S&P analysis for Friday 2nd Oct

#1
S&P analysis for Friday 2nd November

Volume and price analysis for Friday 2nd November 07
By Sebastian Manby

A; prices decline, but with a narrow spread indicated that a rally is probable, in this case the non- farm payrolls, looking into the background
you can see a low after the first yellow arrow on the chart.
B; I wonder how many stops were triggered on this bar, a few thousand I would imagine, that is the purpose of the news, a wide range up bar close off the
high with the next bar down, weakness is looming. Markets do not like excessive high volume on up bars as this shows distribution, which the public cannot see as they
cannot read volume and ultimately professional activity.
Point C is potential strength, countermanded by D.
D; Classic ' No Demand/Upthrust' confirming weakness, if the market was strong, why has the closing price closed on the open? supply must be greater than demand, hence 'No demand'
E; Prices are marked down to this point as the big operators are not supporting the market as they have shorted and are waiting to cover at lower prices, this happens at this point E and the following
bar otherwise the close would be at/near the low of the bar, not way above the low.
F; The bar with the yellow arrow indicates that there is little sellers at this level as the volume is low, the big money were active on the previous 2 bars, and so we see a bottom reversal and a sign of strength
G; A previous sign of strength is now followed by a weak bar, this one is an upthrust where the close is very close to the open, the big money are not interested in higher prices at the moment.
H; Another upthrust with a different slant, related to G but a different formation, but the same result of lower prices.
I; This bar appears 3 time in the next few bars and really should be a down bar where the close is very close to the open, so you would deduce that the buyers and sellers are evenly matched, and a possible reversal
could be soon, no a bar that I would trade on for a signal.
J; As prices rally up the volume increases and the close of the bar pulls back from the high on the close, this is a sign that the
market may not have much further to go and supply is starting to swamp demand.
K; Another upthrust, market is now weak as started at point J and you should be ready to short on this bar, it is a very big clue, next bar is an up bar
on low volume confirming weakness.
L; Down she go's, a wide spread to lock you in if you are long and put you under pressure, and also to lock you out if you are waiting to short or close out your longs.
M; Up bar on low volume is 'No Demand' and is a second opportunity to short(if you can see it).
N; An up bar on increasing volume is bullish, and I would expect the market to open higher Monday, I do not read further than the open of the following day. When the small lot traders(public) are out of the market or short, the market will rally.
 

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Mar 25, 2004
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#2
Dear Sebastian,

many thanks for your interesting analysis.

I rapidly went through the Daily Trading Activity file you posted and do not understand a thing.

From what I can see, you went short ES 4 lots at 1506.75 at 2:40:54 PM (during the bar following the F bar, I suppose) and covered at 1505.75 at 2:42:10 PM (during the same bar).

Apparently, please correct me if I'm wrong, you looked at a smaller time frame chart to take and manage your position, as at the time there weren't signs of weakness on the 10' chart.

Thanks for your kind attention.

Best regards.
 
#3
Real trading

Hi Gordon;

I traded 4 contracts after the close of bar G on the 10 minute chart. I should have stayed in, but not a bad return for 2.5 minutes work. I was late in getting the Emini's enabled on my account, so it was a rush trade.

