Registered User
Joined: 8/24/2006
Posts: 46
|
Hello,
Today Worden’s comments on Telechart for DNDN have posed me with a new dilemma about indicators. Specifically “Momentum” Which indicators are best to show positive or negative momentum. Is TSV, MS the most useful in determining “Momentum” DNDN is shown with 3 months of daily data. Is this best for short term trends? I do realize this is probably up to me to decide, but is there something you can suggest that I should read to learn how to make these decisions.
Have a great day
Amp39
|
|
Worden Trainer
Joined: 10/7/2004
Posts: 65,138
|
I can't make suggestions. The trainers cannot give settings, interpretation or investment advice. I'll move this to Stock and Market Talk forum where other traders are more likely to see it and comment. You may wish to review the following:
Basic Info on BOP, TSV and MoneyStream
-Bruce
Personal Criteria Formulas
TC2000 Support Articles
|
|
Registered User
Joined: 4/18/2005
Posts: 4,090
|
Momentum is a sporadic thin the the market... in the most recent markets there haven't been much momentum excep ina few isolated cases.
Volume and candles are best there IMO. Stochastics stuck in its over sold zone is a good indicator you are seeing momentum. This is when it fails. Often moneystream and TSV will be pegged out at the top of the screen each day. Macd can measure momentum in a fashion. Moving averages also, as a stock speeds up its shorter moving averages will peel away from slower ones. My best momentum plays come from recognizing candle formations and volume. Lately there are short spurts of momentum that seem to fizzle... 2/27 recovery aside.
|
|
Registered User
Joined: 3/21/2006
Posts: 4,308
|
Stochastics, and ADX are good momentum indicators if used properly. Check out these tutorials -
Average Directional Index (ADX)
Understanding Stochastics
|
|
Registered User
Joined: 12/2/2004
Posts: 1,775
|
QUOTE (scottnlena)
Volume and candles are best there IMO. My best momentum plays come from recognizing candle formations and volume.
Bingo. I gave up most indicators over my charts long ago. I tried just about every one and I only ended up confusing myself and being overly complicated and not trading too well. But that's just me, Mr. School of Less is More, lol. I used to subscribe to several pro traders who use Telechart, and almost every one used the simple layout that influenced me. Maybe I'm lazy, but my trading has definitely improved by concentrating on the very basics of chart pattern recognition, and noting resistance/support levels, trendlines. My main default chart layout consists of daily candles, daily volume, at zoom 3, along with the major averages the institutions tend to key off of, the 50 and 200.
|
|
Registered User
Joined: 12/21/2004
Posts: 902
|
<cough>MACD-H<cough>
excuse me... carry on...
|
|
Registered User
Joined: 8/24/2006
Posts: 46
|
Hello, Scottnlena, Apsll, Fpetry, Hohandy.
First thank you all for being kind to respond to my dilemma.
Every time some smart trader posts his personal know-how on Worden daily reports, I build a new study chart. I have a ton of them and I am getting so confused and jumping from one chart to another accomplishing zippo zero nada. I just tend to read too much into the indicators that I miss my chance most of the time.
To be honest the only one that I found of any use was the money management indicators provided by sir old Viking. I developed his formula based on my loss tolerance and price volatility to determine the number of the stock to buy and my initial stop. I use this every time before I buy any stock.
I agree with fpetry regarding simplicity KSS is best. Fpetry, I don’t think you are lazy maybe smart.
Quote fpetry
“very basics of chart pattern recognition, and noting resistance/support levels, trendlines. My main default chart layout consists of daily candles, daily volume, at zoom 3, along with the major averages the institutions tend to key off of, the 50 and 200”.
What about market indicators do you monitor them along the stock you are considering buying? If so which?
I have used similar chart for my intraday. However, what I am lacking is the confidence that I am reading the signals correctly and I am not entering the trade too soon or chasing it and then buying them at the top. Is there a mentor willing to help me develop the correct skills to trade profitably?
fpetry
Do you use daily charts to scan for stock to buy? Do you have an easy scan that you mostly like? I normally use a price crossing 200 SMA with TSV and BOP above zero and average volume over 20day>= to 500K.
