In last night’s Subscriber Letter I examined whether the relatively low volume on Thursday’s bounce should be concerning. I examined it a few different ways. Below is one series of tests I showed. First let’s look at what happened when volume came in higher on a bounce following some severe short-term oversold conditions.
Interesting that the high volume bounces failed to follow through. The number of instances is a bit low but the numbers are fairly compelling anyway. Let’s see how this compares to low volume bounces:
These tests suggest that Thursday’s light volume should not be of any concern. In fact, it may be a market positive.