medium · Volume Spread Analysis supply-demand-smart-money
An index has been rising for months. You identify a stock that has failed to hit a new high for three weeks while the index was still climbing. During a small index pullback, this stock falls 8%, much more than its peers.
What does this indicate?
- The stock is a prime candidate for a 'Spring' because it has successfully been shaken out before the rest of the market.
- The stock is showing relative weakness because professionals have already distributed it and are no longer providing support.
- Market rotation is just starting, and this stock will be the first to hit new highs once the index recovery begins.
- The 'Bag Holding' signal is in effect, and professionals are waiting for the price to reach an attractive re-accumulation level.
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