Sell-off is the rapid selling of securities such as stocks , bonds and commodities. The increase in supply leads to a decline in the value of the security. A sell-off may occur for many reasons, such as the sell-off of a company's stock after a disappointing earnings report , or a sell-off in the broad market when oil prices surge, causing increased fear about the energy costs that companies will face.

All financial trading instruments have sell-offs. They are a natural occurrence from profit-taking and short-selling. Healthy price uptrends require periodic sell-offs to replenish supply and trigger demand. Minor sell-offs are considered pullbacks.

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Pullbacks tend to hold support at the period moving average. However, when a sell-off continues on an extensive basis, it can be signs of a potentially dangerous market reversal.

Corrections tend to be more aggressive, usually testing the period moving average. The death cross is a popular sell-off signal in which the daily period moving average forms a crossover down through the daily period moving average.

However, the distinction between a correction and a bear market is clearly defined. When a sell-off resonates throughout the financial markets for an extended period of time, it can trigger a bear market.

Since , the domestic equity markets have experienced 25 bear market sell-offs. Bear markets are defined by two distinguishing characteristics. Anything less is considered a correction.

There have been two bear market sell-offs in the new millennium. The average bear market occurs every 3. Markets have been in a bull market for nearly double the average figure. Dictionary Term Of The Day.

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