What’s the advantage of looking at the market through a volume lens instead of price? Volume can tell you exactly how low it can go, whereas price can… well, you never can tell where price will land. Sure there are “logical support levels,” but the market makers of today scoff at those numbers, as they take the price down (much lower than you’d ever expect) and proceed take out all the stops just below support.
Volume on the other hand, holds no such logic that can be undermined… unless of course the MMs catch on to TVO. In volume data going back to 1978, TVO has never gone lower than -9.9 (Which is close to where it was in one of the first trades ever posted on this blog), so you can say pretty confidently that when the value reaches -7.7, (as it did last Monday 8/21) the market is pretty darn close to a bottom.
Since our volume oscillator began its climb back towards positive values, the distribution phase the bears put in place throughout most of August has come to a screeching halt. The big players are now holding the ball for the time being (Although the Nasdaq logged an accumulation day today), and whether they continue to hold, load up on more, or throw it down for the count may depend on the outcome of a triple whammy of catalysts this week… End of the month, 1st of the month and the jobs report. In the shorter term, though, IO has just become OVERBOUGHT II, so one more flush (like the one building up in the futures right now) may be in store before any rally can take hold. -MD
To view past positions check out our Trade History.
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