Low Volume Bounces Since July

Yesterday I showed a study that demonstrated how Monday’s low volume at the beginning of the bounce was in fact bullish, and not bearish. This is something that many people have difficulty believing. For the more visually inclined I’ve created a chart below that examines many of the moves up since July.

(click chart to enlarge)


Note that in basically every instance where the market was coming off a strong pullback, technicians could’ve complained about the volume. Volume can be a useful indicator, but it is constantly overvalued and misinterpreted. It’s certainly possible that this bounce could roll right over and substantial downmove could ensue. If it happens it isn’t because of the relatively low volume the last 2 days.