What is a 'weak' holder of a stock?

  We often refer to weak holders of a stock when discussing bases and breakouts. What often has to happen before a stock can move up is get rid of the investors who are inclined to dump the stock at the best opportunity to recover what they can of their investment. The are part of what is called the overhead supply, and they are shaken out of the picture at various points as a stock moves through a base. When a stock moves into the handle of a cup with handle base, the last of the weak holders are shaken out as the stock has approached its pre-correction high, but then appears to fade away from breaking out. Frustrated, the last holder that was looking to 'get even' sells out. After that, all that are left are those who are going to hang onto the stock.


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