Education and Market Wisdom

[Runner]

Here is a huge volume mover (not) ATEA check out this little gem

[Runner]

So here is my question can you argue with the set up that I posted on ATEA?

[skiracer]

So here is my question can you argue with the set up that I posted on ATEA?

Runner,
I'm not sure if you're saying that the
volume doesn't matter or if it does matter. But here's the weekly of ATEA and there is a justifiable difference in the movement when there is a heavier volume present. Wouldn't you have to agree from the charts perspective? Plus look at the spike up on heavy volume spike in May 04

[Runner]

Ski, I can’t disagree with you and I know volume moves price, but I just don’t pay much attention to it and in all honesty I do not look at it. I think the trend is move important then volume. Yes I know volume moves the trend. Back in my O’Neil days I thought everything about volume and man did I get my head handed to me keying in on all the awesome volume. I forgot one simple thing. In choppy questionable markets (like current conditions) Volume can mislead one into thinking a stock is taking off to the moon. Ya’ll have experienced this, up 5 points today down 7 points tomorrow. I do think the specialist and MM]s can fool traders. Ya see we got some uncertainty happening in the markets right now. The battle has been going on for about a month and I see the Bears slowly defeating the Bulls. This is why IMO if one trades long it should be for a day trade. Or possible overnighter. I know someone can prove me wrong and that is great, but we all have a bias of the markets.

[spikefader]

Support, resistance, and volume dudes! That's what drives price! But it's more complicated than that. Let's drill down on how those 3 things must interact to move price around. Only got a few mins right now, so I'll keep it brief and add more if I think of anything worthwhile later.

Ya got buyers, sellers, and the volume. Ya got different TYPES of orders presented to the market. You might have huge volume at the bid, and smaller volume at the ask, and despite logic saying that price must surely go up because of that, price may just sit there all day without price rising. Why? Because the bidders don't chase the ask. The sellers might be hitting the bid all day and price stays flat. There's no high volume interest in the ask, and price stalls.....There is just no intention to chase the ask! But the moment current bidders or new money in the market are prepared to hit the ask (cuz they just want to own this stock NOW), then THAT's when price will move. The asks get exhausted by the sheer volume and interest in the asking price, and boom, up goes price to the next level of asks. That level gets depleted and boom up to the next level and so on until all the ask hitting buyers disappear. Then it's a matter of how many bidders and their volume that will determine price direction....Sellers will start hitting the bid to get out, and the bid will only last so long, until the bidders are exhausted, then bingo down goes price to the next bidding price. It's not rocket science...it's just intention of buyers and sellers, and how much volume is there to saturate or be exhausted. It's that interaction between the type of orders TOGETHER with the volume of orders, and the order type that affects price movement. What is reflected on the chart insofar as volume may not tell the true picture of intent. Ya gotta find things that will show you that intent. That is the key to determining or anticipating price direction. And if you can work out that intent at places of support and resistance, and you can anticipate that intent, and trade around those areas in a disciplined fashion, then get ready to celebrate! And that's what's great about patterns over indicators (they are distinct from one another in my view)..because patterns do reflect intention of market participants at key points. If you were to study what causes the shape of a Head and Shoulders formation, or a double top, or a triangle, then you'll understand why pattern are so good. The reflect expectation, intention, weakening support and strengthening resistance. They help work out where the money has a potential to go. Now of course at ANY time there may be an event that causes buying or selling contrary to the pattern, and that's just market forces dominating what currently exists, and thereby creating a new chart action. A failed pattern will soon form into another dominant pattern, and it will be seen whether that pattern will come to fruition, or whether market forces will break it and open the door for market action that is independant of what the chart can possibly show or anticipate.

What drives price? It ain't volume so much as the intent of that volume. For price to move up you need people to hit the ask. For it to move down, you need it to hit the bid. And what causes people to hit the ask? Perhaps a break of resistance, perhaps price falling to key support, perhaps news, perhaps just cuz I gotta go take a pee and can't wait at the bid any longer, perhaps I got 50,000 shares to buy by lunchtime. It may not be rational, and yet it may be. Ya never know WHAT's going to happen. Ya just gotta draw your lines in the sand and trade the plan. Hopefully you'll put support and resistance areas in your favor and make a buck doing it.

[skiracer]

Of course the intent of the volume is what drives the price up, down, or makes it stay flat but it is still volume that is the motivating prime factor. What comes first volume or intent of volume or which is a by-product of the other. My own feelings are that everything else comes off of the volume and how the stock reacts to the intent of that volume. That gives you support and resistance lines and drives every other signal, chart formation, or indicator off of the results of that influence and the changes in it.

[spikefader]

...volume that is the motivating prime factor. What comes first volume or intent of volume or which is a by-product of the other. My own feelings are that everything else comes off of the volume and how the stock reacts to the intent of that volume. That gives you support and resistance lines and drives every other signal, chart formation, or indicator off of the results of that influence and the changes in it.

I think the "motivating prime factor" that drives price in a market is perception of 'value'. Something is only valued as high as someone will bid for it, and markets WILL find the true value of something eventually. But then just when it does, or while it's in the process of doing it, something happens, whether it's news, or a MM fat-figered order entry, or a moment of irrationality caused by a big holder or big buyer, but whatever it is that happens, the valuation of the thing changes in the perception of us knuckleheaded humans, and market forces, the battle between buyers and sellers changes ground, and the market will seek equilibrium again. But the fact is, perceived value is so unmeasurable to you or I. It's a subjective thing. And because of that, thus is born speculation.

