The Initial Market Decline Can Be on Lower Volume

Tags: stock market, stocks, stock market useful guide, stocks tips, Earn Money from stock, How to make money in stock market

The Initial Market Decline Can Be on Lower Volume

Most stock market technicians are fooled by the initial market decline off the top when they see volume contracting. They do not understand this is a normal occurrence after heavy distribution has occurred on the way up around the top.

Volume begins to pick up on the downside, days or weeks later, when it becomes obvious to more investors. But as in anything else, if you wait until it becomes obvious to most people, it is going to cost you more. You will be selling late.

Similar top indications can be seen on the S&P 500, New York Stock Exchange Composite, or even on occasion an index of the current cycle's speculative growth stock leaders. These averages should be followed together because sometimes one average may give a much clearer and more definite sell signal than another.

The speculative, or swinger-type, stock index is occasionally significant because market movements are almost always led by a few aggressive stocks. The leaders of the original move up may at times turn on their heels first. Therefore, a speculative index may highlight the one-day price reversal or stalling action on increased volume. I term this "heavy or increased volume without further price progress on the upside."