medium · Volume Spread Analysis climaxes-tests-springs-upthrusts
Why does a 'shakeout' often occur on bad news at the bottom of an accumulation range?
- The news provides the catalyst for emotional selling by weak holders, creating the liquidity the professional needs to complete his accumulation at low prices.
- The news confirms that fundamental value has dropped, forcing market-makers to reprice the stock lower to attract fresh institutional buyers now.
- The bad news creates 'no demand' at these lower levels, which in VSA terms all but guarantees the market will stay stuck in a bear phase for months to come.
- The professionals are caught off guard by the news and are themselves forced into panic selling, and that forced selling is what produces the high volume on this bar.
Sign up free to see the explanation and track your rank →
More Volume Spread Analysis climaxes-tests-springs-upthrusts practice
- What is the professional purpose of an 'Upthrust' - a wide-spread move up that collapses t
- A 'Failed Test' is identified when a price probe into a prio… — What does this signal to t
- A stock has been in a markdown phase for weeks. Suddenly, a… — What is this sequence?
- While observing a downtrend, you see a bar that dips into fr… — What does this indicate to
- What happens during a 'Shake-Out' in a market that has been in a long accumulation phase?
- What VSA signal has occurred?
- What third signal is required to complete Bearish Sequence 3?
- A practitioner sees a 'Hidden Upthrust' on a chart. Which of the following best describes