The Importance of Down Volume ..

tenteddies

What happens when the volume of money moving out of your checking account is larger than the volume of money moving into your checking account?

Well, if you had a large positive balance before the net outflow began, you would maintain a positive balance until your savings had disappeared.   After that, you would go into a negative balance, checks would bounce, and you would be in financial trouble.

Today, let's discuss Down Volume or the symbol Dvol and mentally equate Dvol with money flowing out of your checking account.   

If your income is constant, and the amount of outflowing money is a constant lesser amount, then you will maintain a net positive cash flow position.

If the stock market's Down Volume were in an up trend and moving higher and higher, then you could assume that it would eventually overtake the amount of Up volume and the market would have to move down or go into a correction.

If  the Down Volume were to move higher and higher, you could assume that investors were profit taking or moving to safety and selling more of their holdings.

So, what has the Down Volume looked like since the end of last July?

The answer is in today's chart showing our DVOL model.    A quick look at the chart tells an investor that the Down Volume has been in a sideways trading range since July of 2010.   If you observe the two solid yellow lines,  you will see the range's upside resistance and downside support.  

Down Volume is one of the many tools that technicians use to measure what is happening in the stock market.  

xiaohehua

thanks!!

happywacom

thanks

trueself

希望俺理解对了

sexydaytrader

raintreebrea

thanks, indeed, it is very good

umqasr

Thanks, DVOL is meaningful to measure the matket.