Climax

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DEFINITION

A market condition that is characterized by very high trading volume and a dramatic downward or upward movement in price. High volume and downward price movement indicate a selling climax, while high volume and upward price movement indicate a buying climax. Either type of climax signals the end of a trend.

INVESTOPEDIA EXPLAINS

Selling into a climax run can be a good exit strategy, because by selling during a period of euphoria, investors can lock in dramatic gains. A buying climax can bid a stock's price up to levels it will never reach again, or that it will not reach again for at least a decade. At the end of a buying climax, prices can fall sharply as investors realize the stock has been overbought.


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