Market Overhang

AAA

DEFINITION of 'Market Overhang'

An observational theory stating that in certain stocks at certain times, there is a buildup of selling pressure. This occurs as a combined result of sales and a strong wish to sell among those who still hold the stock but fear that selling it may cause further declines. Depending on the overall liquidity in the stock, a market overhang can last for weeks, months or longer. Market overhang usually relates to trading in one security but can also apply to larger areas of the market, such as an entire sector.

INVESTOPEDIA EXPLAINS 'Market Overhang'

Market overhang is most often felt and created by institutional investors, who may have a large block of shares they wish to sell and are aware of high selling interest across the market for the stock. Another scenario arises when a large shareholder is thought to be looking at selling his or her stake. This creates an overhang in the stock, which prevents investors from buying the stock until the large shareholder is done selling his stake. Market overhang can also develop in a poorly-performing IPO when the lockup period ends and insiders look to unload their recently-acquired shares.

RELATED TERMS
  1. Bagging the Street

    An investor's failure to avoid trading in the stocks that are ...
  2. Institutional Investor

    A non-bank person or organization that trades securities in large ...
  3. Block Trade

    An order or trade submitted for sale or purchase of a large quantity ...
  4. Majority Shareholder

    A person or entity that owns more than 50% of a company's outstanding ...
  5. Stock

    A type of security that signifies ownership in a corporation ...
  6. Significant Order

    An order to buy or sell a security that, due to its abnormally ...
Related Articles
  1. Keeping An Eye On The Activities Of ...
    Options & Futures

    Keeping An Eye On The Activities Of ...

  2. Why would my stock's value decline despite ...
    Investing

    Why would my stock's value decline despite ...

  3. Introduction To Level II Quotes
    Active Trading

    Introduction To Level II Quotes

  4. What is Alibaba?
    Investing News

    What is Alibaba?

Hot Definitions
  1. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  2. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  3. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  4. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  5. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  6. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
Trading Center