A damaged market needs a “capitulation” phase followed by a “base-building” phase. Each phase defined by trading volume because trading volume confirms a trend. During “capitulation”, investors “cave-in” with dramatic selling, and significant way-above-average trading volume.

I wrote this a few weeks ago, and forgot to enter the thought. Maybe/maybe not, we have seen capitulation. Today’s U.S. market activity suggests that probability. Today’s (September 29, 2009) foreign market activity may validate this presumption.

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