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Buy Stock Now? Check This Chart First

By Editorial Staff
Tue, 28 Oct 2008 09:30:00 ET
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Have investors panicked and capitulated yet? Not according to this chart based on volume data since January 2008.
 
  
Here's part of Bob Prechter's explanation from his latest Elliott Wave Theorist:
 
"Ever since mid-September, we have read that the bottom is in because investors have 'panicked' and 'capitulated.' But market history does not support this widespread view. A perusal of volume data since January 2008 shows that, despite claims to the contrary, investors actually have not panicked. Here's why: In a market panic, the number of shares traded increases substantially on down days and bottom days. In October 1929 and in October 1987, for example, daily volume surged to between triple and quadruple the preceding summer’s average as prices plummeted. In contrast, volume recently has been quite steady, aside from two spikes." [Elliott Wave Theorist, October 2008]
  
To get the full explanation of this volume chart as well as a detailed, full-page chart that details 16 instances of buying on bullish news in a bear market over the past two months, subscribe to the Elliott Wave Theorist now. Read more about it here.

Tags: volume
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