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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 677.56

-2.0%

Jan 20 4:00 PM EST

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To: Zeev Hed who wrote (80945)	7/29/2001 11:04:07 AM
From: KymarFye	Read Replies (1) of 99985

As you probably know, declining volume is a classic component of formations like the falling wedge. As you've also acknowledged, the adage about price following volume can be taken in different ways, and at extreme points can turn into its opposite. In the falling wedge, price follows volume in one sense - as declining price follows declining volume - but also in a more abstract sense, in that volume is decreasingly giving its stamp of approval to the overall down move, leading price to follow the implications with an eventual upward thrust (often explosive, probably accompanied by sharply increasing volume). The false breakdowns may occur in part simply because low volume/narrow range markets are susceptible to strong moves of either type. Seems to me that a falling wedge is rather appropriate to the current economic situation and context of sentiment. On its own it implies a Summer rally of only around 15% from current levels, still leaving the Nasdaq in the red for the year. To me, it still seems far too early to be talking about moves to the high 2000s or higher.

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