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First volume, then price. Not the other way around. – TVO MB 2-08

Thursday’s shakeout, powered by huge spikes in down volume, seems to have run its course. HG didn’t quite make it down to COOL on Friday, but BALMY is pretty close. Nevertheless, SIDEWAYS is the direction that volume is showing, at least for Monday’s session.

But what about the declining volume on Friday? Shouldn’t the bulls be concerned?

When it comes to volume, the market is rarely an up/down binary affair. The selloff day on Thursday provided more than enough overall volume to fuel any potential further upward move.

No matter how you slice it, volume counts, regardless of whether it happens on the exact day as the reversal. Volume fuels the move and price confirms it, not the other way around.

While most folks are focused on price, big volume on a red day often conceals the fact that there is indeed buying going on. You just have to know where to look. -MD

Sentiment: INSATIABLE – Big institutions are buying like there’s no tomorrow.

Volume: -10% – Today’s volume was lower than the previous session.

Real Feel: BALMY – Bears were in control of the session with considerable buying under the surface.

Cycle: OVERBOUGHT II – Retail investors are overly cocky and heavily positioned in their holdings.

Portfolio: HEDGE – The market is over saturated and long-term investments warrant some protection.

Next Day Move: SIDEWAYS - The probability that SPY will close positive in the next session is 54%.

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