Sunday, May 31, 2009
Volume drives the markets. Everyone HATES to sell at a loss. Therefore dropping volume is bad two or more ways. Volume drops when a market recedes as there are few that want lower prices for the stocks they hold, until they get an epiphany or something else happens, like a need for cash or a margin call. Dropping volume in a rising market tends to imply DISTRIBUTION, a seriously dirty word amongst the non-professionals out there. Dropping volume on a rising price also implies a false rise. Without market volume to drive market prices, things are in fact, soured.
The solid lines are Moving Averages of the NYSE PRIMARY VOLUME.
The Dashed lines are of 1/ a Breadth index,the SI, and 2/ the DJIA.