Interesting chart patterns

Trading volume is grossly misunderstood. Why? The conventional wisdom believes strong markets have to rise with strong volume. I do not share this view. This is why.

The attached chart (click on the chart to enlarge it) shows the typical volume patterns useful for short-term and long-term investors.

Above average volume following a sharp rally signals distribution and a top formation.

Above average volume following a sharp decline signals the beginning of as bottom (accumulation, panic selling, "do not talk to me about investing anymore" type of sentiment).

The attached chart shows these two patterns quite clearly. My point? Watch for above average volume. It may signal a bottom or a top depending on the action of the market prior to soaring volume.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.