Last Friday, overall volume spiked as the Nasdaq took a dive in what most folks viewed as a shakeout… when fear or uncertainty causes many investors to exit their positions at a loss. After the weak hands clear the deck, the market can once again resume its upward direction. While the market that “only goes up” has indeed resumed its course, the shakeout seems to have lacked both fear and uncertainty as far as volume is concerned. The Heat Gauge (our trusty “shakeout” meter) barely budged during the selloff and has since remained in a tight range. The lack of distribution has allowed the scale to tip on our Issues Oscillator, which is now starting to show overbought conditions in the near term. When a shakeout fails to clear the decks and gets mostly bought before it gets going, there may not be much room left on the boat for buyers to get on. -MD
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