CF Industries Presents A ‘Topping Volume’ Example On Its Daily Chart
Anna Coulling | Dec 06, 2021 11:29PM ET
CF Industries Holdings (NYSE:CF) presents us with the mirror image of stopping volume which we saw on a previous post for Bristol Myers Squibb (NYSE:BMY).
Once again, it is the anomaly of volume and price which reveals the truth behind the chart and tells us where the price is likely to be headed next. And of course, the opposite of stopping volume is topping volume.
In this case, we have seen the stock rise steadily from $44 per share before moving into a congestion phase at the $60 per share region as denoted with the yellow dashed line.
During the middle of November, the stock picked up the bullish tone once more and advanced towards $66 per share and beyond, at which point we see the candle develop on the 18th of November with the associated volume.
Note how significant the volume was when compared to that which had preceded it over the previous week. It was almost double, yet the price did not reflect this and while it was an up candle, it was well below what we might have expected for such an inrush of volume.
This was Wyckoff’s third law of effort and result in action. The result, in other words, the price move in the session, should have been in agreement with the effort which was input, namely the volume. So what was happening here?
Again in simple terms, the market makers were selling into weakness as the market was not receptive to higher prices. Those buyers who were there were the latecomers who were buying on the fear of missing out, (FOMO) and the market makers duly obliged by happily selling to them, clearing their stock, before moving the price lower. And once again, a nice price waterfall developed on rising volume and it’s back to the VPOC once more.
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