Volume and Indexes

Since nobody leaves any comments I will take a courtesy of telling some good words. From my last week "Technical Analysis" post

"I think that starting from February 27, 2009 (biggest daily volume) everybody who was entering long position (buying) could be in profit soon. Yes, indexes have dropped about 10% down since then, yet, over the past year, in such volatile market, we saw indexes 10% recovery in 1-3 trading sessions."

It's nice to be right, especially on the stock market where it could be reworded. I may say only one thing - volume never lie. There are still a lot of traders who is very skeptical about volume analysis and who underestimates the power of the volume based technical analysis. I am not telling that the price based indicators are bad. No, not at all. However, price analysis without volume is zero, the same as volume without price tells nothing.

I consider myself not a very bad in the index volume technical analysis and I will take a risk to give two advices:

1. If you still do not have any volume based technical indicator in your arsenal, take it and learn it. I'm not talking about rejecting your price analysis, but completing it with volume technical analysis. Remember, the price trend is always described by price change and by volume during this price change. So, why to look only on half of the picture?
2. If you still do not analyze indexes (even if you trade stocks) take a look at them. I'm not talking about stopping to analyze stocks or switching to index derivatives trading. Stock analysis is very narrow and does not show where the market goes. Only index analysis (not CNN news) may tell you where the market goes. I bet over the last three sessions even lousy stocks were happy. Find our what index your stock belongs to and take a look at this index - find out where the market sector your stock is traded goes.