on 25/01/2010 VSA analysis kinda failed to detect the fall of nifty on 27/01/2010
My observation is that inside down bars that show signs of strength often fail. The same is often not true for inside up bars that show signs of weakness. I have not done statistical assessment to confirm if there really exists such tendency, but its just a casual striking observation. I think Tom Williams, also has mentioned this somewhere in one of his books - that "The range must be broken" but I cannot find it right now,
so i wish to know was this whipsaw by VSA
It wasn't a whipsaw, because the bar of 22 JAN 2010, although was a down bar closing on the middle/high has high volume under it - meaning supply was still present. Also, as we are analyzing the chart of an index, some error is introduced because if two scrips are contributing oppositely to the index, their volumes are still added cumulatively, thus distorting the effective volume.
like where did you see this down trend coming?
I am not sure what this piece of the question meant, but I think you are asking if VSA failed to see this bear move coming? If this is what you are asking, then I admit that, though VSA had given signal that "Market direction may change", it was my personal error in judgment, do not blame the VSA for this. You can see below the post I made on 18 JAN 2010, which was made very accurately when we were on the almost top and just before the markets slid. I think such accuracy is enviable, though it is unfortunate of my judgmental error. To add to the confusion, the low volumes on the following down days added to further error.
There is something noteworthy about today's volumes. They were lower in the cash market(S & P CNX NIFTY index stocks) but higher in NIFTY futures and options. Usually, such an activity is seen when the market is going to change its direction, or make a big move in the ongoing directions. So will we reverse and slip south? or, will we make new highs? In most probability, we will make new highs. I am arriving at this conclusion by looking at the top-gainer stocks in various groups(BSE groups). If we see analyze the charts of large-cap stocks who have made large moves(more than 4% over its previous close in a single day), most of these moves are to breakout above trading range. The same is true for mid-cap and small-cap stocks where we have huge single-day gains across levels where there are gaps or circuits of lower circuits. The high volume under this breakout signifies absorption by the professional money. The professional money is absorbing the supply from locked-in traders because it believes that they can sell the same stock at higher price. In one singlular and popular word, the professional sentiment is Bullish through we are at the 18-months top. Many of the stock who have made the large moves through a trading range have confirmed "no selling pressure" on the down-bars following them.
PS: I am analyzing the daily chart of NIFTY index or spot, manually, without any AFL.
