Best of the Week
Most Popular
1. Next Financial Crisis Is Already Here! John Lewis 99% Profits CRASH - Retail Sector Collapse - Nadeem_Walayat
2.Why Is Apple Giving This Tiny Stock A $900 Million Opportunity? - James Burgess
3.Gold Price Trend Analysis - - Nadeem_Walayatt
4.The Beginning of the End of the Dollar - Richard_Mills
5.Stock Market Trend Forecast Update - - Nadeem_Walayat
6.Hindenburg Omen & Consumer Confidence: More Signs of Stock Market Trouble in 2019 - Troy_Bombardia
7.Precious Metals Sector: It’s 2013 All Over Again - P_Radomski_CFA
8.Central Banks Have Gone Rogue, Putting Us All at Risk - Ellen_Brown
9.Gold Stocks Forced Capitulation - Zeal_LLC
10.The Post Bubble Market Contraction Thesis Receives Validation - Plunger
Last 7 days
Stock Market Buy the Dip is Dead - 20th Nov 18
Deep State Mad World - 20th Nov 18
Commodities - What Do You Need To Know? - 20th Nov 18
Precious Metals Moving In Unison For A Massive Price Advance - 20th Nov 18
Handicapping the Precious Metals Through Year-End - 20th Nov 18
Betting Markets Confirm Theresa May Safe From Tory Leadership Challenge this Week - 20th Nov 18
Rail Chaos Transpennine Express Cancels Services to Manchester Airport Whilst on the Train! - 20th Nov 18
The Giants Are Coming...Giants of The Internet! - 20th Nov 18
Gold & Silver Corrective Rally is Almost Over - 19th Nov 18
Stock Market Going Sideways - Which Direction is Next? - 19th Nov 18
Technical Analysis Points to DOW 30k Next Target - 19th Nov 18
Stock Market Consolidating in a Downtrend  - 19th Nov 18
Next Tory Leader, Prime Minister Forecast and Betting Market Odds - 18th Nov 18
The Fed's Misleading Money Supply Measures - 17th Nov 18
Stock Market Outlook: Why the Economy is Bullish for Stocks Going into 2019 - 17th Nov 18
NO DEAL HARD BrExit Tory Chaos, Theresa May Leadership Challenge - 17th Nov 18
Gold vs Several Key Investments - 17th Nov 18
GDX Gold Mining Stocks Q3 18 Fundamentals - 17th Nov 18
Is Gold Under or Overpriced? - 17th Nov 18
Active Managers are Bearish on Stocks. A Bullish Contrarian Sign - 16th Nov 18
Will The Fed Sacrifice Retirement Portfolio Values For The "Common Good"? - 16th Nov 18
BrExit War - Tory Party About to Replace Theresa May for NO DEAL BrExit - 16th Nov 18
Aspire Global Makes Significant Financial Strides - 16th Nov 18
Gold Oil and Commodities …Back to the Future ? - 16th Nov 18
Will Oil Price Crash Lead to “Contagion” for the U.S. Stock Market? - 15th Nov 18
How NOT to Be Among the MANY Stock Investors Fooled by This Market Myth - 15th Nov 18
Tory BrExit Chaos Cripples UK Economy, Wrecks Housing Market Confidence - 15th Nov 18
Stocks Could End 2018 With A Dramatic Rally - 15th Nov 18
What Could Be the Last Nail in This Stock Bull Markets Coffin - 15th Nov 18
Defensive Stock Sectors Outperforming, Just Like During the Dot-com Bubble - 15th Nov 18
Buying Your First Home? Here’s How to Save Money - 15th Nov 18
US Economy Ten Points or Ten Miles to ‘Bridge Out’? - 14th Nov 18
US Stocks: Whither from Here? - 14th Nov 18
Know exactly when to Enter&Exit trades using this... - 14th Nov 18
Understanding the Benefits of Keeping a Trading Journal - 14th Nov 18
S&P 500 Below 2,800 Again, New Downtrend or Just Correction? - 13th Nov 18
Warning: Precious Metals’ Gold and Silver Prices are about to Collapse! - 13th Nov 18
Why the End of the Longest Crude Oil Bull Market Since 2008? - 13th Nov 18
Stock Market Counter-trend Rally Reaches .618 Retracement - 13th Nov 18
How to Create the Best Website Content and Generate Organic Traffic - 13th Nov 18
Why the Stock Market Will Pullback, Rally, and Roll Into a Bear Market - 13th Nov 18
Stock Markets Around the World are Crashing. What Not to Worry About? - 12th Nov 18
Cyclical Commodities Continue to Weaken, Gold Moves in Relation - 12th Nov 18
Olympus Tough TG-5 Camera Stuck or Dead Pixels, Rubbish Video Auto Focus - 12th Nov 18
5 Things That Precede Gold Price Major Bottoms - 12th Nov 18
Big US Stocks Q3 Fundamentals - 12th Nov 18
How "Free Money" Helped Create Sizzling Housing Market & REIT Gains - 12th Nov 18
One Direction More Likely for Bitcoin Price - 12th Nov 18
The Place of HSE Software in Today's Business - 12th Nov 18