Are you a swing trader or daily trader? Before you make the trade do you look at an intraday chart? If so “which time frame”. For a long position, do you wait for price to regress, consolidate and then enter when buying volume starts to move up?
Thank you
Amp39
Hi hohandy,
Your quote?
<cough>MACD-H<cough>excuse me... carry on...
Is this supposed to mean something?
Amp39
|
|
 Gold Customer
Joined: 11/11/2006
Posts: 359
|
"In War, the simple things work the best.
In War, the simple things can be very difficult." Sun Tzu
Mammon
|
|
Registered User
Joined: 1/28/2005
Posts: 6,049
|
"In bull markets the simple things work the best.
In bear markets the simple things can be very difficult."
(diceman)
|
|
Gold Customer
Joined: 11/11/2006
Posts: 359
|
Good show. One up.
Mammon
|
|
Registered User
Joined: 12/21/2004
Posts: 902
|
Hi Amp
I'll always boring these guys with my advocacy of the MACD-H indicator - we've had a bunch of discussions about it lately and I feel like I'm beating a one-note drum (I do like other indicators too - seriously!)
I use volume as my main momentum indicator (I want to see volume at least 1.5 x 50ma of volume on a day that goes through resistance to indicate momentum to me - and thereafter, volume should maintain at least the 50ma on "up" days, with, hopefully the 50ma increasing over time), relying also on 13ema, 26ema and 50 ema - price bar of course has to be above these guys, with the occasional touchback for support, hopefully bouncing back off on a high volume day.
But then I also use the MACD-H, primarily as a measure of momentum strength. If a stock is in a trend, and as it hits a new high, the MACD-H also hits a new high, I've satisfied myself that the trend/momentum is strong enough to continue. If the stock hits a new high and MACD-H doesn't, then my concern is that the trend/momentum is not going to last.
Others look for divergences, which can be meaningful, but for this purpose I'm simply looking at the MACD-H as a confirmation.
But I don't want to be accused of bringing up MACD-H whenever I post.. It's not like I'm trying to convert anybody or anything...
|
|
Registered User
Joined: 1/28/2005
Posts: 6,049
|
amp39
It sounds like your problem has nothing to do
with momentum. It is about settling in on a
trading style.
You have to decide from what you see and what you like.
What type of trader you want to be. Long-term,
Short-term, breakout, trend, counter-trend?
Once you develop a style and goals. You will have an easier
time deciding what suits you and what indicators to
use.
Thanks
diceman
|
|
Registered User
Joined: 12/2/2004
Posts: 1,775
|
Amp39, I don’t use market indicators on my charts if that’s what you mean; I simply keep a close eye on live charts intraday of the major indexes…Naz, Dow, SP500. And of course I always read what Mr. Worden has to say in daily reports on market action. On a day like today where the Naz was taking a beating with volume it caused me to tighten up stops on some individual stocks and get out earlier than I originally planned. Some stocks also went down so fast that I ended up getting out lower than I intended.
I scan daily intraday and my most used scan is: Price above $10, avg. daily volume minimum 150k, price equal to or above the 50-day simple moving average, and the 50 day above the 200 day. Price up minimum 3% with volume above avg. I’m always tinkering with the settings. This just about guarantees that I’ll be looking at stocks with a general uptrend past 6 months or so. I eyeball each chart to make sure it’s in a price consolidation phase of at least several weeks if not months and current price not too extended from its base. If I like the chart I move it to my live streamer list and set audible/visual price alerts and volume alerts. I check earnings date and finally cross check candidates to make sure good basic fundamentals and also with high quality mutual fund sponsorship.
