Tuesday: Daily Buy/Sell Strength Charts…More Light Readings!
Today we sold off in the morning (not that surprising considering the ridiculously weak buy strength noted yesterday), but regained some ground by the afternoon.
By first appearances, one might conclude that today is remarkably similar to yesterday, but in the opposite direction. Â Yesterday we had a .9% gain with no buying, and today we had a .85% loss with little selling. Â This is a similarity, but the critical distinction is that while buying should accompany good volume, selling does NOT necessarily need to meet any volume threshold. Â Strong volume on a buy day is important, but strong selling on a sell day is not, because price leads volume.
In an uptrend, low volume pullbacks are the best type. Â The otherside of that coin is that low volume selling means few people threw in the towel, and the should prices comtinue to move lower, there is still a large remainder of people who have yet to cash out and may do so at signs of additional weakness.
Other things to be aware of is that this is the fourth consecutive month higher, and the second consecutive week lower. Â In other words, it wouldn’t surprise me if we got a bounce in the context of a lower monthly close for July (June close is 919.)
Danny, did you mean that volume leads price?
no, what I was saying is that price > volume on level of importance.