Price Persistence

What is persistence, really? You’re out in the woods hiking; you run out of water and get lost. And yet, you persist. It means you keep going.

Price persistence is when the price of a security keeps going in whatever direction it’s currently going. A stock with a strong upward trend shows price persistence, as well as a stock with a strong downward trend. Where there’s price persistence, there’s general market agreement, i.e. yep, this security is worth more (or yep, this security is worth less).

High volatility, with the price of a security going up and down with no strong up or down trend, shows a lack of price persistence. It shows wishy-washiness. Investors talking price persistence shop are thinking about the security’s momentum (how fast is the price rising?) and its relative strength (how is the price compared to the market overall?).

Price persistence is considered useful by some, and...not-so-much by others. Some believe price persistence on a strong upward trend proves the stock is worthy and valuable. Others believe price persistence doesn’t mean that necessarily; it could mean that the stock is overvalued and overbought—overhyped.