The Precision Profit Float Indicator: Powerful Techniques to Exploit Price and Volume not the greatest book or holy grail but interesting ideas and I have never seen it offered so cheaply as now $9.99
The key is to discover the character of the instrument....some call these trading stocks....or perhaps contra-trading stocks when considering your post...lol and leave Mr.Market alone he is huge (besides we need to make money off these folks) Michael B.
I do have the book, and though the concept sounds intriguing, Steve Woods admission that he "knows [float anaylsis will make people money] to be a fact" is based on his own tenfold gain in 16 months, is severely impacted by the caveat he adds, "Note that in that timeframe... the stock market was in a new bull phase, a great time to be in stocks" (The Precision Profit Float Indicator, pg 33). Well, duh. Secondary to that is his clarification on pg. 3 that in defining a Float Turnover, "we can not say that all the shares in the float have been traded". Now, though we all understand that and the reasons why that is so, that truth is the exact opposite of what a Float Turnover is. So the author goes into other aspects of using this indicator that basically point to realizing a stock is in a basing pattern. Double Duh. I can look at a chart's basing period and know when I see a breakout without having to count the volume backwards until it gets numerically to the float value, can't I?
Float turnover analysis gives insights as to when to exit in stocks where there is a pool or syndicate deliberately ramping it. It would have worked in 1920's US market, I was not there, but I suspect that is why it yielded results in pre 2000 internet stocks, and it works in some stocks in some asian markets. It is a guide as far as I am concerned rather than a standalone system in its own right.
I have coded the Acme F system from Professional Stock Trading by Mark Conway and done some <i>preliminary</i> backtesting. Acme F is a Float Channel breakout and pullback strategy. For the three stocks I tested, AAPL, COH, and GOOG using daily charts over a 2 year time period, the system performed very well on both the short and long side. In fact, it killed the market. One piece of maintenance you have to do is manually enter the float numbers for each stock you want to cover. Please post if you know a way to automate this part of the process. I have a thread called Chabah on Automated Trading if you want to read any more about this topic. http://www.elitetrader.com/vb/showthread.php?threadid=77887 Chabah