I’m basically a swing trader but I don’t have a set time period; I sell only when the chart tells me to or if a stop is hit, could be 3 days, 3 months, or a year. I almost always sell 1/3 to 1/2 the position once I’ve got a 15 to 25% gain and then raise the stop for remainder but loosen it up. I always check intraday charts before a trade…I have live intraday charts for all the stocks on my streamer list set with 5 minute bars, sometimes switching to 15 min. bars. As for when I buy it all depends. If I’m looking at a chart with a flat base I’ll buy almost the instant price crosses resistance by a dime or more as long as an increase in volume is evident. A 3 mo. flat base I’m monitoring now is KNL...buy signal would be a volume move above 24.50 or 25. I also love pullbacks…what I do here is simply keep a close watch on it and maybe take a small position as soon as it hooks up from the pullback. Matter of fact I never take on a full position at once, usually entering in 3 pieces as price goes up but not so much that price gets extended; I try to keep last buy within 5% of first buy, and that’s assuming first buy was very close to what I consider ideal buy point. I also sometimes buy when price regresses to bottom of a price range within a tight consolidation, or when price drops to the 50-day moving average and starts to bounce.
|
|
Registered User
Joined: 10/7/2004
Posts: 2,126
|
I see some folks around here are rather confused about momentum. What is the definition of momentum? What does momemtum indicate? Let me say first of all that Price is the basis of all indicator. The best indicators to tell momemtum are ROC of price and MOM (same as ROC but with a slightly diffencen in the calculation). Price, and time are essencial elements of the formula.
ROC = ( (Today's close - Close n periods ago) / (Close n periods ago) ) * 100
What does it indicate? Simply an indication that prices are either declining ir rising or that will soon rise or decline.
That is all. But you can certainly see that clearly in prices. Sure. The advantage of mometum is that it is a leading indicator so it may deviate (diverge) from the action of price to show probable future rise or decline.
As for Stochastics is not a momemtum indicator. It only measures oversold or overbough conditions.
MACD isn't either a momentum indicator. Its calculation doesn't include comparing the current price to the price n periods ago. And from my experience you are much better off using the standard line representation of MACD than its Histogram cousing. It is much easier to read, and its picture (Slopes per example) will reveal a lot more to you than the histogram.
If you want to daytrade - momentum will not be your best friend - things move too fast to discover divergences. Your best bet intraday is price (learn the candles), resistant and support levels, and Stochastics along with shifting techniques of MA's.
For swings trades you can use momemtum very eficiently and the best setting in my opinion is 28 along with a shorter average of itself (as 18 perhaps)
As for ADX it is not either an indicator of momemtum. ADX indicates solely the streng of the trend.
I have to agree with the following comment "In War, the simple things work the best.
In War, the simple things can be very difficult." Sun Tzu
good luck to all in your trading
|
|
Registered User
Joined: 4/18/2005
Posts: 4,090
|
AMP39
"Every time some smart trader posts his personal know-how on Worden daily reports, I build a new study chart. I have a ton of them and I am getting so confused and jumping from one chart to another accomplishing zippo zero nada. I just tend to read too much into the indicators that I miss my chance most of the time".
I feel ya. One thing I can say is that to my understanding most of the GREAT chartists use mostly price as their main que and volume.
I paid for a training service and aside from the very beginnings I think I'm getting more here on these forums and from watching ALL the worden tutorial videos. Personaly am having a hard time with my own trading now.. and i'm working to find and end the problem, and it seems to be getting better. BUT I am certain that I am not completely squish between the ears... In 06 i closed the tax year with a 30% gain which is down from an alltime high of about 45% for the year. This IS a more difficult market in my opinion.
Diceman is a gem among us if I may say so. His points are more than valid reguarding identifying your trading style. It is ok to trade a few styles or strategies...but work with one and get it pretty darn right before moving on. Each strategy has markets where it shines and some where it sucks. Either know what strategy to switch to, become an experto at finding your criteria or sit it out when your market condidtions no longer exist.
papertrade various strategies and see what works for you. Also an exercise i am fond of is "foreward testing" clip back a chart in time then CHANGE charts so you dont know what is coming and make decisions as you would for your strategy as you move foreward one day at a time. Record them and don't cheat. I use Excell and Telechart for this. I draw trendlines at buy sell points but you could wright down prices. don't get over fixated on indicators in terms of types of indicators and and settings find some that you like and play with them... check out the knowledge base on all the indicators and ask us. but find what works for you. Consider playing with Backscanner for a bit at least to try to get a sense of things.
