Short excerpt from a Kardec Trader YouTube video arguing that small-cap stocks tend to be in steady downtrends because they are 'bad companies'; sudden price spikes occur when long-term holders (bag holders) seek opportunities to sell during thin-volume, low-liquidity periods. The speaker explains selling pressure dynamics around spike days.
You look at the daily chart, the overall trend of these small caps is like this. And this is the market open of the spike day. So let's say this is like a period of months or years. They're always on a steady downtrend because they're, they're bad companies. Right. They're selling off. So a lot of the times the reasons that these sell off from a spike is because you have long term bag holders in the stock looking to get out. And they can't sell on these days because there's no volume, there's no liquidity. So they are looking for a spike even to sell at a smaller loss. It's easier to live with. Right. So you have that kind of selling pressure.
