'No indicators' revisited

[china white]

Rustic1, I believe u can just open a new window in QCharts for Dow futures and create the volume study, just like ES.

 

[china white]

lads/lasses - just an observation here - look how on strong trend days Lynda's "holy grail" gets validated and "endorsed" by price-volume dynamics. I must say NOW I really see why the grail actually works - and is not just some "mechanical" trading rule...... dark side is truly amazing

 

[clylbw]

Accumulation, Volume and Time&Sales at NQ

Hi,

First of all, I have been told that some of the charts I attached were not clear enough; I am really sorry for the confusion. The chart attached in this post is the 5-minute chart of today's NQ; the first bar started at 9:30am EST when the market opened, and the last bar indicated the market's close at 16:15pm EST. The hours of the day are indicated in the x axis. Hopefully this chart is clear enough.

I would like to ask three things about today's NQ actions.

1. SOCRATES, can you (or others) please tell me whether you would think the periods between 9:30 and 11:00am, and 13:35 to 14:40pm, both highlighted by pink horizontal lines, as accumulations? During both periods, the price travelled within a range, but the volume in the afternoon period was much lighter than that in the morning period. I have heard that accumulation takes place with light volume; is light volume a necessary condition for accumulation?

2. I wonder how to interpret the period between 12:55 and 13:25pm, when the price increased in apparent light volume (both the bars and the corresponding volume are highlighted by orange lines)? I was long at that time, and a bit concerned as volume did not seem to support the price movement. Fortunately later prices and volumes invalidated such concern.

3. Do other Dark Siders look at the Time&Sales information? Sometimes I find it confusing. For example, I have seen more than once large quantities such as hundreds or even thousands in bid/ask, but the actual trades are only in tens and dozens. I wonder whether people are playing games at GLOBEX as they would be doing in NASDAQ Level II.

Thanks indeed.

BTW, china, I hope this post does not clash with your daily volume analysis, which I have enjoyed a lot.

 

[clylbw]

Side Note: GLOBEX close at Friday?

Apparently NYSE will be closed at Friday in respect of Ronald Reagan; are NASDAQ and GLOBEX also going to be closed that day?

 

[james88]

clylbw

1 Accumulation ? It traded sideways after an up move. Chances are good that the trend will resume once it breaks out. It's easy to follow, why worry about accumulation or distribution IMHO ?

2 It was lunchtime

3. There are plenty of games going on . I do'nt look at time and sales , others might.

 

[clylbw]

Thanks indeed.

 

[Rognvald]

I'll have a go. I saw the move up from 11.05 to the 1478 HH at 12.10 as a BO from a formation likely to peak at about 1480. Perhaps it ran out of steam over lunch and I can't say what that bit represented but the volume started to kick in at 13.35 when 1480 was reached. 13.40 to 14.45 was probably accumulation and it took comparatively small volume then to break that and suck in a lot of longs?

 

[SOCRATES]

Hi,

First of all, I have been told that some of the charts I attached were not clear enough; I am really sorry for the confusion. The chart attached in this post is the 5-minute chart of today's NQ; the first bar started at 9:30am EST when the market opened, and the last bar indicated the market's close at 16:15pm EST. The hours of the day are indicated in the x axis. Hopefully this chart is clear enough.

I would like to ask three things about today's NQ actions.

1. SOCRATES, can you (or others) please tell me whether you would think the periods between 9:30 and 11:00am, and 13:35 to 14:40pm, both highlighted by pink horizontal lines, as accumulations? During both periods, the price travelled within a range, but the volume in the afternoon period was much lighter than that in the morning period. I have heard that accumulation takes place with light volume; is light volume a necessary condition for accumulation?

2. I wonder how to interpret the period between 12:55 and 13:25pm, when the price increased in apparent light volume (both the bars and the corresponding volume are highlighted by orange lines)? I was long at that time, and a bit concerned as volume did not seem to support the price movement. Fortunately later prices and volumes invalidated such concern.

3. Do other Dark Siders look at the Time&Sales information? Sometimes I find it confusing. For example, I have seen more than once large quantities such as hundreds or even thousands in bid/ask, but the actual trades are only in tens and dozens. I wonder whether people are playing games at GLOBEX as they would be doing in NASDAQ Level II.

Thanks indeed.

BTW, china, I hope this post does not clash with your daily volume analysis, which I have enjoyed a lot.

Here are the answers to your questions.

One:~ during the period you mention notice that the volume is heavy on up bars but the price is capped. Probably every time the price went up some selling took place to dampen it to facilitate accumulation later. You don't display the background so I have no idea what preceded this but if it was preceded by rises, then it looks as if the high volume I have just described is an attempt to cool down a market a bit just enough to try to accumulate at a steady price without being noticed.