Regards Sebastian
 
#6
Analysis for Monday 5th November 07

Volume and price analysis for Monday 5th November 07
By Sebastian Manby

A; This bar has high volume on an up bar, showing supply is present and not a good sign for higher prices.
B; Supply is swamping demand, if the close falls back to the middle or open then there is too much supply around and prices will struggle to rally. You should be looking for ' No demand' bar to short.
C; Now we have a test, a down bar on a narrow spread closing near the open, this bar has changed the situation, because prices have been quoted down and the selling is not as acute as the previous 2 bars, if you get weakness and suddenly you get a Test, you must assume that the market is still strong to a degree else the next bar would be down.
D; wide spread up closing off the high on high volume with the next bar down is weakness, the big money is selling to the small lot traders on the way up, this is how a large trader can distribute to the herd as they cannot distribute on the way down, they have to make prices rise to attract buyers.
E; The selling has decreased here possibly because the distribution has not been completed, and the volume is still quite high, now if you look at the following bar, this bar is up on very low volume, this tells us that the market is weak and cannot sustain a rally.
F; A down bar close off the lows will show that prices are supported here and the next bar is up on an increase in volume. If you notice that the volume is lower than at point D, this will tell you that there is no interest in pushing prices above point D, and this is bearish.
G; An Upthrust telling us that supply is present, the close is off the high on an increase in volume, and this tells us that supply has swamped demand(Bearish) with the next bar down to confirm.
H; Another ' No Demand' this absolutely confirms weakness and an excellent bar to short the market, and if you were fooled be the previous rally, you can make up your losses here.
I; Buyers and sellers are equally matched on this bar and that is why the open and the close are the same, the selling has been reduced and the bulls are trying to take control, you should be careful of this bar.
J; No Supply on this bar, which allows prices to be marked up for further distribution, why is this so, because if the market was truly bullish, you would have a shakeout in the background.
K; Another Upthrust, into point G shows that there is no effort by the smart money to push prices through point G, and supply knocks prices back down. The next bar is 'No demand', what else do you want?
L; There is some closing out shorts and stops caught, but the market is so weak, that the best they can do is allow prices to drift sideways.
M; Some support, but no enough to rally far.
N; Prices have drifted up, but there is no support from the traders that count and again we have 'No Demand' and the next bar is down.
O; Another ' No Demand ' from the traders that matter, the market is still weak and you can expect lower prices.
P; Again another'No Demand' and this market has no energy to rally, and as you can see the market just falls away.
Q; At this point the losses to the herd must be mounting and they are stopping out their positions giving the smart money the opportunity to cover, that is why the smart money buy on down bars and sell on up bars, to fool everyone else, and also, so that they do not mark prices against their objective.
R; More' No demand' prices cannot rally as there is no support from the smart money, they know that if their buying bull up prices, they will have to carry other traders hoping to close out at break even, and that is not the way to accumulate, so they let the market fall further to shake out the herd.
S; High volume on down bars shows an effort to shake out the rest of the herd hopefully at a large loss to the herd, as prices are closing off the lows, this shows support.
T; A test, A low volume down bar showing that supply is fading and the market is now strong enough to attempt a rally, very important here as there is supply on the previous bar.
U; A wide spread up on ultra high volume but closing off the high, weakness is still around because as prices rally, it is met with high volume(supply) and the close is in the middle, weakness. The next bar shows equality and this is enough to attempt another rally.
V; Again a wide spread up on ultra high volume shows distribution from traders who got in at point S, closing off the high is a big clue.
W; Another Upthrust, and will weakness in the background, this is confirmation allows the market to be marked down.
X; Another' No demand, this shows that the market is still weak, and that the previous Upthrust was genuine.

Outlook: I expect the weakness to continue as the market was well distributed today, but there was some support on the bar after X, this could allow prices to rise in the overnight trade
and possible into tomorrows open, we shall see.
 

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Mar 25, 2004
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#7
Hi Sebastian,

thanks for these nice charts.

As regards your post #5 of this thread, I see it's an 8' chart ... what I found challenging with VSA is to choose the right time frames ... sometimes the market is fast and a 3' chart is great, sometimes the 5' and the 10' are more appropriate.

I noted that the bar you entered in is in the range of a high volume bar with close in the middle 8 bars before; supply entered there.

Have a nice evening.

Michael
 
Apr 10, 2006
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Parker, Colorado
#10
Hi Sebastian, thank you for taking the time to post. You come with high qualifications. I understand you are one of Tom's brightest students.

I am just starting to get the handle of VSA so I hope you don't mind what may be an elementary question ( I have read MTM twice and have been studying all that I can get my hands on VSA wise for the last couple of weeks full time ).

On point C of the 11/5 chart why is that considered narrow spread when the distance between the high and low of the bar is almost the same as the spread on bar B ? Unless I misunderstand spread is simply the distance between the high and the low?

TIA for your time and effort.

Dan
 

millsy500

Active member
Dec 5, 2004
355
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#11
Hi Sebastian

Also getting to grips with vsa, your posts are appreciated, hopefully will be able to contribute something worthwhile soon:D
 
#12
On point C of the 11/5 chart why is that considered narrow spread when the distance between the high and low of the bar is almost the same as the spread on bar B ? Unless I misunderstand spread is simply the distance between the high and the low?

