medium · Volume Spread Analysis effort-vs-result-spread

Relative Strength analysis in VSA suggests that when the parent index is correcting, the best stocks to buy for the next mark-up are those that:

1. Refuse to fall with the index, trading sideways or slightly down on low volume, indicating professional support and accumulation.
2. Keep showing heavy volume on each down-bar, which is read as proof that strong liquid interest exists in that particular stock.
3. Drop faster than the index does, since this creates a deeper discount that value-oriented investors will favor once the market turns.
4. Carry a high beta, which ensures the biggest rally once the broader index eventually recovers from its correction.

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