Hello Nifty_Trader Jai,
I have a question regarding stocks. You come across as a well informed person, therefore I would appreciate your opinion (on mine)
Please look at the monthly chart of Infosys (for ex.) and bring your attention to the volume.
One will notice that there is a distinct bifurcation in nature of volumes around 2004. After 2004 the volume suddenly thinned out.
Mathematically,
Let,
A = total volume of shares traded from 1998 to 2004 (adjusted for spilts not bonuses, since they do not show in the chart data)
B = total volume of shares traded from 2004 to current, 2012
Our focus is A/B;
For infosys,
A = 5003679962
B = 998802680
The ratio A/B = 5
If A is almost 5 times greater than B, then one would think that participation was relatively weak after 2004. After 2004, even the major monthly supports do not have serious participation. Therefore, any semi-serious cue (global or local) could easily break these supports. This is because,
Ones who bought before 2004, at sub-700 prices, would be happy to book profit at current prices. No wonder Infy saw the sharpest fall in its recent history.
Please provide your views, especially contrary ones.
I have a question regarding stocks. You come across as a well informed person, therefore I would appreciate your opinion (on mine)
Please look at the monthly chart of Infosys (for ex.) and bring your attention to the volume.
One will notice that there is a distinct bifurcation in nature of volumes around 2004. After 2004 the volume suddenly thinned out.
Mathematically,
Let,
A = total volume of shares traded from 1998 to 2004 (adjusted for spilts not bonuses, since they do not show in the chart data)
B = total volume of shares traded from 2004 to current, 2012
Our focus is A/B;
For infosys,
A = 5003679962
B = 998802680
The ratio A/B = 5
If A is almost 5 times greater than B, then one would think that participation was relatively weak after 2004. After 2004, even the major monthly supports do not have serious participation. Therefore, any semi-serious cue (global or local) could easily break these supports. This is because,
Ones who bought before 2004, at sub-700 prices, would be happy to book profit at current prices. No wonder Infy saw the sharpest fall in its recent history.
Please provide your views, especially contrary ones.
I have also seen downtrending charts which were very good shorting opportunities but where volume was average. If one were to wait for volume confirmation, probably one would have missed out on such trades.
So if you are in a trade which is going in your favour and volumes are good, thats a good sign. However, it could also be distribution volume after the initial few surges. Also, generally smart money accumulates a good stock in a phased manner so as not to communicate their intentions to everybody else watching the same indicators of price and volume. So the volume spike might not be there.
Thats my 2 cents on it