Two:~ It looks as if this climb is price driven, that is , the advance in price causes the volume, do you understand ? This volume appears to be consequential., subjective. Again we have to verify the background, previous to the period shown by the chart but my hunch is that the background would show a rise. Then, given this, this subjective volume is justified. And in addirtion, it was lunchtime as James88 so aptly points out.

Three:~Reply Negative.

 

[clylbw]

Hi Rognvald, SOCRATES,

Many thanks indeed.

 

[china white]

Clylbw - what Socrates said is very sage - and makes perfect sense, that is exactly how big operators work. Not JUST on price btw - it is also a very common practice in trading options, when e.g. volatility skew explodes and big long put operators "cool down" the volatility on the downside - u get this period of both "healthy" volume and open interest on listed option with the volatility on that range of strikes sort of stuck - not going anywhere. Think abt it - it is all human nature games (with LOADS of ducats at stake) - btw this is why in all honesty I am so fascinated with the dark side - which bases trading decisions not on some mechanical indicator (no pun intended ) but rather on realisation of what wud the crowd ruled by greed and fear do under circumstances.

let me think out loud here and explore why particular price-volume patterns work so well in relation to UNDERSTANDING what they mean in terms of sussing what the crowd is doing. PLS NOTE - I will be very simplistic here - U ALWAYS HAVE TO VIEW THESE PATTERNS IN CONTEXT!!!! as stand-alones they may be VERY deceiving. Let us c - I will explore the bullish case:

a) Up maribozu on miniscule volume
b) Up maribozu on heavy volume
c) Doji on miniscule volume - or as in your Part 2 - steady but not too quick rise on little volume
d) Doji on high volume.

Let us think carefully - what do those mean?

a) price moves miles without any "resistance". What is it? NO ASKS IN THE BOOK LOG! Cavalry full gallop without a sign of the enemy! It is NOT the most common pattern - e.g. it happened in the first minutes of the fall of 1929, when ppl were happy if they cud cancel their bids before they got hit. It is most likely the consequence of some major news or something of that sort. Yes, usually it is the beginning of some major move, but beware, it can be a trap - there can be heavily fortified "trenches" 20 miles further along the cavalry's advance

b) unlike previous "unhealthy" bull move this is most likely a "healthy" bull move - loads of bulls, strong resistance by bears, but bulls outnumber the bears and take the upper hand in heavy fighting (Battle of Kursk if I may be excused for repeating the analogy ). HOWEVER CONTEXT IS KEY and I'll show why next.

d) (I am skipping c) for the time being). Heavy fight with price going nowhere. What does that mean? Obviously heavy buying meets heavy selling but what does THAT mean? 2 things - either as in your Part 1 the bulls r "colling down" the market after a big move OR bulls closing their longs and a potential reversal. NOW THINK ABOUT THIS: a maribozu up on heavy volume in a given 2 min interval followed by a maribozu down on a heavy volume over the next 2 minutes = a doji on a heavy volume on a 4 minutes interval!!!!!!! IS IT CLEAR NOW HOW THE CONTEXT IS KEY?

c) most probably your part 2 mate with the volume being the 2nd violin (consequential volume).

fascinating isnt' it? For me personally loads more informative than finding out what the formula for calculating MACD(5,35,10) is

 

[Milamber]

Bullflag or Reversal?

Hello and thanks again to everyone for excellent contributions.

Attached are pictures from yesterdays (7th) and fridays (4th) trading (ES 5 min). On both charts there is a bullflaggish formation, marked with a blue horisontal line above the formation. On friday it turned out ot be a reversal, yesterday a continuation pattern. Any ideas how one could have been able to differentiate between the two in real-time? I know it probably has a lot to do with context (what has happened before the formation) and also with what happens during the formation.

Any input greatly appreciated.

Bungle

 

[Milamber]

lads/lasses - just an observation here - look how on strong trend days Lynda's "holy grail" gets validated and "endorsed" by price-volume dynamics. I must say NOW I really see why the grail actually works - and is not just some "mechanical" trading rule...... dark side is truly amazing

I (and many others) had difficulties during yesterdays (7th) trading as I interpreted the price / volume action to signal a lack of upwards momentum on several occasions and was suprised to see the price continue upwards. Can you elaborate on your comment on price-volume dynamics for a day like this?

One observation that I made which talks in favor of uptrend continuing is that even if the upwards momentum seemed to stall on several occasions, the downward momentum was even poorer, actually there was ZERO downward momentum. Not a single long red bar or a red bar with significant volume. I suppose this is very important.

