Less emotionally painful than being stood up.
In the finance world, a blowoff refers to a sustained increase in stock prices (say, for at least six months going up by 100-500% or more), with few or any dips. Market players want to get in on the action, further raising overvalued prices, but the stock market then suddenly plummets.
To try and identify an upcoming blowoff, the key is to look for an increase in volume right before it hits the peak, followed by another increase in volume as the sell-offs begin.
As just one of many examples, you can Iook back to the year 200,7 when the S&P 500 peaked after a final rally that sent stocks higher by 13% over a two month period. By September 2008, losses amounted to 54%, with 41% of that occurring when Lehman Brothers collapsed.
It’s always tough to predict market reversals, and to go against the grain of what everyone else is doing, but while we don’t have a crystal ball, savvy market watchers look for clues and try to sell before a peak.
