The markets finished the week on a strong note with the Dow advancing just over 1%. For the week, the Dow was down just over 1%.
My take of the action is that the bulls aren’t ready to give up the rally and the professionals haven’t taken a new stance. In VSA (Volume Spread Analysis) the volume is supposed to match the price action. What I mean by this is that if the markets move up or down a large amount, the volume should also spike accordingly to signal that the move is healthy and supported.
I always like to use the example I read: If you are driving up a hill and take your foot off the gas, the car will only continue up the hill so long before it starts to roll backwards. If the volume drys up in a rally, it will stall and trend sideways until the professionals take a stance.
Right now, I think we are in a transition period and will see a bit of a see-saw motion. There are still good looking long charts out there like TAP, PSS, and CBE (which I added to my portfolio on breakouts Friday), but the rally can only last so long without significant volume.
You also might enjoy:
About Author
