TVO Market Barometer 5/23/17: Volume is everything, but don’t tell anyone.

Folks have been saying low volume means nothing. They even go so far as to say that volume itself is not predictive, can’t make you any money, and only makes sense after the fact. Well, using only volume data, we have been correctly predicting price moves (and making money) for the past 3 years without referring to a single price chart, and our backtesting shows 15 more successful years before that. But if the standard “inside of the box” trading method is working for you that’s great (I mean that sincerely). If your price systems leave something to be desired, though, or if you’ve just had enough of the noise you might want to check out TVO. But try to keep it quiet because when it comes to a trading system, the more who know, the less likely your edge will last.

So yes, volume has dropped the past few days, but today we’re seeing signs of the trend reversing as overall volume stayed put at zero (of course TVO already saw that coming when the oscillator reversed direction yesterday, but let’s keep that a secret between you and me). And then we had a +20% increase in volume last Wednesday that many folks were quick to file away as just declining volume… but that’s precisely the kind of extreme heat that creates a vacuum for buyers to start flooding in.

How do we know how much volume is enough to ignite the flame? HG and HG Live beta are designed to let us know just the right amount, and high levels aren’t necessarily bullish, as there are actually patterns of high volume (contrary to popular belief) that can lead to sudden reversals to the downside. Next Day Move says a SIDEWAYS move looks to be in the cards at this point, which would be good for the bulls as it would allow the rally a chance for a much needed refueling. So volume is indeed a predictive indicator that both bulls and bears can benefit from. But please don’t quote me on that. -MD

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