Technical patterns

Heavy volume after a protracted decline in prices is a reliable signal the decline is almost over and a bottom is near. In other words ...it signals capitulation. There are no more sellers and the asset has moved from weak hands to strong hands.

On the other hand, heavy volume following a sharp and parabolic rise in prices is a sign of distribution. In other words ... the asset has moved from strong hands to weak hands.

In May 2011 gold experienced the same patterns - parabolic rise and heavy volume. Gold peaked. Copper is acting in the same way since mid-September (clisk on the chart to enlarge it). Heavy volume as copper spiked - and copper has been going nowhere since then.

George Dagnino, PhD Editor,
The Peter Dag Portfolio.
Since 1977
2009 Market Timer of the Year by Timer Digest
Portfolio manager

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