Using volume to spot tops and bottoms

 

Trading volume is very important to spot important bottoms and tops in the stock market and individual stocks.

The above chart shows you what I mean. Two important patterns.

1.  Well above average volume after a sharp market correction is a sign stocks are close to a bottom.

2.  Well above average volume following a spike in price is a sign of an important market top. There are many examples of this pattern. For example gold in 2011 and Berkshire in December 2014.

George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
Author, Profiting in Bull and Bear Markets

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