bcrafty,
<I still think this rally smells funny>
Yes, I agree with you now (short term). I feel that due to the candlestick pattern of Thurs (doji) and Fri forming a fairly reliable Evening Star reversal pattern (bearish) and the fact exactly as you
point out there was zip for volume after that trendline break
(indicating it was not a true breakout as Raptor says) makes me believe that the bias will again be down now for the short term. Also, as I was
anticipating a high +/- two trading sessions from the FM Aug 4 (Sat)...I think it is likely at this point that Thurs was the high.
Also, relating to our volume discussion as I was attempting to show with that last chart example; this view of the daily compx has been marked to illustrate the ebb and flow of volume peaks in relation to the price turns up and down on the chart.
home.earthlink.net
As most will agree that we are in the summer doldrums and sideways trading range market, the volume peaks are not as clear as the same phenomenon on individual stock issues, but the pattern is visible nonetheless.
I believe that one of the reasons this heavier trading volume at the turns up and down is due to the behavior of different groups of traders at these periods. I doubt many will disagree that most non-professional traders lose money. The reason is that human emotion tends to become more exuberant after price has advanced beyond a certain point of disbelief, and becomes more gloomy after price has declined beyond limits of optimism. In essence, most investors are bullish at the top, and bearish at the bottom. In direct opposition to these is the "smart money", those super sharp traders who sell to the losers at the top and buy from the losers at the bottom. The point I am making is that at the tops and bottoms are when the largest part of the exchange I just identified occurs and when the volume increases as seen on the charts identify where the winners and losers are exchanging their positions!
But, even though I say now the short term bias is down, keep in mind that on the last 13 turns in the compx since the 4/20 high, the longest period of trading sessions from high to low was 8 sessions with an average of 5.83.
4/20 high - 3 (sessions to next turn)
4/25 low - 5
5/2 high - 8
5/14 low - 6
5/22 high - 5
5/30 low - 6
6/7 high - 8
6/20 low - 7
7/2 high - 6
7/11 low - 2
7/13 high - 8
7/24 low - 6
8/2 high - ? (1 so far and counting)
adding up the periods for a total of 70 on 12 turns yields the average between turns of 5.83 trading sessions.
From these factors and points I have made, I feel it is quite likely to now see potentially 4.83 (from an average point of view) more trading days until our next turn which would be a low...towards the end of this next week. So, my expectation from here would be to see a progression of lower highs and lower lows for another 4-5 sessions approximately.
Appreciate your continuation of this discussion as I do believe that various ways of incorporating volume data into
the traders tool bag of tricks is beneficial.
Best of luck to you and ALL this next week,
Regards,
Eichler |
