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humble
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Sir or Madam
In terms of what happens prior....I think it is hard to provide a short form answer that covers all the bases...the first part of the sequence is price dropping down significantly and then people responding by looking for bargains...this is just plain human nature...in terms of the technical issues it is more complex....I try to show my students how it works every day, and even though they are watching me trade, I think it is difficult for them to follow and evaluate the data...We look at several data points that may help you...one is the $VOLD (NYSE up volume minus down volume) and another is the $ADD (number of issues positive vs number of issues negative) and we monitor the NYSE tick....finally we read the tape....and frankly that part is very difficult to describe to you....(we read several data points including the "time & sales strip", and the NYSE tick together)
It requires a bit of practice, but that is how I was trained
