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Definition

The value of unexecuted sell orders in the market at the close of trade. An excessive overhang of sell orders can be an indication of a crash if it is very large. On Monday 19th October 1987, Wall Street closed with a huge overhang of sell orders which led to the market falling heavily the next day. A combination of factors leads to such an overhang, starting with the fact that the market is generally overbought and trading at an excessive average multiple. That leads to bearish sentiment which can then be triggered by adverse economic data or a surge of poor results from large, listed companies. A build-up of sell orders late in the trading day when prices are falling quickly can result in an overhang at the close of trade.

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