TVO Market Barometer 10/10/17: What’s volume like at the top?

All time highs across the indices were rejected at the open on Tuesday. As many traders and investors rushed in to speculate the reason behind it, one factor that just can’t be held responsible this time around is lack of volume… Or maybe the post-holiday volume burst may be precisely the reason behind the breakout failure.

Even though there was a substantial boost from the prior session (+19% overall), the market has been on a low volume streak for the past 6 days. When conditions are over saturated, a light volume environment suits the bulls just fine as issues easily change hands and stocks simply follow the prevailing trend (which is UP). Turning up volume just a little bit, though, makes internals start to churn, and when supply can’t keep up with the new demand, the engine stalls.

But in this “market that never goes down” the bulls can easily kick-start things again and keep it rolling, right? Well, TVO is getting close to +5.0, which is the highest it’s been since 3/1 (which turned out to be a short-term top), so the chances of another low-volume leg higher are getting increasingly slim. Potential pullback catalysts could be either the Fed on Wednesday or Consumer sentiment on Friday. -MD

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