MomentumFalling prices can gain and sustain momentum for a considerable period of time as people panic or give up to limit their losses.
SentimentThe negative feelings surrounding a stock that has declined dramatically may linger for a while making a reversal difficult.
Information AsymmetryIf you feel that a stock has fallen too far and is cheap based on your information it can be difficult to know if someone else has better information. Insiders or bank analysts who are advising clients may know something you don't.
|Overview: Falling Knife
A stock that is rapidly falling.
A stock that is falling rapidly is dangerous to buy due to factors such as momentum, sentiment and information asymmetry.