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Technology Stocks : OBJECT DESIGN Inc.: Bargain of the year!!
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To: Bob Trocchi who wrote (2485)10/30/1998 12:36:00 PM
From: ahhaha  Read Replies (1) of 3194
 
What others call "money flow" is garbage. You have to have a computer taking every trade data and then process it according to methods evaluating the instantaneous state. What you see isn't that at all. What you see is a proxy for trade activity. What good is the level of trade activity? People put such emphasis on activity (volume). Somehow they think volume means weight or significance. Sometimes that's true, mostly it isn't. The only TA that has any more value than a coin is what I'm doing and it isn't much better. Stock prices are randomly distributed. It's a physical fact, but you sure can't find anyone who wants to believe it actively trading.

There are some services that give you raw net tick volume and even a few that compute weighted to trade size net tick volume, but they aren't adequate alone in assessing the state. Worden Bros., for example, used to do this with great success, but they discovered that during the '80s their stuff started causing inconsistencies. Part of the problem is the sheer scale of transactions, but the real problem is that the data flow must be analyzed correctly.

20 years ago I set up stochastic differential equations and solved them which have local solutions only, but can be integrated using the Riemann Stieltjes Integral and then simplified to provide demand/supply structure algorithms. The algorithms provide a local stable solution for the expectation of the persistence of a flow state. They provide probability amplitudes for elasticity relative to marginal demand and supply. That is all that can be done. There is only the expectation of persistence of state. The infinitesimal accumulation of the states represent the martingale-like process seen in stock charts.

Even though the raw tick volume is extremely negative in ODIS, the price is elastic relative to marginal supply. The selling isn't causing a log adjusted deterioration in price. You could conceptualize this as "selling into strong hands". The attitude of the strong hands which can be seen in second order approximations to the flow state is, "I'll take it, if I must". The general market strength is making the price action sensitive to the upside. A little buying has to pay some premium. Don't be fooled that this has sustainable meaning. It's just a market dynamic, a circumstance of market makers trying to figure out how to price this baby.
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