FTDs on Moderate Volume

Total NYSE volume was down slightly but Nasdaq volume rose on Tuesday.  Using the original 1% gain rules that we used to create our Follow Through Day (FTD) database, this meant Tuesday did see a FTD in the Nasdaq.  But what happens when volume rises to trigger a FTD, but it is still light?  This is one concept I looked at in last night’s subscriber letter.  To answer this question I looked at all FTDs where volume came in below its 10ma.

The inclinations over the 1st few days here appear moderately bearish.  The stat at the bottom is interesting, and suggests the rally attempts often fail when FTDs don’t come on strong volume. And for those that may be curious, the success rate rises to 56% when volume comes in above its 10ma.