The key to timing short-term trend inflections is volume. Volume at support and resistance zones, for example climax bottoms and tops as well as gaps, reveal changes in the force behind the trend. Richard Wyckoff made millions by recognizing that when price fails to break resistance or support with force, it inevitably reversed and attempted to break support or resistance with force.
74.7 million shares changed hands at the climax bottom in Russell 2000 (small cap stocks) on 5/18. If volume contracts significantly on the retest of this bottom, it suggests downside force is waning and a potential short-term trend change ahead.
The markets are beginning to realize that a slowing economy increases the probability of another installment of QE(n). This liquidity injection in whatever form will lift all asset boats. Gold and silver, rallying today, as well as commodities and equities. Watch the retest of the climax bottom closely today!
Chart Russell 2000 ETF (IWM)
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