medium · Volume Spread Analysis wyckoff-phases-schematics
How does 'Relative Strength' analysis help confirm a spring signal during an index correction?
- If the broad index is falling, no individual stock signals should be taken seriously, since the index will eventually drag every stock down.
- A stock must decline by exactly the same percentage as the broad index for its spring to be considered technically 'harmonious' and therefore valid.
- A stock that performs a low-volume spring while the index is making new lows is showing professional support and is likely to lead the next market advance.
- Relative strength analysis is only useful for spotting weakness near market tops, identifying which stocks will crash the fastest once mark-down begins in earnest.
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