My dad taught me to fly a kite when I was just a little kid.
Something he said back then stuck with me. He said a kite can only climb higher with a strong, sustained breeze. When the breeze slacks off, the kite will wobble and then fall. Only another breeze can lift it higher again.
Volume is the breeze that keeps stocks climbing. Without good volume, stocks eventually fall.
Well, our “breeze” is getting a bit calmer, but the DOW is still climbing.
In other words, the kite may soon wobble.
Okay, if you’re not into my kite metaphor, take a look at the chart of the DOW. The volume isn’t the best, but it’s still climbing (don’t let yesterday’s volume throw you, it was options expiration day).
The decreasing volume means we could correct a bit.
So, what do we do?
I’m suggesting that if you are in long positions, tighten up your stops, and perhaps begin looking for potential shorts.
We may correct a little, or a bit more (or not at all). But, let’s be ready if we are reading the charts right.
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