Definition of a Spike in the Stock Market

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The stock market and economy are constantly moving and fluctuating. Every now and then, a spike occurs. A spike is a significant change in the market that can occur within a brief period.

Identification

A spike is a drastic upward or downward movement of value or price level within a short period, according to "Stock Market Cycles: A Practical Explanation."

History

According to the book, "High-Powered Investing All-In-One For Dummies," an example of a negative spike in the stock market was the stock market crash of October 19, 1987, also known as Black Monday. During Black Monday, the S&P 500 fell more than 20 percent.

 

Considerations

The market will occasionally behave in a wild and random manner, according to "High-Powered Investing All-In-One for Dummies." Though market observers and experts can detect the various conditions that can cause a spike, these technical warnings may not always lead to an actual spike. This is what makes a spike unpredictable.

 

References

  • "Stock Market Cycles: A Practical Explanation"; Stephen E. Bolton; 2000
  • "High-Powered Investing All-In-One For Dummies"; Amine Bouchentouf, Brian Dolan, Joe Duarte, Mark Galant, Ann C. Logue, MBA, Paul Mladjenovic, Kerry Pechter, Barbara Rockefeller, Peter J. Sander, Russell Wild; 2008

About the Author

Kat Consador is a freelance writer and professional competitive Latin dancer. Her work has appeared in eHow and various online publications. She also writes for clients in small businesses, primarily specializing in SEO. She earned a Bachelor's of Arts in Psychology from Arizona State University.

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