Market Oracle FREE Newsletter

How You Could Make £2,850 Per Month

A Stock Market Rally on Low Volume is NOT Bearish

Stock-Markets / Stock Markets 2018 Apr 17, 2018 - 04:49 PM GMT

By: Troy_Bombardia


Conventional trading “wisdom” states that a rally that occurs on falling volume is bearish. Conventional “wisdom” states that sustainable rallies should occur on rising volume.

This simply isn’t true. As we said in Don’t use volume for trading,

Rising/falling volume isn’t a bullish sign or a bearish sign. It just is. Volume is mostly irrelevant. It doesn’t give you much of an edge in the markets.

The S&P 500 is rallying on falling volume right now.

Chart courtesy of

Here are the historical 10%+ corrections since 1998. (The S&P has fallen 11.8% so far a of April 2018). Notice how there is no consistent correlation between the market’s volume and its post-correction rallies.

*We don’t have volume data before 1998.

  1. Some post-correction rallies occured on falling falling
  2. Some post-correction rallies occurred on flat volume.
  3. Some post-correction rallies occurred on rising volume.

This means that a post-correction rally with falling volume is NOT a bearish sign. It is not an “ominous sign” for the stock market. It’s an irrelevant sign.

Here are the bottom dates for those corrections:

  1. February 11, 2016
  2. June 4, 2012
  3. October 4, 2011
  4. July 1, 2010
  5. August 16, 2007
  6. February 28, 2000
  7. October 18, 1999
  8. October 8, 1998

Let’s look at the S&P 500’s volume during each of these times.

February 11, 2016

The S&P 500 ended its 15.2% “significant correction” on February 11, 2016. The subsequent post-correction rally occurred on falling volume. The stock market soared nonstop.

June 4, 2012

The S&P 500 ended its 10.9% “small correction” on June 4, 2012. The subsequent post-correction rally occurred on flat-falling volume. The stock market rallied in a choppy manner.

October 4, 2011

The S&P 500 ended its 21.5% “significant correction” on October 4, 2011. The subsequent post-correction rally occurred on falling volume. The stock market rallied in a very choppy manner with big waves.

July 1, 2010

The S&P 500 ended its 17.1% “significant correction” on July 1, 2010. The subsequent post-correction rally occurred on falling volume. The stock market rallied in a choppy manner.

August 16, 2007

The S&P 500 ended its 11.9% “small correction” on August 16, 2007. The subsequent post-correction rally occurred on falling volume. The stock market rallied in a choppy manner.

February 28, 2000

The S&P 500 ended its 10.3% “small correction” on February 28, 2000. The subsequent post-correction rally occurred on rising volume. The stock market soared to new highs very quickly.

October 18, 1999

The S&P 500 ended its 13.1% “small correction” on October 18, 1999. The subsequent post-correction rally occurred on flat volume. The stock market soared nonstop.

October 8, 1998

The S&P 500 ended its 22.4% “significant correction” on October 8, 1998. The subsequent post-correction rally occurred on falling volume. The stock market soared nonstop.


The stock market’s recent rally on falling volume is not a bearish sign for the stock market. It is an irrelevant sign for the stock market. It’s neither bullish nor bearish.

With that in mind, some short term downside risk is present. But this downside risk is limited because the medium and long term outlooks are very bullish. See this study and this study.

By Troy Bombardia

I’m Troy Bombardia, the author behind I used to run a hedge fund, but closed it due to a major health scare. I am now enjoying life and simply investing/trading my own account. I focus on long term performance and ignore short term performance.

Copyright 2018 © Troy Bombardia - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2018 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules