Swing and Intraday Set-ups

Discussion in 'Trading' started by Commisso, Jan 2, 2002.

  1. It's all about psychology Neo. For example, there's no scientific reason why the 20-period moving average (or any other moving average) should provide support or resistance. The only way it can provide S or R is if enough people believe it provides S or R.

    That's why, in my opinion, artificially defined support and resistance concepts such as moving averages and Fib. levels are less significant that charting features such as tops, bottoms and areas of congestion. The latter represent price points where real people made real mistakes and might jump at the chance to correct them. They are also watched by many more people who did not previously have a position.

    The way to guage crowd psychology is to evaluate the actual price-volume-time behaviour rather than rely on artificial constructs to do it for you.

    Try these very simple rules of thumb as a starting point

    P increasing, Volume increasing = long
    P peaking, Volume decreasing = exit long
    P decreasing, Volume increasing = short
    P troughing, Volume decreasing = exit short
    P flat, Volume decreasing = stay on sidelines
    P flat, Volume increasing = be ready to enter.

    Very often a change in volume behaviour is indicative of a change in psychology before there is a change in price behaviour.

    I am not implying that indicators such as the 20-period MA are totally irrelevent. It is not, as we know a lot of people watch it. If I see the P,V behaviour I am looking for in the vicinity of the 20 MA, I may give it more significance because I know that many of those who are also watching place great significance on the 20 MA. However, my focus is on the P,V behaviour. The 20 MA is just a bonus.
    #31     Jan 5, 2002
  2. neo_hr


    "I thirst the truth" - thanx man, really nice post

    #32     Jan 5, 2002
  3. TERN - Stock has broken uptrend line and now Looks like it has formed a bearish flag after a downtrend. The stock has consolidated higher on low volume which is bearish. I would wait for it to move higher on good volume before I go long on this one. There seems to be not much buying interest.

    FITB - It close almost at high of the day but again, not strong buying interest as volume did not even reach 60MA. Daily chart shows oversold in Stoch 2-2-2 and 14-4-4. Money Flow, OBV and Accum/Distr looks good though. Weekly chart also shows oversold and looks like there is strong resistance near 63 and then at 64.

    I'll pass up on these two.
    #33     Jan 6, 2002
  4. eggduffer


    It's all about lying about myself Neo. For example, I act so smart but hide the fact I have my own commercial trading business to protect. It would be so easy for you all to find out who I really am, but you're all too dumb to see the truth.

    That's why, in my opinion, artificially defined concepts that I make up and share with the group make me look good and others look bad. It's a gift.

    Thank goodness you keep out of my dark closets. This way I can stay your daddy, you you can stay my obedient dog.

    "The crowd has never thirsted for the truth" - Gustave LeBon
    #34     Jan 6, 2002
  5. Rigel


    There's this guy named Mr. Volume. Everybody thinks that some of the newcomers, like Mr. Greenspan or Mr. Fabionci are the ones that decide which way the stocks are going, but it's really Mr. Volume. If he wants to buy a stock you can be sure that he knows what he's doing and it's going to go up. If he wants to sell one, then it's definately going down.
    #35     Jan 6, 2002
  6. Rigel
    So how come I regularly see more sell volume than buy volume but the price goes up? (and vice versa) Something to do with market makers perhaps?

    #36     Jan 6, 2002
  7. Rigel


    I don't know. But I'm sure Mr. Volume does.
    #37     Jan 6, 2002
  8. Spike, what do you mean by sell and buy volume?
    #38     Jan 6, 2002
  9. "If he wants to buy a stock you can be sure that he knows what he's doing and it's going to go up"

    Nothing is for sure in trading. It's all about odds and probabilities and trying to tilt them in you favor. I believe that studying volume behaviour helps me in this regard. My results suggest that it does.
    #39     Jan 6, 2002
  10. Duffer, are there any good books on volume that you would suggest?
    #40     Jan 6, 2002