And now I don't know what to think...

Yesterday the Dow recovered very slightly but there were movements in both directions before it closed some 40 points higher. What captures the eye is the massive increase in volume. Average daily volume over the past 18 months has been about 150 m shares. On the chart I have marked the 300 m share level to highlight the days when volumes were over twice the average. I have then drawn the trends between those volume spikes. I've added the volume spike that occurred on 15th June last year to the series even though it did not quite make the grade. It was preceded by a couple of smaller spikes a few days before so maybe that made a difference. I've also included some smaller spikes that have signaled direction changes. I have coloured them in brown. They are there as a reminder that all volume spikes can be signals and should be taken seriously.

I have explained before that I have noticed that volume spikes seem to occur close to changes in market direction. When they occur I take note and am extra cautious, make myself ready to move. I have been surprised that we have not had one before yesterday. So now I don't know what to think. Is Friday's spike signalling the end of the pull back or is it a belated signal for a new bear market?

The theory behind the belief that these volume spikes are important is that they represent shifts in smart money. Big traders stock up on shares in anticipation of a run up in the market, or dump them, taking profits as they await a fall.

Friday's signal could go either way: Smart money might be readying itself for a last hurrah in the bull market,  a run up for an opportunity to sell everything at a higher price, or they may be taking profits on the remnants of their holdings before a real rout begins. I believe that these smart traders use techniques to manipulate the market on these high volume days to shake fearful traders out of their positions to pick up or offload shares at more favorable prices.

The fact that the market ended marginally up suggests that this might be a signal for the end of the down move, but on the other hand.....    I feel the need to be ready.

UK Vector Vest seminar

Yesterday I dragged myself into London, (how I hate the big city these days), to take a friend to David Paul's seminar on the new Vector Vest7 for the UK. The journey was well worth the effort. David described in sparkling clarity how he uses VV to make piles of money in the UK. I believe there must be subscribers do not make the most of this fabulous product. They see but they do not believe. 

If you are in that position. If VV has not paid for itself many times over, do your best to catch one of David's seminars and you will see how easy it is to use this fabulous product to transform your financial fortune. 

If you have friends who are struggling with the market bring them along. If they learn from the very simple, straightforward lesson that David offers in those two hours, they will be thanking you for ever.

As you will know, I use VV mainly in the US now, but I still make investments in the UK for my wife and I offer guidance to my daughter and son in law. After listening to David I shall take his ideas on board when I prepare to offer them advice. If you do make the effort I believe that you and your friends will spend a very valuable two hours in David's company. Even if you are already doing well you may well pick up that extra little gem of knowledge that will give you an edge. I know I did.