Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Playing the QQQQ with Terry and friends. -- Ignore unavailable to you. Want to Upgrade?

To: SHAWING who wrote (804)	6/11/2005 5:57:35 AM
From: Walkingshadow	Respond to of 4814

Hi Shawing, The markets are normally driven by trading programs, which typically account for 60% or more of all trading volume. I don't really know, but it makes sense to me that one important factor driving programmed trading is the overall volumes, and also the volume patterns. Just as momentum traders zero in on stocks with low floats that can be more easily pushed around, so too it would be predicted that trading programs may be more successful on low volume days. There have been some notable spikes on the dips, and this is accumulation as you say. This week there were four big volume spikes, one each on Tuesday, Wednesday, Thursday and Friday. The first two and the last occurred on dips, and these are consistent with your interpretation. 139.142.147.22 It is very hard to appreciate on this chart, but the one on Thursday occurred at a peak as the market was rallying. Thus, the market sowed the seeds of its own destruction in the very short term, which we saw on Friday as QQQQ lost 1% on the day. Downward movement was stopped on Friday by a fairly good-sized volume spike of the kind you mention. Over a longer time frame, the medium term correction was stopped by precisely the sort of volume spikes you refer to. These began to increase in frequency and magnitude during April, and finally culminated in a series of substantial spikes near the end of the month. I saw these, and together with other factors, these things made me go long and I posted repeatedly that I thought the medium-term correction was over, and suggested that every penny you could find should be thrown into this market on the long side. As it turned out, that reversal occurred on April 29 with a dramatic reversal candle. Message 21272335 Message 21283436 Message 21301491 Message 21291267 The problem now is that since that bottom, we have seen a sharp rally, and the majority of the volume spikes have occurred at market highs, not market lows. This distribution volume has been largely unprocessed so far.... the market has delayed the reaction repeatedly, making the possibility of a strong downside move increasingly likely. We saw some two or three sessions where the move down was fairly vigorous. I think we'll see more of this over the next week or two or three. I do NOT expect the lows of late April to be revisited. I think reversal will come long before that, probably at about $36.50 or so, maybe a bit lower. But we'll just have to wait to see the volume reactions along the way before we can know for sure. So, you are correct----there has been large spikes of volume, particularly on Tuesday and Wednesday and Friday. But this is still greatly overshadowed by the opposite kind of volume, and the market still needs to resolve this imbalance by moving downward. As it moves downward, the key to the end of this short term correction will be the appearance of considerably more of what you are talking about----big volume spikes at short-term market lows, and I will be watching for these because they will be a significant factor in telling me when to cover my current short position and flip back to the long side (still unquestionably the dominant long-term trend). ....all IMHO, of course. T