Price, (Volume), Support, Resistance, Demand, Supply . . .

[dbphoenix]

I don't think Steve believes "every purchase is accumulation. Every sell is distribution."
I never read it that way and certainly don't think thats the case.

As I stated before, I don't understand what your getting at. I've read post 365 several times but its not clicking, sorry, it must be me.

Would you prefer if I used the terms strong hands in place of those and the public in place of others in my original post.

Please try and explain your intent clearly.

Rgds.

Have you read the Demand/Supply piece that the post refers to?

 

[Vorpal]

Yes. Something must be going way over my head.

 

[dbphoenix]

So you understand that accumulation takes place in a base, correct?

 

[Vorpal]

Accumulation takes place in a range, with low volume.

A base is an area that forms over some time. Interest in the stock will be significantly less than previously.

If I am missing something then I will study your file again in the morning and respond having done so.

Rgds.

 

[dbphoenix]

I don't see the distinction you're making between a range and a base if you characterize both as having low volume.

 

[Vorpal]

I don't see the distinction you're making between a range and a base if you characterize both as having low volume.

Sorry, I didn't mean there to be a distinction between range and base. In accumulation I look at a base as a congestion area that has formed over some length of time on low volume.

 

[dbphoenix]

If you agree that that base is where accumulation takes place, then we're on the same page and I apparently misunderstood what it is you were trying to say earlier.

I know it's late over there, and it's Friday. And it's been a long week. Don't re-read the D/S stuff unless you really want to. But if you haven't looked at the Bases/Rectangles stuff, you may want to do so. It's a hell of a lot shorter.

 

[Vorpal]

If you agree that that base is where accumulation takes place, then we're on the same page and I apparently misunderstood what it is you were trying to say earlier.

I do agree that a base is where accumulation takes place, followed by Mark-up, then Distribution.

I will look at the Bases/Rectangles and S/D stuff over the weekend. Something I regularly do.

Thanks for your time.

Rgds.

 

[erierambler]

What I'm interested in is price and price movement as a manifestation of the dynamics of buying and selling pressures and how the results of all this determine support and resistance and trend.

This I believe is the main theme of the thread.
The best example I can find occurs at swing points. It is at the swing points one can have some method of increased probability. When one drills down to interday it is very challenging to know or try to calculate reference points where buying/selling pressures occur and result in support or resistance.

erie

 

[Southpaw46]

Hello:
It seems to me that a couple of important concepts have been overlooked. In my experience, the movement of price often reflects the urgency (speed) with which buyers or sellers enter orders. This urgency to enter is why an order to buy shares executes at the offer, rather than at the bid. Conversely , urgency to exit is reflected in orders to sell that execute at the bid, rather than at the offer. Because there are a variety of participants in the market, with similar agendas, there is an aspect of "mob mentality" that is often seen when economic reports, earnings reports, or news items are released. Even in the execution of programs, one can see the effect that many orders executing electronically has on price. Professionals call these movements "spikes" and (eventually) learn to trade them in countertrend fashion. By the way, a good example of how important "urgency" is can be seen in the Late Day Reversal. Once again, if you simply review intraday charts, one can see periodically, a situation where groups of participants change their minds late in the day. The market reverses, picks up momentum as participants struggle to execute, initially on one side of the spread, then as time starts to run out, with "market orders" as they rush to get "to the door" before it closes.

Support and resistance are important concepts certainly. But again I believe that many are overlooking the obvious. Wide Range Bars, and Gaps. If you simply review daily charts with an eye towards finding these two elements, what you notice eventually is that price often hesitates and retraces, at about the mid-point of a wide range bar. Gaps often serve the same function, and finally Swing Points. I find that all three are important in helping the trader to identify areas that traders call "support and resistance. Southpaw46

 

[babymush]

Need help in this - Reading the book "Technique of Tape Reading"

There is a part where it says,

When the market is very strong, we look to buy at the first sign of strenth and don't wait for the actual break

When the market is trending but not overly strong, we look to buy at the actual breakout

If the market is uncertain, then we look to buy only after the break and a successful retest of the new support.

I am not intraday trading, holding positions for 3 days to 14 days - How do I determine if a market is strong etc etc?

Thank you

 

[Southpaw46]

Hello:
I have been doing this a while. Reading your quotes, I think to myself, "that is all well and good, but it doesn't really help much because it is not very specific. When I have a screen in front of me, and a decision to make, this kind of advice doesn't inspire confidence. In fact it seems to bring up more questions than it answers".

