Precipitously low market
volume a sign that a correction is imminent
May 5, 2010
Since the 16th of April, the Dow has pulled back several
times however on 3 occasions the volume swelled to over 7
billion shares. April 16, volume swelled to 9.1 billion,
April 27, volume surged to 8.31 billion and on May 4th
volume surged to 7.4 billion. What do all these dates have
in common? The markets sold off on each one of these dates.
What is even more important is that not once during the 37
new highs the Dow put in did the volume ever make it even to
the 7 billion mark. This is an astounding development, for
it clearly indicates that long term players are not
participating in this rally. Low volume indicates low
market participation and vice versa. Thus a market that puts
in new highs on low volume is setting itself up for a very
big fall as there are fewer and fewer players to support it.
VIX appears to have put in a bottom and is ready to trend
much higher. An upward trending VIX means markets will trend
in the opposite direction.
Copper a leading economic indicator has already topped and
the Baltic Dry index put in top last November. Put call
ratios are indicating that the masses are also extremely
Individuals willing to take on a bit of risk can short the
market via the following ETF’s DOG and QID.