medium · Volume Spread Analysis background-trend-context
Background: An index is correcting downward. Stock A is falling significantly faster than the index. Stock B is trading sideways on very low volume.
Based on relative strength principles, which stock should a practitioner prioritize for a long position when the index turns?
- Stock A, because it is now 'oversold' and will bounce harder.
- Neither, as you should only buy stocks that are currently making new highs.
- Stock B, because its resistance to the decline indicates professional accumulation.
- Both, as the index turn will lift all stocks simultaneously.
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