value in just a few months but then sober
reality began to hit the investing community There simply wasn't
enough constipation to go around So the stock began to
flag and traded down teo here this level at twelve
bucks But then glam o again released big news a
partnership with manish of its grandma tsa and the american
cheese manufacturing association So the stock raced again to fifteen
But no there just wasn't enough enthusiasm from buyers pay
more than fifteen bucks a share for it So you
know that's all despite this newly created a kind of
market So the stock sank back to twelve only to
then have investment interest from procter and gamble owners of
sharman who bought five percent of the company at thirteen
fifty ish year and left a lot of investors thinking
surveyed by the whole company complete with its product line
of anti constipation drinks Waymo glam Oh thankyou memo But
alas the investment community would not pay up past fifteen
to share and the stock flagged again sinking back to
twelve having created a triple top and needing something to
make things really start you know going So yeah that's
a triple top What about a triple bottom Well a
triple bottom and basically just the same thing in reverse
like this keeps hitting a low point looking like it's
going tio bottom out further But then it recovers on
the subject of bottoming out well glam o is now
available in new chewable gummy form Yeah glam o so
you never have to worry when your bottoms out
Up Next
What is Community Property? Under state matrimonial law, community property is defined as any assets or debts accumulated by a couple starting from...
Technical analysts don't care how companies make their money or how they run their business; they're just interested in the numbers. The data. Yeah...