Another question, the double toppish formation at 11.15 and 11.50 looked like a reversal setting up, but it turned out to be just a breather, leading to the bull flag I mentioned in my previous post. Any ideas how one could avoid mistaking this for a double top (obviously related to my question in my previous post)?

Bungle

 

[TheBramble]

lads/lasses - just an observation here - look how on strong trend days Lynda's "holy grail" gets validated and "endorsed" by price-volume dynamics. I must say NOW I really see why the grail actually works - and is not just some "mechanical" trading rule...... dark side is truly amazing

China - continuing thickness on my part I'm sure.

What is 'Lynda's Holy grail' that you're referring to?

 

[Milamber]

China - continuing thickness on my part I'm sure.

What is 'Lynda's Holy grail' that you're referring to?

I think he is referring to Linda Raschkes Holy Grail setup. Google for "holy grail linda raschke" and you find a lot of stuff on it.

Bungle

 

[james88]

Bramble

Linda is found at www.lbrgroup.com

The "holy grail" is a set up based on the adx, which is an oscillator, which means that the chinaman should be for the high jump when Socrates finds out !

 

[Rognvald]

Dr Bungle
Perhaps context in this case is a lot.. I have put your 2 charts side by side to help clarity.

To continue with the allegory the queen did some shouting over the weekend and some heads had to roll.

Should we not debate whose and why?

 

[BKuerbs]

This thread is called "No indicators" and so my comments may be considered to be not valid. But I do not put $Tick and the Advance/Decline line in the same league as MACD and RSI.

Compare the behaviour of volume and $Tick at the beginning of area A and B. In A, ES rises on declining volume and declining $Tick while in B volume rises, though a bit too much. During the declines there are differences too: in A $Tick moves down below 0 and ES moves down too. In B, though $Tick moves down, it does not drop below 0, and though ES does follow, it drops only much less than in A.

From the start of the each session, there are differences: ADD is strong on both days, but stronger on Monday. On Monday, $Tick only once touches 0, but else stays positive.

C is a repetition of B. Though $Tick drops, ES rises. You have to look at the COMP index too, because ADD and $Tick actually reflect their behaviour, not that of the SPX (ES).

regards

Bernd Kuerbs

 

[Rognvald]

Dr Bungle

sorry one of my machines is down and I dont have access to the charts I want to post so am doing the best I can by manipulating yours. As you see the two are now out of scale but at least their join up point is about right (I hope)

The red line is a starting point I think 112900.

Volume size & price action in the LH chart has to be adjusted in the mind to compensate for scale.

 

[SOCRATES]

Bullflags

Hello and thanks again to everyone for excellent contributions.

Attached are pictures from yesterdays (7th) and fridays (4th) trading (ES 5 min). On both charts there is a bullflaggish formation, marked with a blue horisontal line above the formation. On friday it turned out ot be a reversal, yesterday a continuation pattern. Any ideas how one could have been able to differentiate between the two in real-time? I know it probably has a lot to do with context (what has happened before the formation) and also with what happens during the formation.

Any input greatly appreciated.

Bungle

Well Dr Bungle, it is obvious, is it not ?
What you have to do is to change your use of time.
When you change your use of time everything will become clearer.
You have to apply the correct time to time,
If you do not, how can you expect time to give you any time,
in order for you to enjoy the benefits thereof ?

 

[SOCRATES]

This thread is called "No indicators" and so my comments may be considered to be not valid. But I do not put $Tick and the Advance/Decline line in the same league as MACD and RSI.

Compare the behaviour of volume and $Tick at the beginning of area A and B. In A, ES rises on declining volume and declining $Tick while in B volume rises, though a bit too much. During the declines there are differences too: in A $Tick moves down below 0 and ES moves down too. In B, though $Tick moves down, it does not drop below 0, and though ES does follow, it drops only much less than in A.

From the start of the each session, there are differences: ADD is strong on both days, but stronger on Monday. On Monday, $Tick only once touches 0, but else stays positive.

C is a repetition of B. Though $Tick drops, ES rises. You have to look at the COMP index too, because ADD and $Tick actually reflect their behaviour, not that of the SPX (ES).

regards

Bernd Kuerbs

We do not find your comments invalid, but we do find them unnecessarily overlaboured.
In the first chart prices are led to collapse at a top as a consequence of high volume marking
the end of the move = exhaustion.
In the second chart prices are led to continue as a consequence of moderate volume playing its proper role within the price time continueum argument = continuation.
They are very different for diametrically opposite volumetric reasons. That's simple.
However we are all baffled as to why it is necessary to explain a straightforward volume driven action in each case in the way you go about it. Why complicate what is very simple and obvious by introducing all these complications ? Or is it that we have not grasped the point you make ?
Will you kindly elucidate if appropriate, please.