By Jeff Pierce
On Friday the volume on the Nasdaq exceeded the upper bollinger band that I’ve plotted on the volume section of the chart. I also noticed a large number of stocks on my volume scans that seem indicative of an index re-balancing, but keep in mind I don’t watch the news, so I’m not sure if that is really the reason. I’ve just noticed this in the past.
Anyhow, this is not an indicator to use on it’s own, but it’s something to take not of. Lots of volume with little or no movement in the actual index is worrisome. My timing signals remain on a buy signal except for the TSX which is in neutral mode at the moment. Take a look at the second chart below for a weekly look at the Nasdaq to really add some clarity to this new way of using the bollinger band in conjunction with volume.
Nasdaq Composite Index ($COMPQ) – Daily
Nasdaq Composite Index ($COMPQ) – Weekly
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Jeff Pierce is a momentum trader that specializes in market timing. He utilizes a proprietary timing system that helps minimize emotions and trading biases within his trading plan. He offers a free newsletter at zentrader.ca that alerts you to trend changes within the market so you’ll always be on the right side of the trade.