Technical Decline

You live alone in a cabin in the woods. You hear rustling outside. Sometimes that means a serial killer has come to slaughter you. Sometimes, it’s just the wind whistling through the trees.

Same with the declines on Wall Street. Sometimes, when the market drops, it means bad news for the economy. Lower earnings...higher unemployment...mass hysteria. Other times, it doesn’t mean much of anything at all. Those more benign drops count as technical decline.

Technical declines don’t happen in response to anything fundamental. Shares of a company fall. But the slide didn’t happen because earnings were bad, or because bad news about the company was released. The decline took place because of people responding to the movement of the stock. The chart showed that the stock hit some resistance. That triggered some automatic trading. Meanwhile, other people just moved to lock in recent profits.

Whatever the specific cause, it doesn't signal that anything has changed for the underlying company. It's a stock market thing alone. Something technical, not fundamental. A technical decline.