I am using Money Flow Indicator in this example, but same dilemma is faced when we have to do direct comparison between Small Cap and Large Cap Stocks, through volume value based indicators. If we take example of Technology Sector from NASDAQ Stock Exchange. The market capitalization of MSFT is around 390 Billion, INTEL is around 180 Billion and for the AMD it is just around 3 Billion. Because of this huge difference in the Market Cap and daily trading volume value, it is not possible to do the direct comparison of Money Flow Changes between them. For example, suppose today Intel has received a positive Money Flow of $ 50 Million and AMD has received $ 25 Million. Now in basic calculations it would appear as if Intel has received DOUBLE Money Flow compared with AMD and therefor twice as strong. But when we compare these values with their own past average Money Flow values then it becomes clear that Intel MF is just half of its normal daily MF average over the past one month whereas AMD MF is 5 times of its normal daily MF average over the past one month. Now this observations changes the picture completely and now AMD would look much stronger then Intel from the Money Flow perspective. My question is - How to NORMALIZE this Money Flow data in some way so that an apples-to-apples comparison can be made and a direct comparison could be done between the different stocks and sectors to see their relative strength or weakness from a given indicator's perspective? If you have got any idea by which such comparisons can be made between different stocks or futures which have huge difference in trading volume then please share your views. Thank you so much
You may try comparing the Russell 2000 volume (small cap stocks) to the S&P 500 volume (large cap stocks). You may check the snapshot from http://www.marketvolume.com
%%%%%%%%% I like TSC, small cap low volume stock typical Russel 2000; i buy my chicken feed there. Some do well with small caps cause they roller coaster more up + down, more slippage on exit.................................. Wisdom;Not a prediction If your personality likes them, go for it;REALTY does well with only one property[Volume = 1 contract per house,LOL but true..... IBD[see Newspaper chart page with S&P500, NasdaQQQ, 10 day free trial] does well with smaller caps; more of a roller coaster.