May
18
2009

  Chart Looks Like Recovery, But Volumes Don't Support It

The Dow's rally recycled. Just when it looked like the upward momentum was running out, it was rejuvenated. The extent of the rally had me wondering if maybe the March 9th lows were really the bottom, but one glance at the volumes confirms that we're just in a rally.

If a full recovery was beginning, the volumes traded would increase as the stock price rises, but the volumes are actually declining as the price continues to rise. This indicates that the large traders (institutions, hedge funds, etc.) don't think the price uptrend is sustainable. I'll take a closer look, it might actually be time to double-down on the shorts.

I'm way behind on my charting, but I hope to get caught up today. Maybe I'll even have time to be proactive and come up with some ideas of sectors to invest in over the next two months. I still figure the market will bottom in July, so I'm going to have to watch the various short ETFs very closely if I want to play the plunge. It might be time to get into those soon.