consider picking a few stocks and just trade them. If forces you to get "in tune" with it. One mistake I make is that my nightly watchlists get way to big. For momentum and Swing most people agree that you want volume on your side for the trade. I like Vol at or above it's 15 ma (V > XAVGV15) I like MacD and MacD Histogram. TSV and Moneystream are excellent indicators in my opinion, I also use ADX but right now my favorites are RSI and 20,40,50 moving averages with a plan based loosely around some of Elders ideas. price oscilates around value (some moving average) I use the position of the moving averages to guage which way to trade.. 20>40>50 is an up trend and 20 is the value area . The space between 20 & 50 represents a Sweet spot in which context I like to look for my favorite candle entries. so anywhere from close to the 20 Ma to between 20 & 50. Stabing below 50 is a warning but not an eliminated trade. Seems to be working out fairly well.
Learn about suport and resistance, (and when you figure it out tell me). Libraries are great, I keep a steady flow of market education books coming. Try "Technical analysis of Stock Trends" by Edwards and McGee and then take it wath a grain of salt the core is good but parts are dated IMO. I enjoyed Don Wordens books. Also i enjoyed most of Elders books and "mastering the trade" forget whoe wrote that.
I will say that often at my best I'm not listening to news, and not trying five hundred different strategies. You don't need all those approaches.. still read them and think about them .. but I let most go right on by. In fact only this year started reading Dons Notes and market comentary. but the thing is pick ONE and listen to that, or NONE, learn to listen to charts. Work up a trading plan that has rules but can be flexable. It will probably evolve over time so don't carve it in stone.
And stick with it.
|
|
Registered User
Joined: 4/18/2005
Posts: 4,090
|
I meant to say that in most of my momentum trades indicators go out the window... but trying to find a momentum trade before it goes momentum is allot of Fun. Check the "Simple proffitable method" discussion for the scan formula there. It isn't really for momentum but I think that situation in th eright market will put you in to good momentum probibilities. I like springboards for momentum entries.
Another momentum entrie I like is a tall white candle with 1-3 tiny resting days in the range of the close... enter a tad above the highest high of the three. Learn the Candles... they can be very uselful. I don't know all the names of setups.. but I think I can generally recognize the intent of what is going on.
|
|
Registered User
Joined: 4/18/2005
Posts: 4,090
|
I should clarify .. I only use a hand fuld of entry signals.. don't get to fixated on learning them all... it'll screw you up.
|
|
Registered User
Joined: 10/7/2004
Posts: 2,126
|
Just an example of divergence coincidentaly on the stock in question DNDN.
Lets see if the link works this time
|
|
Registered User
Joined: 8/24/2006
Posts: 46
|
 
Mammon, Diceman, Hohandy, Fpetry, BigBlock, Scottnlena,
To all of you, thank you so much for the overwhelming responses. I have to print this out to absorb the topics and to respond to all.
Have a great day
Amp39
|
|
Registered User
Joined: 8/24/2006
Posts: 46
|
Mammon,
"In War, the simple things work the best.
In War, the simple things can be very difficult." Sun Tzu
Agree I would add pick your battles
Thank you
Hohandy,
Your quote:
I want to see volume at least 1.5 x 50ma of volume on a day that goes through resistance to indicate momentum to me - and thereafter, volume should maintain at least the 50ma on "up" days
Assuming that the 50MA is to volume? What is the time frame you use?
Thank you
Diceman,
"In bull markets the simple things work the best.
In bear markets the simple things can be very difficult."
(Point well taken)
Your quote:
It sounds like your problem has nothing to do
with momentum. It is about settling in on a
trading style.
(Yes you have a point here and I assume you referring to Trader, swing or micro.
I can’t wait too long so that rules out Buffet’s style trader
I can’t be on the computer at all times so that rules out microtrader
I consider myself a Swing trader.
I must keep two jobs and have limited hours to study trading conditions indicators etc. etc. therefore that leads me to a quest of “simplicity being the best”.
I have used fundamentals and technical to have a minimum comfort zone for my trades.
