Thursday, October 1, 2009

You can't have it both ways

Over the past few months, many technical holy grails, such as breakouts on high volume should be bought, have not worked. Then two weeks ago, all of the sudden an reversal bar on high volume means the end of the bull market.

Either it works or it doesn't. And yes, we all pray in the Church of What's Working Now but the gospel there does not change on a daily basis. Volume matters, then it doesn't and now it does.

Riddle me this, why did "they" make such a stink over the Sep 30 decline when traded high volume but closed in the middle of its range? All of the sudden traditional distribution days work again? If the stock market has broken down then how come volume was not really heavy today when the Dow sheds 200 points?

Yes, it was heavy volume on a big decline but if distribution days work again then volume should have been higher. After all, the rising trend from July was broken rather decisively.

I've already said that retail stock trading has jumped the shark. There was a piece on Minyanville about how lawmakers can usual inside information legally. With Goldman Sachs pulling Washington's strings, too, I have a feeling that investments as a whole are strapping on the water skis.

* For those confused by the reference, the TV show Happy Days was said to have peaked when they had Fonzie jump over a roped off shark while water skiing.

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