Coiled Market
Categories: Financial Theory, Investing
Boooing!
Yes, a coiled market is basically the same idea as a springy coil. A coiled market is one that might make a strong “boing!” one way after being pushed from the other direction. Because of built-up pressure, the market will eventually have a burst of energy, releasing that pressure in a substantial way in a certain direction.
A common reason coiled markets happen are because of artificial constraints (like government interference) that have been applied, then lifted or changed. This is pretty common in commodities markets, where the government tinkers with prices and quotas to meet certain ends. Watch out for coiled markets in the news...you’ll see ‘em. Gold, silver, and steel now are often coiled, but so are agricultural products like soy and ethanol. Keep one eye on the coil.