Don't Ignore This Chart!

Volume Drying Up On DJIA

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Dollar-Weighted Volume (DWV) is a short-term indicator. Generally the DWV and the price index run pretty close together, with tops confirming tops and bottoms confirming bottoms. What we look for are positive/negative divergences and for instances where volume doesn't confirm price, meaning that volume either leads or lags price. When this happens, look for a change in the short-term price trend. Right now we are seeing a divergence between DWV and price on the Dow Jones Industrials. Currently price is moving up faster than volume. This tells us that volume is drying up and support for the rally in the short term may be falling away. 

You'll find the DWV charts in the DP Market Indicators ChartPack. It is in the "DPMI - 1040 - Dollar Weight Volume" ChartList and the chart I used above is "120 - DJIA Dollar-Weighted Volume (1-Yr)" chart in the DPMI - 1040 ChartList.

If you'd like to read more about DWV, here is a blog article that Carl wrote a few years back.

Happy Charting!
Erin

Erin Swenlin
About the author: is a co-founder of the DecisionPoint.com website along with her father, Carl Swenlin. She launched the DecisionPoint daily blog in 2009 alongside Carl and now serves as a consulting technical analyst and blog contributor at StockCharts.com. Erin is an active Member of the CMT Association. She holds a Master's degree in Information Resource Management from the Air Force Institute of Technology as well as a Bachelor's degree in Mathematics from the University of Southern California. Learn More
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