medium · Volume Spread Analysis climaxes-tests-springs-upthrusts
When analyzing the 'Emotional Cycle,' why is a 'Selling Climax' considered the end of the panic phase and the start of a new cycle?
- The P/E ratio hits a 20-year low, making the stock 'undervalued' by any metric.
- Market-makers are required by law to stop stocks from falling after a climax.
- The ultra-high volume indicates that the last of the weak holders have capitulated and their stock has been transferred to professionals.
- The news cycle becomes 100% positive, allowing for a healthy mark-up.
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