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He recognized volume as a secondary but important factor in confirming price signals. Simply mentioned, volume must expand increase in the direction of the major trend. In a major uptrend, volume will then increase as price moves high, and reduce as prices fall. In a downtrend, volume should increase as prices drop and diminish as they rally (Qanda, 2009).

This belief forms much of the foundation of modern trend-following loom. It narrates a physical law to market movement, which states that an object in motion leans to continue in motion unless some external forces causes it to change direction. A number of technical tools are offered to traders to help in difficult task of spotting reversal signals, involving study of resistance levels and support, trend lines, price patterns, and moving averages. Some indicators can offer even earlier warning signals of loss of momentum. All of that not enduring, the odds normally favor and the existing trend will continue (Qanda, 2009).

The risk of a prevalent banking crisis has eased and potential write downs on securities are likely to be lower, due to the recovery in mark-to-market valuations, but bank capitalization still remains a worry as more write downs on loans are projected. Confidence in the U.S. banking system has been boosted by better-than-anticipated earnings results, a winning stress-testing exercise, commitment by U.S. government to stand behind the 19 largest banks, and a string of bank capital-raisings. But, loss ratios are likely to continue to rise for loans (Cuckee, 2009)