TIA for your time and effort.

Dan
Hi;

The spread on the bar is probably average, not ultra high. The really significant part is the narrow range between the open and the close and the volume being very low, demand must be greater than supply else then close would have been lower, there was weakness on the previous 2 bars which had to be tested before an up move could occur.
I used to give volume analysis seminars for TradeGuider when Todd was there, were you ever present to those I hosted?

Regards Sebastian
 
Apr 10, 2006
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Parker, Colorado
#13
Hi;

The spread on the bar is probably average, not ultra high. The really significant part is the narrow range between the open and the close and the volume being very low, demand must be greater than supply else then close would have been lower, there was weakness on the previous 2 bars which had to be tested before an up move could occur.
I used to give volume analysis seminars for TradeGuider when Todd was there, were you ever present to those I hosted?

Regards Sebastian
Thanks Sebastian. I am glad you explained that because I thought VSA never looked at the open, just the close? I just started to learn VSA at the surface level at the beginning of 07. I just focused on it hard in the last couple of weeks when I realized the traditional TA tools just didn't work consistently no matter which one of them I tried. I am devouring everything price and volume I can get my hands on. Now that I have started to memorize the VSA patterns things are getting so much clearer!

Looking at charts with price and volume is like having 20/10 vision. Without volume the glasses are fuzzy at best.

Speaking of TG I have a question for you and any other TG students/users. This Saturday they are raising their prices considerably in USD. Originally I was planning on getting the RT software, but now I am feeling like it's not necessary as long as I can apply the techniques on my own chart. I am considering just getting their bootcamp CD because it's supposedly 10 hours of Todd and Tom going through VSA set up by set up in granular detail. What would you recommend Sebastian and others for someone in my shoes? I feel like the more I study VSA and the more I memorize the chart patterns the clearer it coming day by day.

Thanks again for a great thread.

Dan
 
Apr 10, 2006
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Parker, Colorado
#14
If I could put on my wish list of things that you could explain please Sebastian I would really appreciate it if you could suggest so entry spots on charts? And possibly how you draw out multiple playing fields aka trend channels, if you use them? I hope I am not out of line and asking to much. I find this has been one of the areas where I can't seem to find enough information to complete the picture. Thanks again and best of trading to you.

Dan
 
#15
Speaking of TG I have a question for you and any other TG students/users. This Saturday they are raising their prices considerably in USD. Originally I was planning on getting the RT software, but now I am feeling like it's not necessary as long as I can apply the techniques on my own chart. I am considering just getting their bootcamp CD because it's supposedly 10 hours of Todd and Tom going through VSA set up by set up in granular detail. What would you recommend Sebastian and others for someone in my shoes? I feel like the more I study VSA and the more I memorize the chart patterns the clearer it coming day by day.

Thanks again for a great thread.

Dan
Thank you for taking the time to read my thread, I just spoke to Tom Williams on the phone, and he said that Todd is suing TradeGuider, you may well know that Todd left TG, and it is mu understanding that Todd cannot sell his bootcamp CD yet, but if you go to www.geniechartist.com, it will appear on that web site, feel free to call Todd at the number on the website and speak to him, best to call after 12:00 midday London time, as Todd is in England and staying at the home of Tom.

Best wishes
Sebastian
 
#16
If I could put on my wish list of things that you could explain please Sebastian I would really appreciate it if you could suggest so entry spots on charts? And possibly how you draw out multiple playing fields aka trend channels, if you use them? I hope I am not out of line and asking to much. I find this has been one of the areas where I can't seem to find enough information to complete the picture. Thanks again and best of trading to you.

Dan
Hi Dandxg;

I cannot tell you where to enter the market and when to exit, it is only you who can make that decision, I like bars that, say an up bar, with a narrow spread' No demand' after weakness has appeared, no one can ever tell you when to get in or out, because we all see different things on a chart.
Trend channels are used by Todd, and he got that from a book of which I do not know the name, I prefer Volume analysis at its purest form, the charts you see in my letters are the ones I use to trade and no indicators are allowed, I do everything in my head.


