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Tackle Today: Never Short a Dull Market

August 30, 2021

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Low-volume days are bullish.

Traders,

Once upon a time, I thought low volume up days were a sign that strength was waning, that momentum was petering out. I’ve since been disabused of the notion, and the chart below tells you everything you need to know about just how bullish those low volume rallies can be.

Here are a few key takeaways to today’s volume-focused message.

First, volume is secondary to price. If a stock rises 1% on low volume, you get paid the same as if it had risen on high volume.

Second, high volume up days are known as accumulation days and suggest institutions are gobbling up shares. These are bullish too.

Third, high volume down days are known as distribution days and reveal institutions are selling shares. View these as red flags.

Fourth, just because high volume days are bullish doesn’t mean that low volume days are automatically bearish. Above-average participation often occurs during corrections and downturns. Low volume usually accompanies extended uptrends.

Fifth and final, a lengthy low volume period can often indicate that there is no news worrying investors right now. Thus, prices push northward.

#TeamTackle


Chart of the Day

Never Short a Dull Market

Source: @bespokeinvest

The dark blue line shows how SPY performed over the past decade on above-average volume days. The green line shows how it performed on below-average volume days. Notice the grand canyon of difference?


Video of the day

Coach Frank’s Charts


Coach Frank always brings us some beautiful charts to look at. Check out the segment starWatch this clip from Friday’s Halftime Report where the coaches analyze Frank’s charts and discuss their potential trading setups on stocks like Microsoft, Trimble, Starbucks, Amphenol, WestRock, and Linde.

Today’s line up

Traders Lounge 11 AM EST

Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.

Halftime Report 12:30 PM EST

The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day and fun in a way that only Matt and Tim can deliver.

Weekend Reports

Watch the Stock, Options, Commodity and Forex Reports to help you prepare for the week.


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