Tape reading. Think of it out of context. If you are in a hotel and see a couple walking towards the pool in their swimming suits they are probably going to the pool. Someone who is wearing a tux is probably going to the wedding in the main ballroom. Tape reading is sort of the same. The best thing is to watch a stock over and over again for a long time. You get a feel for how the prints read. Robert Tharp
Eldredge I missed part of your post. I am rereading this thread, reading a few books on tape reading, researching the internet, and have hooked up with another trader at my firm who is great at reading the tape. We are going to write a newsletter about Tape Reading for my father's company that should be published sooner or later. (I find sometimes one of the best ways to learn is to teach others --so I took it upon myself to write another newsletter covering the info in great detail.) on your post you said you constantly see prints outside the bid/ask On seeing quotes constantly outside the spread bid/ask that doesn't happen unless you have your time and sales turned on to see bids and asks being posted instead of just real trades that are printed. The real prints are 99% of the time within the bid/offer for at least the size shown.
RTharp Thanks for the info. I have been doing pretty well the last several weeks without having T&S up. I'll have to bring it back up and pay a little more attention. If I get it set up correctly it will probably be more helpful. Thanks again. If I'm still confused, I'll post again.
My definition of tape reading is "watching the action". It can be time and sales. level 2 or charts or a combination. Whatever combination you use to monitor the market is the "tape" for you.
I agree with this wholeheartedly Nicodemus. It's not about this or that way for viewing the "tape". It's understanding what you are seeing in that visual representation that shows how the majority is acting and how the minority should be responding. The tape could almost be a metaphor where the tape isn't this or that, but rather a representation of something deeper that provides us with familiar reasons for entry and exit. And at the risk of going too far, this is perfect for taking "tape" away from just being a buzzword for many and bringing it's true nature back to the markets. Respectfully, Chris
OK, now some questions : (Ill take yesterdays PWER 2 min chart as an ex) In the morning it sold of, rebounded and from there it kinda formed a slim-jim. Then it5 started to drift lower and just as I was about to short it on the breakdown of this midday-dolldrum-channel I remembered the news that was due 2PM (dah ) When the news broke out, of course a lot of green prints flying by and the price went to high heaven. Id get murdered on a short play. What I dont understand is this : after such a violent outbreak, a retraction is in order. I wanted to play that intraday and was looking for clues on T&S. It did start showing red prints but only stalles the price a little and when the sellers were gone price thrusted upwards. -when buying takes out all the inside ask the next ask is higher, SHOULDNT THE PRICE MOVE HIGHER? So shouldnt we be looking for red prints if we want to go long? -I also saw a couple of 25k, 50k shares (red ones) -normal lot in this stock is up to say 2k- but didnt move the price lower, then comes green 100 or 400 lot and it goes higher... Man can anybody help out about this tape reading as to what to look for if we want to go long vs. short and so... Cheers Alex
10/7/2001 UPDATE Right now I shorted FISV (missed the morning run down , caught the run up ) so heres my question : -Im watching the T&S and this is what happens - there are a lot of GREEn prints @ 41.13 - price stays at 41.13 -then a lot of RED prints @ 41.13 (all 100-600 share lots) -then a red 25000 share red print @ 41.04 and the price drops there for a moment -THEN another GREEN 100 draws it back to 41.13 ??? What in the world has just happened ? Could it be that the small ptints were MM buying to get the price up and then whack ans sell 25k? Or is it that those large prints are some cumulative or something cos they come up like every couple of minutes or so... AND noone has yet answered what do we look for when we are looking to go long - a lot of red ones or green or... man this tape is like you put old "Cream" tape on and "rolled" one... Peace ! Alex
A question on tape reading. A stock has just gone down about 30% over the last 2 days on 3x normal volume. For the last 2 hours volume has dropped to almost normal and the price is climbing very slowly and steadily (but hasn't risen much). Everytime a little bit of volume comes in the price rises dramatically, but then falls back down to slightly above where it was before the volume came in. I don't know much about tape reading but what it "looks like" to me is that someone wants to start accumulating it but everytime they get a little greedy and buy too much, it causes the price to rise, so they back off and resume buying slowly. It looks to me like there is solid support and little resistance, so the price may be going up. Is this reasonable?
It's an hour later and LARGE volume has come on again (for the entire last hour). The Price dropped 2% in the first two minutes of the volume and has been holding steady for the last hour. Volume is 20x what it was in the previous hour, but after the initial 2% drop it has remained remarkably steady. Is this accumulation? What it looks like to me is that whoever is buying couldn't originally because it caused the price to ramp up so they came in with a huge sell order in the first two minutes that caused the price to fall 2%, which caused a whole crop of sellers to spring up, so they could accumulate the stock without paying a premium for it.