Investment Basics-XXV Volume and the Bull-Bear Cycle

Abstract

Four basic assumptions on the relationship between market behaviour and price action enable a descriptive model of changes in turnover during a complete bull-bear cycle. It is found, contrary to common wisdom, that an increase in volume does not necessarily confirm the ruling trend. Instead, when turnover begins to increase following a period of sustained rising or falling trend, it may well signal the end of that trend. This fact can be used to anticipate changes in the trend.