Your statements are a little late concerning low volume. It's important to see volume tapering off as the downside risk decreases. The weak hands have already sold back when the stock was trading with small 200/300 share blocks, and even more so when the issue traded its second highest volume day of over a million shares.
Low volume is more of a concern when shares are rising in price. When that happens, be suspect. When volume is low and the price is declining, then the validity of the decline is also suspect(i.e. small and weak hands).
If you saw the recent WSJ with the teenage daytrader, you'll see that they focused specifically on issues that experienced weakness on low volume, because it gave them considerable assurance that the decline was not based on adverse fundamental developments. These were the issues they picked up that let them turn $10,000 into over $200,000 in a 60 day trading period. Volume is everything, it seems, for this group.
Today's mild decline was on low volume, which tells me to (1) ignore it, because probably nothing changed with the fundamental outlook and (2) look at it as a tapering off of "weak hands."
You'll also note that a significant Candlestick pattern, called a Doji, was formed on Thursday's trading. I leave it to you to find out what it means in further detail. In short, it's a reversal candle that signals a potential change in sentiment from bull to bear and vice versa.
That's the first signal indicating we've leveled off.The second is that Momentum is troughing for the short term. Study the effects of momentum; it'll show you why this is important. The third is that we're approaching the 21 dma. The fourth is that further price support exists at 7.5. The fifth is that we're about to approach oversold levels on the stochastics indicator...and there's plenty more where that came from from RSI, trend following indicators, and so forth, which I will not attempt to bore you with.
That's why I am watching this closely over the next few days. SNRS has already had its fun ahead of the broad market pullback. I feel that technically, SNRS is a safer issue than any of the over-extended broad market issues I am tracking.
I hope this perspective helps.
Regards,
Rainier |
