Churning
Volume Spread Analysis glossary · Wyckoff Phases & Schematics
Definition
The choppy up-one-day, down-the-next pattern that appears on a stock index near a major low, produced by sector rotation rather than indecision. On any major market low, not all stocks reverse on the same day: the strongest stocks (those with the most accumulation behind them) reverse first, while weaker stocks with less professional interest reverse later. This staggered reversal creates the characteristic churning seen on index lows and is why index-only analysis can mislead — a clean reading of the S&P 500 may mask the fact that technology stocks are still in distribution while financials are already in accumulation.
Churning in plain English
Near the very bottom of a big market drop, a stock index often stops falling cleanly and instead lurches up one day, down the next — this jittery back-and-forth is called churning. It happens because an index is an average of many stocks, and they don't all turn upward on the same day: the strongest ones (the ones big money has been quietly buying) recover first, while the weaker, less-loved ones lag behind. That staggered timing blends together into the choppy pattern. It's also a warning that watching only the index can fool you — a calm-looking S&P 500 might hide the fact that tech stocks are still being unloaded while banks are already being bought.
Learn these first
Related Volume Spread Analysis terms
Volume Spread Analysis practice questions · Volume Spread Analysis flashcards · Volume Spread Analysis study guide