I am lacking the confidence to pull the entry trigger. I have learned a defense tactic, but that too lacks confidence as I have gone out too soon or stay in too long on the loosing side. I just can’t seem to stick to it and at the same time have the mastery to know when to flinch.
Here are three examples of today that I have been following:
Time frame is “5 minute 1 day”: May 16 @ 2pm
ASTI looks good to buy today, but I am not sure when it will stop to slide.
Deep I have the same predicament.
Acm I have been following it since started last week wanted to buy yesterday at $21.10 I liked the company good business potential and revenues a real winner . Did not buy wanted to see if it kept going down. Told myself I will buy it today last night Cramer announced this company as being a great buy and Bingo it went up 10% at pre-market. I did not buy it it is too late now.
With this in mind do you have any additional wisdom to share?
Thank you
Fpetry,
Thank you for sharing your tactics it is interesting that you too share the need to know the company basic fundamental before trading. The book I am reading Tool and Tactics of the Master Traders says that fundamentals are total waist of time. I disagree unless you are a microtader.
Your quote:
“almost always sell 1/3 to 1/2 the position once I’ve got a 15 to 25% gain and then raise the stop for remainder but loosen it up”.
How often you get 15 to 25% initial gains. I am lucky to get 3% to 6% percent and after that the price takes a dive and it triggers my stop.
Big Block,
Thank you for your technical explanation of indicators versus momentum very clear. Everyone so far have mentioned learn the candles! Is there some specific tutorial I need to study beside the obvious “the candles body, color, extension, etc”.
Scottnlena,
Thanks for the sentiment of sharing desperation, but our passion of trading will prevail to make us masters in this life time yet! I agree this is a GREAT forum and can see that Diceman is an experienced trader and a wise man. “A gem as you describe”
Your Quote:
“Also an exercise I am fond of is "forward testing" clip back a chart in time then CHANGE charts so you don’t know what is coming and make decisions as you would for your strategy as you move forward one day at a time. Record them and don't cheat”.
I found your comments very interesting and like this exercise very clever!
Scott, Your mind goes 100 miles an hour. I have been watching your postings and you get too deep into indicators that blows me away.
Thank you for all your pointers
And again thanks to all of you.
Amp
|
|
Registered User
Joined: 12/21/2004
Posts: 902
|
QUOTE (amp39) Hohandy,
Your quote:
I want to see volume at least 1.5 x 50ma of volume on a day that goes through resistance to indicate momentum to me - and thereafter, volume should maintain at least the 50ma on "up" days
Assuming that the 50MA is to volume? What is the time frame you use?
Thank you
Strictly talking about a daily chart. And the 50 ma is referring to volume. Basic stuff - volume spikes on important days, strong volume (above its 50 ma) on good days declining or weak volume on down days. To my mind if you don't have volume you don't have momentum.
|
|
Registered User
Joined: 4/18/2005
Posts: 4,090
|
That is probaly true... Momentum trading in and of it's self is tough I think. Where to look? I get bummed by the fact that often when you find potential momentum trades is aftera big day... so depending on market conditions can it continue for another day or more?
|
|
Registered User
Joined: 8/24/2006
Posts: 46
|
A Hohandy,
No volume no momentum
Good point simple.
Now considering an intraday if the price is consolidated and volume is also at a stand still than what trigger a bullish entry opportunity? ASTI is my example since 1pm the price made very little improvement, but has a positive trend. Would this alone constitute a positive momentum? Would you have bought it before the bell?
|
|
Registered User
Joined: 10/7/2004
Posts: 2,126
|
Lets not get confused here. YOur statement "No volume no momentum" is rather confusing. No volume = 0 volume or what?
It is a fact that most stocks in the earlier stages of momentum don't show volume increases (notice I said increases). When the volume comes in (increases) it is already in the latest stages of it. YOu can see this by watching ROC of price. That is why most folks say, oh! I am always late to momentum. ROC will tell you before volume does.
