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.
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