The Problem With A Low-Volume Rally
The market is technically in a confirmed uptrend, but
above-average volume has yet to show up during this rally.Â
The single problem with a low-volume rally is that
eventually the market will hit higher prices that appeal to sellers and volume
will not be there to absorb the selling pressure. In the meanwhile, the best
thing to do is watch the market’s daily price and volume action for clues of
selling or a further advance with more power.
Individual growth stocks from the internet, medical and
retail groups have taken advantage of the current market to break out of a few
growth patterns. Urban Outfitters (URBN) made a move today, even though the
base did not qualify in length of a healthy pattern.
Idexx Labs (IDXX) followed
through on yesterday’s move out of a flat base and through its pivot point of
63.71, but volume came in lighter.Â
eResearch
(ERES) rounds out the more popular names and saw its price pull back following
two days of breaking out of a multi-week cup and handle base.Â
breaking out of a multi-week cup and handle base.Â
This is still a market to be careful in even if you are
playing some of the opportunities that seem to be presenting themselves. We
have yet to see a 20% gain in under 4 weeks, which usually indicates the true
strength of a leader.
Tim Truebenbach