FLS on decreasing volume

Falling volume gives a sign that the trend is about to reverse. Flowserve Corp (FLS) will help illustrate this point, or at least the setup.

While volume can be an important indicator, I find in this case the pattern to be of interest as well. It is popular for a stock, once it's breached its trendline (assume for this example to the downside) to drop precipitously, retrace back to the underside of its old trendline, and then continue downward. Here is a similar example from earlier this week (10 yr SPY). If you wanted to buy puts on FLS, place your stop on a close above the trendline. Next earnings: not till 08/06/08

FLS