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Strategies & Market Trends : Short Selling, Dark Side, Bubble Busting Laboratory

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From: russwinter	10/27/2005 9:44:52 AM
	of 361

Deron Wagner: tradingmarkets.com Both the S&P 500 and Nasdaq registered their second consecutive "distribution days," as volume increased in both exchanges yesterday. Total volume in the Nasdaq increased by 15%, while volume in the NYSE came in 5% higher than the previous day's level. Declining volume exceeded advancing volume by a margin of nearly 2 to 1 in both exchanges. Stocks rallied sharply as a knee-jerk reaction to the new Fed chief announcement on October 24, but it appears that institutions have since used that strength as a selling opportunity. Although the major indices have not dropped a significant percentage over the past two days, the fact that they have declined on higher volume both times is indicative of institutional selling "under the hood." If you ignore the volume changes of the past two days, it simply appears that the broad market has dropped a little bit. But astute traders who understand the relationship between price and volume will see the action of the past two days as a warning sign to the bulls. You may recall that a series of "distribution days" preceded the decline in the first half of October as well.

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