Market overhang


Market overhang

The theory that, in certain situations, institutions wish to sell their shares but postpone the sale because large orders under current market conditions would drive down the share price and that the consequent threat of securities sales will tend to retard the rate of share price appreciation. Support for this theory is largely anecdotal.

Market Overhang

Shares in a security or commodity contracts that are likely to be sold in certain circumstances, creating downward pressure on the price. That is, the market overhang supply is a block that investors are holding but will likely attempt to sell. For example, if a security hits its resistance level, more investors are likely to sell their shares which increases the number of shares available on the market and, assuming demand does not increase, will lead to a decline in the price. Market overhang is also called the overhanging supply or simply the overhang.