Let's take a look at the chart for Dow last night - Started off pretty well, trending upwards all the way hitting a high of 13,330 before it wasn't able to support itself and started to have a sell down, breaking all 3 moving average and finally closed at 13,204.89. No one likes sell down but we want to see if this is a genuine major sell down or it's something else.
Looking at the daily chart, volumes typically spike during the start and end day for Dow. If we look at the volume intraday, it's really low and not even hitting average volume for trading.
Now let's look at the monthly chart - look at the volume for this week (we are at Wednesday already) and comparing it across the months, the volume is slightly lower than average and big sell downs are pretty obvious (e.g. in 2009, in mid year of 2011).
Of course there are many factors that will affect the direction of the stock markets but before we sound the alarm, we probably need to assess whether this is a genuine mass market sell down or this is currently still profit taking from retailers/small funds.
What's your thoughts?
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