I find that lower volume when an index churns is a more reliable sign of a topping pattern. Often times investors/traders point to an index that is rising on lower volume and they expect it to fall and it never does.
I would be on the look at for a climax top at the end of a low volume rise to be a signal that the markets are going to reverse. We’re in a grind higher pattern as far as I can see for now.
Low volume at a new high can often be concerning, whether it be NYSE volume or SPY volume. In last night’s subscriber letter I looked at a couple of volume-related studies with moderately bearish inclinations. I then combined them to see what would occur. The study below shows the result of the combination. |
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