So does massive volume drive value? I guess there's two kinds of volume in the equation. There's bid volume underneath price, and this could be imaginary or illusionary. Large traders regularly 'flash' bids below the top bid when they have no real intention to buy that quantity. And then there is traded volume. How is one to know whether that traded volume is a big seller unloaded a huge position with a boat load more shares he's trying to sell into strength...and how is one to know whether the high volume traded is simply a MM churning volume to make it appear like there's interest in a stock, only to be setting up to dump and short into the bullishness they may encourage. The answer is no-one can really rely on volume being a true indication of direction. Yes, volume is integral in price movement, but I don't think high volume while price is rising guarantees continuing upward trend. No-one can boast the absolute ability to know for sure how that volume is being manipulated and directed. Sure, you've got brilliant 'tape-readers' who have an ability to sniff out the bias, but even the smartest dude in the world is gonna be deceived or mistaken. It's a matter of who is driving the move, and what their intentions are. Sometimes it's a clear as nose on your face; volume is acting in such a way that it's unmistakeable. Often I'll see raw data action for futures or stocks that is unmistakeable bullishness.....other times, bearishness. But how often do you really see that in today's market? And what about the slow times in between? It's during low volume and quiet times, where you've got big pockets that can manipulate price and fool even the best tape-reader.

So the element of volume is hugely complex, and I don't think pure volume drives price. Does price even follow volume? Perhaps it does. But it's a relative assessement. If massive volume enters a stock on a breakout, it's pretty clear what's likely going to happen. But it'll hit resistance or exhaustion at some point, and then it'll be a question of what now? And this is why buying at resistance is so dangerous, and why buying at support makes so much sense. Yes, you might get lucky if you recklessly follow volume and chase it. But ya gotta be careful, cuz the minute after you buy may be the time when big dog says, OK, time to unload a bunch, and it turns your entry into red hope if you let it. You may say, Oh it's OK, look at the volume, I'm safe so I'll set a 20% stop on this.....and then you see that huge volume that looked so good turn into exhaustion and trend changes direction on you.

And this is where patterns come into the equation. Most patterns are closely associated with support and resistance. When pattern support fails, it is relecting a potential. Sure, it may fail, and that means something too. Likewise when pattern resistance fails.

And as for indicators, where do they fit into all of that? Do they reflect support, resistance, pattern failure, market volume depth and volume? Some may attempt to, but how accurate is it? Perhaps interpretation of those indicators is the key. What does a divergence in CCI to price really mean? Is that reflective of value of an issue? No....it's merely a graphical representation of historical data that may be cyclic and designed to provide 'signals' or areas of likely resistance? I don't know, I think I have to think more on it. hehe

But it's a fascinating topic anyway.

[scifos]

Oooh, I sparked quite a debate...

[skiracer]

Spike,
I agree with you that it's a great topic for discussion. Even when I disagree with some of your concepts I always enjoy reading your posts. You always offer a number of interesting points and perspectives to consider as alternatives to what I may be thinking. I don't want to sound like I'm coming off as condescending but it has to be good fodder for the less experienced traders to read this type of stuff. It's the kind of topic that they may not be thinking of yet in the early stages of their trading careers. Has to be a positive effect to take all this into consideration. Anyway it is a great topic an personally I would like to hear from some of the other regulars about how they feel on the subject. No need to let egos run off but just to voice an opinion if you have one. I'm not going to put out any specific names because if I don't mention someone they might get slighted so there are alot of people here who trade regularly on a daily basis. You must have some views or feeling about all of this volume, price, an indicators stuff. Lets get some opinions and views on the topic.

[Lyehopper]

Wanna lose that finger?....huh?....WELL?.... YEAH!!!!

Oooh, I sparked quite a debate...

You're pretty good at that dude....lol

Hey Scifos.... One day my Avatar's gonna jump your Avatar when he ain't lookin and just whoop his a$$....LOL!

[spikefader]

Yeah ski agree entirely. I always enjoy reading yer posts, and anyone elses, even if I happen to have another slant on it or disagree. The way I look at it.....it should be "egos at the door", and bring constructive thoughts forward for sharing....and any topic of discussion is exactly that; a topic of discussion. If it's thought-provoking and it brings new perspectives to the table, in a respectful manner, then it's all good. And I pray that anything I say with passion is taken in the light it's delivered; and that is with a demeaor of goodwill and intent to share and encourage and get to the truth of the matter. Cuz the bottom line is we should all try to help each other improve. Tradin' is way too hard to make this about one-up-manship at the expense of someone else's opinion.

And scifos, kudos for asking the question that prompted those thoughts. I don't think it's a debate.....just healthy discussion. And Shadow, thnx fer startin' the thread.

Lye, every time I look at your Avatar I think of Webs hehe. The Vulcan. I remember the day Webs came up with that one; and it's very very apt. I hope he never discards it. Shoo, how can he; he's named a system after it lol. I can't wait to see it actually....

[scifos]

You're pretty good at that dude....lol

Hey Scifos.... One day my Avatar's gonna jump your Avatar when he ain't lookin and just whoop his a$$....LOL!

Oh come now, everyone knows your avatar wouldn't last 3 seconds against mine.

[AudiQuattro]

This might sound nuts, but I like the basic free charts like those at clearstation.com and bigcharts.com for swing trading and position trading. In a longer time horizon, too many bells and whistles end up just being noise. Relying on the most powerful charting tools might give you a false sense of security.

[gerihearne]

questions, i have questions

Does anyone know of a place, website? that i could go to find stocks that have recently split? Sort of like a list that the bank has of foreclosed property ... does such a think exist?
________
cheap vaporizer

[New-born baby]

Ccj

Does anyone know of a place, website? that i could go to find stocks that have recently split? Sort of like a list that the bank has of foreclosed property ... does such a think exist?

CCJ splits 2:1 after the close Friday.

And no, I don't know. Ask IIC. He knows everything. Really.