As for daytrade that is a different story - Price along with volume must be use in this case.
good luck
|
|
Registered User
Joined: 12/21/2004
Posts: 902
|
QUOTE (amp39)
Now considering an intraday if the price is consolidated and volume is also at a stand still than what trigger a bullish entry opportunity? ASTI is my example since 1pm the price made very little improvement, but has a positive trend. Would this alone constitute a positive momentum? Would you have bought it before the bell?
I have no real experience with intra-day so I'm not sure if there are any conditions that set it off from just regular rules of trading. The most obvious things that come to mind that would spark an entry opportunity would be a successful test of support or breaking of resistance. Others would see that too and it would generate volume and momentum. Depending on what time frame you're trading, go one and maybe two timeframes up to get the big picture, and then drop back down again to find your entry points. Were there are times this afternoon that presented a compelling entry point? None jump out at me...
A positive price trend that isn't being driven by volume does not constitute positive momentum in my book. What gradually drifted up in the absence of any interest can just as easily gradually drift back down.
ASTIs in a horizontalish consolodation right now - nothing is going to happen with it until it breakouts out one way or the other (if I had to guess, I go with a break to the upside). So what kind of play are you looking for? If you are looking to day trade or something really shortterm, there's nothing going on there right now (unless you have other indicators indicating an imminent price break). If you are looking to get in early so that you can catch the full breakout - and there's nowhere else that you can put your money to work for you in the meantime, then go for it (I would wait though, until I'm sure the break is UPward - but it should be).
But this is not an example of a momentum stock by any stretch - yet, IMO. I think a good horizontal consolidation is really healthy after an upmove - but it does tend to kill momentum. If it breakous out on spectacular volume and after the breakou, if it can sustain upward movement over a couple of weeks with a bunch of above average volume days then you're talking momentum.
|
|
Registered User
Joined: 12/21/2004
Posts: 902
|
QUOTE (BigBlock) It is a fact that most stocks in the earlier stages of momentum don't show volume increases (notice I said increases). When the volume comes in (increases) it is already in the latest stages of it.
Is that "a fact"? I could have sworn that I've read in several different places that volume generally precedes price. But if you say that it's "a fact", I'm sure that it's well documented somewhere. I sure would like to be staightened out.
"As technicians, we believe that volume precedes price." - investopedia.com Price Patterns Part 3 1/7/02
"Joe Granville introduced the On Balance Volume (OBV) indicator in his 1963 book, Granville's New Key to Stock Market Profits. This was one of the first and most popular indicators to measure positive and negative volume flow. The concept behind the indicator: volume precedes price." StockCharts.com Education piece on OBV indicator
"One of the underpinnings of volume analysis is the notion that volume precedes price. This basic technical concept is discussed in the earliest technical analysis writings." John Bollinger, Volume Indicators Revisited Active Trader, March 2002
"Ever heard the saying, "volume precedes price"? Many times you will see volume pick up right before a significant move in a stock. You can see that interest is building. On a stock chart, look for volume to be higher than the previous day. This is a sign that there may be a significant move to come." Swing-trade-stocks.com Stock chart volume - how to interpret volume on a chart
I could go on - the phrase "volume precedes price" generates 1670 Google hits.
I didn't do a search on "price precedes volume" maybe I should have, considering that "it's a fact".
|
|
Registered User
Joined: 10/7/2004
Posts: 2,126
|
Hohandy I am afraid you are thinking of momentum as in the latest stages of momentum. You should consider reading again my post and keeping an open mind on the meaning. I never said volume doesn't preceed. I said "no volume increases" in early stages (of course there is volume - just no huge in proportions). That is why most folks can't see momentum while it is starting. The price will tell you before the volume will at that stage. The huge volume bars are made by the commoners at the end - remember that smart money always sell into strenght. And that is why there will be fluctuations.
|
|
Registered User
Joined: 3/21/2006
Posts: 4,308
|
Bigblock, I made an indicator -
((c-c8)/(c8))*100 and put it in the top window with price. Look at STEM for late December 2006 ROC did lead price and volume for that thrust, but was not usefull after that.
Can you elaborate please (maybe a demonstration would help..
If you have time.
