Shoot and I have spent hours talking about and analyzing the recent rally we have seen in US equities. It seems like a super simple analysis to us--this simply is a high volume rally. Just this weekend alone I read 3 articles and watched 2 videos from accredited news organizations talking about how this rally won't hold on low volume.
But why can't anyone accept the fact that this truly is a high volume rally?
Well, I believe the answer to this is in differences in volume analysis. Those who truly feel this is a low volume rally are comparing current volume to the volume during the market crash. This is like comparing apples to oranges. How can we compare volume in a healthy and rational market, which is what we see now, to the volume of a fear driven, panic selling market? During the market crash, we saw money that normally was sitting in positions for years cashing out. We saw huge companies going out of business, banks failing, daily bankruptcies, and a completely fear driven market setting. Now we see a more calm, rational, and less volatile market which is rallying on volume that, compared to any time other than the market crash, is relatively very high.
In the chart below, we can see the market crash boxed in yellow. Now if we were to ignore the volume during the crash, simply because different participants took place in actively trading during this time, we can simply see that volume during this rally is extremely high relative to normal volume:
[Click here for Chart]