To: Raymond James Norris who wrote (2416 ) 7/15/1999 1:47:00 PM From: Sir Francis Drake Read Replies (1) | Respond to
<<What's important is volume after the spike>> Now you are opening a huge subject, and I don't know how suitable this forum is for that. Sure, volume after a spike is important. But so are many other things. A very low volume blowout like at 49 means something different, than a still relatively low volume blowout at 52. Context is everything. The greatest number of mistakes made in TA springs from the inability to evaluate indicators. An indicator that usually is associated with a bullish trend, can mean the opposite if other confirming indicators are not present, or are negating. That is why you have to look very carefully at all the circumstances that obtain, before you formulate a conclusion. The 49 low happened in a different context than the more recent low of 52. That, BTW, is why I don't like to rely exclusively on charts+volume for my TA, and I like the hands on feeling I get while watching the action on LII to see relative block sizes of buys and sells, to see who is driving the action (is the MM who is walking the stock up/down the ax in the stock, or just a secondary MM, etc., ECN volume action vs. MM action, ECN distribution ISLD vs INCA etc., etc., etc.) and many other things. A lot of that data can be gotten after the trading closes, but I do it on the LII because I daytrade (after market close I review the data anyway, in preparation for the next day's trading). I am able to glean a lot of information that I find critical to my trading. I know you think intraday trading activity is "amateurish", but I have made a good living for several years from my trading and so I must use the tools that work, without the luxury of worrying whether someone sees them as "profesional" or merely "amateurish". One prominent feature of the 49 selling vs the 52 low, was the different profiles of the institutional/retail trading. That modifies my view of volume on the day, and I therefore look at that indicator depending on other factors influencing it.
