The idea that lower volume rallies are not reliable is oddly prevalent. But look and learn for yourself. This @trendspider chart for $QQQ includes a 20-day MA for volume which clearly trends down as the market goes up. ? pic.twitter.com/QqlNlOJMwo
— Jonathan Harrier, CMT (@jonathanharrier) December 28, 2021
Today’s Chart of the Day was shared by Jonathan Harrier (@jonathanharrier). It’s a daily candlestick chart of the Nasdaq 100 ETF, $QQQ, over the past 20 months. Stocks have rebounded nicely in the past week, however, volume has been anemic throughout the rally. Conventional wisdom would say you need volume to confirm the trend and that low volume rallies can’t be trusted. However, that idea is fairly antiquated in today’s age of high-frequency trading. Not to mention, it’s the holiday season here in the U.S., so low volume shouldn’t be a surprise. As Jonathan points out, it’s fairly common to see volume trend lower as the market recovers from pullbacks. If anything, this is perfectly normal behavior.