On volume analysis - need your help

Discussion in 'Technical Analysis' started by Newmoney24, Dec 14, 2012.

  1. I know declining volume is suppose to indicate a weakening trend-
    but look at the major indexes currently, like the S&P,

    the volume is declining, but price is going up, to me, this indicates there's virtually just 1-sided buying action-
    so why would that indicate a weakening trend?

    it seems they could just keep driving the price up as long as they want
     
  2. baro-san

    baro-san

    Declining volume indicates a non-dominant price movement, also called distribution. If it's the first in the trend, on increasing volume a trend resumption will fallow, if it's the second a trend reversal.
     
  3. Declining volume "can" but not always as in 100% of the time indicate a weakening trend. Yet, pretend it did 100% indicate a weakening trend...that doesn't imply the trend is going to reverse today or tomorrow.

    Simply, weakening trend or declining volume can also imply demand is slowing down and there's a possibility it will increase again. Thus, supply/demand can change anytime into increasing volume with a strong trend.

    With that said, you aware the SPX index has had two consecutive down days and the Emini ES futures has had three consecutive down days ???

    Thus, I will assume your comments about price is going up was in reference to market action prior to Wednesday December 12th.
     
  4. ==============
    Good points.W -trader..
    Those [original poster comments]are general statements anyway.Exceptions occur.

    Also, even on real low sell SPY volume, for example;
    SPY doesnt have to whip saw into a buy/trend change.It takes MORE buyers/buy to cover to do that. First & last day of month can be bullish-but none of this is a prediction, thats wisdom.:cool:
     
  5. Volume as an indicator (of price) trending (continuing) has eleven measurable and unique elements in this subset.

    Ends of trends can be measured in volume by 35 separate and unique indicator elements.

    There is one additional proviso for taking the measure of volume as an indicator: at 8 of the 10 measurable signals of price, it is not permitable to measure for volume indicators.

    Among the the many things about the CW that bets using OODA, there are myths. Your post is founded on myths which you may believe. several of the replies are mythically based as well.

    Try to meet some of the "they"s you mention. They are mythical as well.

    Suppose you found out that trends overlap. Naturally, to make money, you would not follow your respondent recommending lagging trading to you. But what would you do to have efectiveness and efficiency? You would use volume as a leading indicator of price.

    Behavioral Finance makes a suggestion to you and other respondents here who are incorrect. you need to sideline when your, below the neck, emotions tell you that there is a question on your mind. Stay on the sidelines.

    If you are reading something and you get an emotional warning, it means you do not know what is what. Stay on the sidelines.

    I know I know on every bar the market produces. Since I do, I can tell you the facts on what is what. I go into the market on bar 1 of the day and exit on bar 77 of the day. In between, I hold and reverse to take the full offer of each trend segment of the day.
     
  6. As said here in this post, the first thng to learn is to post the interval you are speaking of.

    before that first thing to do, you have to differentiate between two things: A price reversal and a price retrace. Both happen on declining volume.

    One happens during the natural movements of a trend; the other happens when trends are in a state of overlap.

    Everyone comes to the learning place as potential traders, where they have to learn where they are in a trend. They have skills and limitations. The objective is to turn limitations into skills.

    So post your log. Post the annotations on your chart.

    Make a ratio of your skills/limitations. Make scores for each item on each side. Keep using those scores. Be a frog climbing out of the well of ignorance. All CW myths are limitations.
     
  7. Trader13

    Trader13

    I have tested volume extensively to discover any potential use as a timing indicator to forecast what happens next. This is a reasonable thing to try. After all, we only have price, volume, and time as the basic variables.

    I came to the same conclusion many others have, which is that volume has no predictive value whatsoever. It's useful for market analysts to observe how historical price moves coincide with trading activity and make thoughtful statements about market activity. But traders looking for a timing indicator will not find it in volume.

    There might have been some time long ago (15+ years) when volume was predictive. But today's markets are dominated by derivatives, basket ETF's, and HFT that make volume nearly impossible to interpret.

    The value in volume for traders is simply as a measure of liquidity. I apply a volume filter to the instruments I trade.
     
  8. I agree with you and the results you got by doing what you did.

    If three variables price, volume and time are used, it is not possible to forecast with a timing based indicator what happens next.

    The Present is the only time available for having signals for happenings.

    The key happenings are End Effects of trends. Thus the full offer of the market is a "taking" that accumulates from one End Effect to the next End Effect.

    There are precisely 35 unique and different and, defined in the Present, End Effects.

    Thus on a chosen fractal, during the formation of the signal of a happening, the happening occurs within the period of formation as a single, certain, unique and different element of the set of 35 End Effect happenings. The 35 EE's fit into 11 subsets.

    Thank you for your post. I have looked at many platforms that were built to do testing. They have sets of criteria, filters, functions, rules, and strategies. Also there are three forms of operators that may be used to combine these sets to form even more complex analysis tools to meet a myriad of conceived goals.


    I use such to know that I know how the flow of the human psychology is working out from the End effect that ends a trend all the way through the continuation of the flow of happenings that invariably lead to that trend's End Effect once the flow has come to an end during the formation, in the Present, of a certain End Effect.

    Were I to divide my wqork time into two parts, the first lasted about 40 days and the second 54 years. Two inventions intervened: the PC and its printer capability.

    The advent of platforms made it possible to can systems which define the operation of a market. Pleasantly, As technology advanced it was easier and easier to harden up the definitions of the parts of trends and particularly their End Effects. For trading to extract the full offer of the markets, the partial of the trend with with respect to the trend happening is the function to examine. This Parametric Measure is a vector which comes from the market algorithm which has to meet the Keynesian requirements.

    You may have examined scalors instead.
     
  9. Trader13

    Trader13

    Jack, you have a keen talent for articulating the subconsciously obvious. I tip my hat to you, good sir.
     
    #10     Dec 29, 2012