Above nosotros meet the five-day average book (top chart) for the S&P 500 Index (SPY) together with the five-day average trading make (bottom chart). One subject stressed on this weblog is the importance of trading volume, largely because of its correlation amongst volatility.
As stocks convey moved higher since the March lows, book has steadily declined together with and thence has the average high-low trading range. Stocks straight off supply virtually 1/3 the expectable make equally before inwards the year.
This is why I discovery it crucial to conform net income targets for volatility. (Note: SPY net income targets are posted every morn before the marketplace seat opened upwards via Twitter; follow here or banking enterprise check the final 5 tweets on the weblog page). Without such adjustment, nosotros inevitably await also much out of a merchandise when volatility comes out of the market, leaving us opened upwards to frequent together with frustrating reversals.
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