Overhang

The term can encompass different meanings. First, a market overhang happens when a product leader announces they will begin manufacturing a product in a new industry. As the company is already a well-known and respected competitor in its first industry, the announcement will then cause people to wait for their new product in the new industry instead of buying products that are already available. The waiting period can create a demand backlog. This is sometimes an intentional move done by companies to stall purchases of available products and increase purchases for the new product when it is already available. Second, the term can also describe the observational theory that in certain stocks during certain times, there is an accumulation of selling pressure. This arises due to the combined powers of sales and a strong wish to sell among those who still hold some stock but are reluctant or afraid that selling may further cause declines. Depending on the overall liquidity in the stock, market overhangs can last anywhere from weeks to months, or even longer.

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