I think you have to decide based on the specific market you trade, what "strength" means. Does it mean for instance that on an intraday basis, your market "takes out" or moves through price points where before it was range bound? Does it mean that the 10 period moving average is above the 20 period moving average? Or does it mean for example that on a daily basis the market seems to advance in spite of bad news? these are all possible signs of strength. I think that you need to determine for yourself (by doing a little research) what constitutes strength and weakness.

Say for example that you intend to trade on an intraday basis using 5 minute bars. In that case, to determine whether a market was "strong" or "weak", I would be looking at a daily chart and using at least one, and possible all of the simple metrics mentioned above. Good luck, Southpaw46

 

[babymush]

Thank you for the reply. I am not sure if you use a Top down approach where one will see the relative strength of a stock compared to the market ...

However I have a question, when I use relative strength to analyse a stock, I usually find that those stocks that have a higher relative strength >1 as compared to the market (when the market is going down) are those that have a HUGE increase in price.

Does this mean that when the market goes up, the stock will also go up or will it go into a correction?

Can anyone enlighten me on this?

 

[Southpaw46]

History will answer your question for you. Simply look back at how your target stock performed when there has been a market correction. You can obtain a number of opinions I am sure, but that is the method I would use to determine what to do in the future.

 

[dbphoenix]

Thank you for the reply. I am not sure if you use a Top down approach where one will see the relative strength of a stock compared to the market ...

However I have a question, when I use relative strength to analyse a stock, I usually find that those stocks that have a higher relative strength >1 as compared to the market (when the market is going down) are those that have a HUGE increase in price.

Does this mean that when the market goes up, the stock will also go up or will it go into a correction?

Can anyone enlighten me on this?

As to your earlier question, I've contacted the author to find out if he'd be willing to reply through me without going through the T2W registration process (which he may do anyway).

But as to your questions above, it is sometimes true that a stock that holds up while the market is correcting will do better than average when the market begins to recover, but this is so general as to be useless. Your next question, though, regarding predicting the future, is unanswerable.

You seem to be tip-toeing around a more fundamental question. Why not just ask the question you want to ask? Otherwise, you're just going to get a lot of fortune cookie answers.

 

[dbphoenix]

As to your earlier question, I've contacted the author to find out if he'd be willing to reply through me without going through the T2W registration process (which he may do anyway).

Vad [the author] says that you're referring to the distinction between aggressive entry vs regular vs conservative. The problem with your question is that it's outside of the topic and related to YOUR method of reading [this is all a paraphrase of his reply]. You are asking how you are to determine the strength of the market. Really no way to answer not knowing what set of tools you are using: indicators? chart patterns? candlestick formations? The answer will be different according to the tools you're using. If you simply don't know what you're looking at, then you have to start somewhere more basic... trend, volume confirmations etc...

He also provided his email address if you want to contact him directly. I'll send it to you via PM.

 

[babymush]

Ah Thank you for helping me ask

Actually I really do not know where I am going from here. Just in the middle of the book and saw that sentence between agressive approach etc etc...

What I really hope you can do is:

as I am a visual person and I learn better if I can see it working out in charts ..

Do you think you can post a trade or 2 that you took or would have took that shows why you took the trade .. like Accumulation forming here with increasing volume - Here is where I entered because of:

As I learn better this way, hope some people can help as I am really wandering about aimlessly in PV analysis.
THanks

 

[bracke]

dbphoenix

I refer to your Demand/Supply Document and the sub section Markups.

"check the float against the number of shares being traded"

What is the float and where will I find it.

Regards

bracke

 

[dbphoenix]

Ah Thank you for helping me ask

Actually I really do not know where I am going from here. Just in the middle of the book and saw that sentence between agressive approach etc etc...

What I really hope you can do is:

as I am a visual person and I learn better if I can see it working out in charts ..

Do you think you can post a trade or 2 that you took or would have took that shows why you took the trade .. like Accumulation forming here with increasing volume - Here is where I entered because of:

As I learn better this way, hope some people can help as I am really wandering about aimlessly in PV analysis.
THanks

I'll reply via PM.

 

[dbphoenix]

dbphoenix

I refer to your Demand/Supply Document and the sub section Markups.

"check the float against the number of shares being traded"

What is the float and where will I find it.

Regards

bracke

Float: Number of shares of a corporation that are outstanding and available for trading by the public, excluding insiders or restricted stock on a when-issued basis. A stock's volatility is inversely correlated to its float.