The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question – “When does a stock stop falling and hit bottom?” And so, the answer to this question is actually very simple. A stock will stop falling and hit a relative bottom when there is equilibrium between the amount of sellers and the amount of buyers and the per share price that they agree on. For example, if a stock is continuing to fall and say is at $100 and then falls to $90, well, that shows that there’s still not an equilibrium in price. Market participants, the buyers who are willing to buy and the sellers who are willing to sell have yet to agree on a price at which both parties are now in balance. And so, when we start to see a stock fall and continue to push through multiple levels of support or start to crash through levels of old resistance, what that’s basically telling you is that we have still not found a price at which it would be attractive enough for enough buyers t