Thanks, Apsll..
|
|
Registered User
Joined: 12/21/2004
Posts: 902
|
QUOTE (BigBlock) Hohandy I am afraid you are thinking of momentum as in the latest stages of momentum.
I have no idea where you claim to know that I'm thinking that because I've never even indicated such a thing. We've been talking about momentum in general.
QUOTE (BigBlock) You should consider reading again my post and keeping an open mind on the meaning.
First, before you jump in and start giving lectures to others, how about rereading my post where I said "the 50 ma is referring to volume. Basic stuff - volume spikes on important days, strong volume (above its 50 ma) on good days declining or weak volume on down days. To my mind if you don't have volume you don't have momentum"
to which when Amp responded to me, by name, and summarized as "no volume, no momentum" you decided to jump in and get all in your face about "YOur statement "No volume no momentum" is rather confusing. No volume = 0 volume or what?" And who's giving lectures on reading others posts before commenting? Give me a break.
And when someone gives an unsupported assertion as "It's a fact" - sorry a little hard to keep an open mind when you know that it isn't necessarily the case
QUOTE (BigBlock) I never said volume doesn't preceed. I said "no volume increases" in early stages (of course there is volume - just no huge in proportions).
No dude, first you said: "It's a fact" - very little about anything to do with the market is "a fact" - so I challenge you right there to come up with something that shows "It's a fact" - trying to weasal out by making this now about *me* doesn't change your unsupported assertion that's been challenged.
You want me to bring in some more quotes? Notice how they just talk about the relationship of volume and price - a pickup in volume often results in a pickup in price - i.e., if price was already rising (your "Late momentum" scenario), why would they then associate a pickup in price to a pickup in volume if price has already been moving? I haven't seen anything yet that limits the idea solely to "latest stage of momentum" or whatever hoo-haa qualification you're trying to put on it. Most talk about it as if it's the START of momentum (but they can't be right, because "it's a fact that most stocks in the earlier stages of momentum don't show volume increases")
" Volume and the change in volume or the increase or decrease over time is often a precursor to price movement. It is said that volume precedes price" (but if the price is already moving in momentum, how can the volume rise precede it?)
"Joseph Granville, creator of the On Balance Volume indicator, shares this same insistence on the importance of volume analysis. He exclaims that volume precedes price, and he even goes so far as to argue that volume is cause and price is effect." (now how could that be the case where we're in "late momentum" that the argument can be made that volume is *causing* price? - but it sure makes sense when talking about momentum in general - or even "early momentum".)
"The theory behind OBV is that volume precedes price. Many times it is just a coincident indicator, but there are certainly occasions when it does warn a breakout is coming." (yeah - that cetainly sounds like it's completely limited to "late momentum", doesn't it? Where the heck could I have possibly gotten the idea that it wasn't just limited to "late momentum" from?)
"In his 2001 book The Master Swing Trader, Alan S. Farley signifies the importance of volume in relationship to price development. Common trading knowledge dictates that volume precedes price. Without adequate market participation a stock can't sustain a rally. It is in these moments of high volume that emotions and market participation reach an unprecedented level and allow stocks to run.
"Every stock creates an average daily participation which oscillates through price development. Instances of volatility, external events and surprise press releases have a high percentage of shocking this harmonic average, which in turn can propel the stock into a new trend. When previous levels of resistance are tested on high volume, more often than not, that established barrier can be broken; allowing the stock to move higher uninhibited. Identify these events when volume exceeds 150% of the daily average. These instances can be the catalyst required to grab the attention of the market and generate higher participation during the days, months and even years that follow." (oops - there's that 150% of volume number that I was talking about in the post that you criticized but didn't bother to read - notice how he points to that kind of action as being a catalyst for momentum "in the days, months, and even years that follow" - yup DEFINITELY limited to "latest stages of momentum" there.
I don't see any qualifiers or any discussion at all about "beginning" and "late" momentum.
|
|
Registered User
Joined: 8/24/2006
Posts: 46
|
Hohandy,
I did not buy ASTI. I am going for day trade on this one. I would like to get in at the beginning of the trend, but I do not want to risk going wrong as I already done before on other occasions. I have been watching ASTI for quite some time and have gone from a low of $4 to $9 down to $7 and up again to $11 now down to $8. I do believe this stock will go up. I simply wanted to see what the panel of expert sow in this trend.” Is there momentum or even an underline of it that says go at this time”
You nailed it and I am learning. I will wait for it to break out before jumping on the wagon.
