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Strategies & Market Trends : NetCurrents NTCS -- Ignore unavailable to you. Want to Upgrade?

To: Michael Watkins who wrote (4645)	11/18/2000 4:04:27 PM
From: Chip McVickar	Read Replies (1) \| Respond to of 8925

Michael, >>I've personally found little use for OBV and such indicators on stocks or commodities.<< I tend to agree with you. On looking at OBV I found this technique fails when forecasting imminent price breakdowns. These cumulative volume indicators usually do not signal distribution until price deterioration is well underway. The best signal it gives is often some sort of flattening of a price trend. But always Late. I prefer forward looking and perciant indicators. <smile> Only way I've found any usefulness for OBV is similar to the way some use RSI. Looking for divergence's in the peaks compared to the price peaks. Constance Brown describes this very well. "The Chaikin Oscillator, developed by Marc Chaikin, is based on the difference between the 3-period and 10-period exponential moving averages of the Accumulation/Distribution Line. If the issue price is reaching a new high or new low and the Chaikin Oscillator does not reach a new high or low respectively, then short or intermediate price changes may result in the opposite direction of the current price trend." I haven't found much use for this either..., just another Oscillator that mirrors the price charts. Frankly, I haven't found any volume indicator that helps me measure the strength of any particular move. I'm still at a loss to measure the value of volume in either futures or stocks. It would be wonderful if that were to change...! >>Having said all this, I do have some index charts where I plot Cumulative Volume (up vol and down vol) on the daily charts and sometimes find it interesting if not always useful.<< I tried keeping track of daily up/down/flat volume and approaching the problem in a cyclical manner, ie. 40day/15day, etc. Even interday volume moves. This work was inconclusive and seemed to be a useless activity so I passed. Intuitively, I believe volume is the last piece of the information puzzle that surrounds the action of any market chart, the last in the chain of events. First there's the stimulus - then the idea - then place the order - then the chart bars move - finally volume gets recorded. I find the pattern in individual price bars and groups of price bars as the clearest signal of investor psychology and where they will push future moves in the charts. On top of this I use the Andrews Pitchfork and Fib applications to determine and measure moves. I still have no clear way of knowing the strength of any particular move or the trend length. Thanks For Your Post, Chip