Regards Sebastian
 
Apr 10, 2006
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Parker, Colorado
#17
Thank you for taking the time to read my thread, I just spoke to Tom Williams on the phone, and he said that Todd is suing TradeGuider, you may well know that Todd left TG, and it is mu understanding that Todd cannot sell his bootcamp CD yet, but if you go to www.geniechartist.com, it will appear on that web site, feel free to call Todd at the number on the website and speak to him, best to call after 12:00 midday London time, as Todd is in England and staying at the home of Tom.

Best wishes
Sebastian
I actually did talk to Todd last week. I got his number from a friend at Denver Trading Group. He did tell me that. How can he be sueing TG and be staying with Tom, when Tom is the Chairman of TG? I am thoroughly confused. I actually asked Todd if you were going to be his partner in his new venture. He said he couldn't tell me for a couple of weeks.

I spoke to Steve at TG and asked him point blank if Tom Williams is still part of TG and he laughed and said yes. So now I am asking you Sebastian please. Did Tom Williams dump TG and nows Gavin owns it all?

Todd told me that I would real surprised whom his new partner would be that's why I guessed it would be you or Tom;)

BTW I was just planning on by Todd's bootcamp, owned by TG, from TG for $495 USD by Friday. After that they are jacking the price to $595. I have pretty much decided not to buy the software even though they were nice enough to offer me a 6 week refund. I just looked around at a bunch of VSA experts like yourself and none of them use the software. So what does that tell you:-0

Oh and not to forget thanks for answer my questions on entries. :D
 

dbphoenix

Well-known member
Aug 24, 2003
6,908
1,150
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#18
I'm glad to see that you're making another effort to discuss this aspect of PV analysis. Now that Whozis and his progeny are no longer here, perhaps you can enjoy an uninterrupted and worthwhile thread.

Good luck.

Db
 
#19
I actually did talk to Todd last week. I got his number from a friend at Denver Trading Group. He did tell me that. How can he be sueing TG and be staying with Tom, when Tom is the Chairman of TG? I am thoroughly confused. I actually asked Todd if you were going to be his partner in his new venture. He said he couldn't tell me for a couple of weeks.

I'm afraid I cannot speak about it either at the moment, but this monday 12th Nov, I will be going to see Todd and Tom, but i'm not sure I have the time to train anyone. However I do know the answer to this question

I spoke to Steve at TG and asked him point blank if Tom Williams is still part of TG and he laughed and said yes. So now I am asking you Sebastian please. Did Tom Williams dump TG and nows Gavin owns it all?

Tom is the chairman of the UK company in name only, he has no obligation or liabilitys to the company, I think it just suppose to look good on the web site. Gavin and Richard probably own the remaining shares, I have no use for the software, I have found it buggy and the indicators are not correct on all the bars, but that is down to a sloppy working class programmer, not Tom's fault.

Todd told me that I would real surprised whom his new partner would be that's why I guessed it would be you or Tom;)

Your in the ball park on this one.

BTW I was just planning on by Todd's bootcamp, owned by TG, from TG for $495 USD by Friday. After that they are jacking the price to $595. I have pretty much decided not to buy the software even though they were nice enough to offer me a 6 week refund. I just looked around at a bunch of VSA experts like yourself and none of them use the software. So what does that tell you:-0

The software can help your analysis and tell you what the background position is ( strength or weakness) it's up to you to understand the principles and trade from them.

Oh and not to forget thanks for answer my questions on entries. :D
.
 
Apr 10, 2006
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Parker, Colorado
#20
Thanks Sebastian for your help. I have a question for you. If you get a retest of high or low on lesser volume I know this is normally a good place to sell/buy. My question is can you compare volume of regular trading hours normal trading to say RTH volume when it's the NY lunch hour or should this be viewed in their own. Typically NY lunch hour volume drops off. This is one of the areas I am really not clear on at this moment. db phoenix could you give your pro opinion as well. I consider you 2 some of the best their is at PV - VSA trading. Best of trading to everyone. :cool:

I apologize for not posting a chart. I need to learn how to mark up chart on Sierra and then figure out how to post on T2Win.