No Dirty Dishes Thursday, page-4

Wednesday Evening Thoughts. 17 March, 2017.

XJO down heavily today -1.1%. Volume us up on the past couple of days (that's normal for a Wednesday), but overall volume is very low. This suggests that weak longs are bailing out, allowing for the sellers to capitalise. Such a situation is usually short-lived.

Here's the XJO chart.




Here's the Volume chart from the end of February:



The question now is: Has enough selling occurred for strong bulls to take control again?

Here's the On Balance Volume Chart:



This is an old-fashioned metric rarely mentioned these days. It is, however, one that I put a lot of faith in. Short-term this is rising while the stock chart is falling.

It peaked at the same time as the XJO, i.e., 1/05/17. It bottomed, however, on 5/05/17. Since then, XJO has continued falling while OBV has been in an uptrend. That positive divergence suggests that strong bulls are quietly accumulating stock while the market falls.

In that case, all we have to do is wait for a strong upside move. Then we know that the pull-back is over and strong bulls are showing their hand.

It's possible to see more selling. But there's not much more in it.

RB.