Thank you
|
|
Registered User
Joined: 10/7/2004
Posts: 2,126
|
Dear Hohandy, I see you have a lot of time in your hands, I don't (not for free, anyways). I like to keep the comments down to the topic, but in this case I must deviate and say - dude! you have a narrow mind.
I was going to show a few examples in pics to illustrate, but now I have decided not to since you know all about Price and Volume Relations. By the way, I was using OBV 10 yrs ago - is not going to get you anywhere.
good luck.
|
|
Registered User
Joined: 12/21/2004
Posts: 902
|
Amp - things aren't looking good for ASTI - look at the last 3 trading days and there's a downward triangle - a bearish pattern. The amount of time that the chart has spent with the negative MACD-H, and now the MACD itself is going below zero and the 50ma has been breeched, makes me think that any bullish momentum has died away. Often a horizontal consolidation after an upward move is a sign of strength but not always.
I don't know if you're using any other indicators that are giving you signals and a reason to belive in an uptrend, but this just doesn't look good.
|
|
Gold Customer
Joined: 11/11/2006
Posts: 359
|
Interesting discussions re: volume and momentum and indicators. The Jessie Livermore of our time is most likely Dan Zanger. He was interviewed twice by "Stocks and Commodities" for his great success in trading. (40+ Million). He uses no indicators. He said he didn't even know what Stochastics was till recently. He used only price and volume and chart patterns.
Gary Smith ("How I trade for a Living") who has also been profiled by Stocks and Commodities, totally ignores volume. He gives three paragraphs to it in his book. He quotes Victor Niederhoffers "The Education of a Speculator" wherein Niederhoffer did his undergraduate thesis on volume and breakouts from 1928 to 1961 and did establish a positive correlation between comovements of price and volume. He later continued his research to the period from 1946 to 1991. There was no predictive relation between stock prices and volume.
Thomas Bulkowski finds that increased volume does not lead to increased prices IN ALL CHART PATTERNS.
I don't remember if it was Joe Granville or Gerry Appel that made a small fortune on his system then lost a lot of it. The cause? He felt it was because he went from "Anticipation" of price movement to "Predicting" price movement.
Aye, thats the rub.
Mammon
|
|
Registered User
Joined: 8/24/2006
Posts: 46
|
Hohandy,
Hey thanks for looking into ASTI. I did not buy it after the second consolidation it did not give me the warm feeling that it was going to reverse plus volume seemed very staggered.
I am using Scottrade elite charts and the only indicators I have is price, volume, and roc. I use the 5 min 1 day chart. Or longer time if I need to see past performance. For scanning I use TC2007 the 20, 50 and 250. I look for price crossover and 20 and 50 SMA crossover to bullish. I read Worden’s notes. I don’t use any other indicators. I tried almost all of them, but I get more confused and uncertain. I tried MACD, but it is of no help on intraday.
Thanks
amp
|
|
Registered User
Joined: 12/21/2004
Posts: 902
|
Amp - what time period are you trading in? Are you doing day trading?
Mammon - thanks for clarifying the issue - that volume/price thing is the sort of thing of that you read all over the place. Nice to have it sraightened out.
|
|
Gold Customer
Joined: 11/11/2006
Posts: 359
|
hohandy: There is no truth. There is only perception. The first hint that one is ignorant is when he begins to see thing clearly. The more one studies the markets, the less absolute things become. Pro' and con's abound on all sides of issue. Often, both sides can back up their theory with facts.
Of a certainty, strong moves occur on strong volume. In scanning thru a few months worth, it seems that up moves can also occur on low volume, down moves on high volume seem to be universally disasters.
Had I permitted myself "gut feelings", I still would like to have up moves on high volume.
Opinions abound
Mammon
|
|
|
Guest-1 |