Trading with Volume Spread Analysis (VSA)

[adultvish]

What actually stops a down move and how will I recognize this?

HIgh volume on down day/bar always means selling. However, if the day's action has closed in the middle or high then market makers and other professional money must have attempted to buy the selling from weak holders, which then stops the market to stop going down. Market makers will only buy into a selling, if the price levels have become attractive to them and the trading syndicates have started to accumulate. large buy orders have arrived for reasons we are not interested in.

 

[bunny]

Re: Maruti vsa

It may be upbar. But the close was near the lows of the day making it a downbar for the day. And, even with respect to previous day closing it may be an upbar; but just slight upbar not very prominent. Its range/spread was between 1399-1362, which was completely under the previous day range. Moreover, if smart players have entered long either the volume should be more; or the spread should not be so wide.

What difference does it make? Even if take it as a down bar, the low volume under it will translate into "reducing selling pressure" by book.

Professionals should known known this in advance, in spite of waiting for the public announcement. The bar made a new low and managed to close on the high; but still the high of this day was not above the previous day high.

They are waiting for the herd to throw away their holdings in panic. If they continue to hold, they will be trying to sell on every small rally and this will make the professional incur more costs to absorb the supply coming into his markup.

Instead, if they are able to trap the herd in a losing short position, the herd will run to cover and it buying will further help their markup.

2* Or, it may also happen that the professional have already gone short on 27th Jan.

Professionals will not sell on down day.

And what about the high volume bar of 21 Jan 2010. It clearly indicate smartplayers selling.

They may be hidden buying? From the background, we have seen bullish intention. So it is unlikely that they will sell.

They (smartplayers) may be expecting some more downside and hence waiting for the prices to go down to square off their short trades.

They will not short when strength is seen. And in our market, even if they short cash, they will have to cover it. And shorting and covering in such large amounts will lead to trouble to them.

The only point is taking small volume, wide spread with new low as a bullish signal.

After accumulation, it is common to have low volume rallies because the process of accumulation and shakeout has removed most of the supply in the market. You find such low volume up bars at bottoms very frequently. And I think I just showed you yesterday the same thing in BIOCON chart.

Volume, spread, etc. - everything is relative and contextual. This is why mathematical formulae or writing codes is difficult for VSA. You can identify simple events like up thrust, effort bar, no demand, etc. but interpreting them in the light of background is difficult.

 

[bunny]

What actually stops a down move and how will I recognize this?

HIgh volume on down day/bar always means selling. However, if the day's action has closed in the middle or high then market makers and other professional money must have attempted to buy the selling from weak holders, which then stops the market to stop going down. Market makers will only buy into a selling, if the price levels have become attractive to them and the trading syndicates have started to accumulate. large buy orders have arrived for reasons we are not interested in.

Merely framing "IF() OR() ELSE() AND()" conditions will not help in analysis. The background is of utmost importance, and this has been emphasized in the book again and again.

Even in the book, there are many examples where you will find high volume down bars near bottoms. See chart on pg 36 of the book (point C)

 

[adultvish]

Re: Maruti vsa

Professionals will not sell on down day.

.

Now, this is the only point which needed to be understood by me. Because all other factors, which I submitted are based upon this factor only.

Are you sure that professional will not sell on down day? if yes, then most of the confusions are now getting cleared.

And, thanks a lot my friend. You can see now that I have started countering ur submissions, which apparently may look weird, but actually it has an inside meaning. I have an attitude that without understanding I never question. And, if my understanding is wrong, I rectify it immediately. Earlier, I was not able to have any understanding. Now I have some, which may be correct or may not be correct; but at least some understanding. Improvement is on the way. Thanks again Sir.

 

[bunny]

Re: Maruti vsa

Are you sure that professional will not sell on down day? if yes, then most of the confusions are now getting cleared.

If professionals indulge in huge selling on down days, it will perpetuate a viscous cycle.
Say due to selling, the price comes down. Now to manipulate the price a bit upwards, they have to again buy. This buying may attract other professional's attention who will now get an additional opportunity to sell. Nobody wants to buy into other professional's serious selling. On the contrary, if they sell on the up days, the herd is ready to buy their selling orders.

 

[adultvish]

Merely framing "IF() OR() ELSE() AND()" conditions will not help in analysis. The background is of utmost importance, and this has been emphasized in the book again and again.

Even in the book, there are many examples where you will find high volume down bars near bottoms. See chart on pg 36 of the book (point C)

On page 33 of VSA, this question was answered i.e. how to recognize when a down move will stop and I just quoted it in my own language. The if condition is not countering the main fact but refining it. If it says clearly that High volume on down bar always means selling except the close is either in the middle or at the upside; what is wrong in it.

The page 36 denotes high volume down bar but it also required confirmation; which came in next bar. While in Maruti chart, you are not requiring any confirmation of being bullish on it. My submission is that until and unless there comes any confirmation on tomorrow, I am bearish on Maruti Chart.

It does not really matter what comes out actually, but it will be adding to my understanding of VSA.

and, please do not mind it. It seems to me that very soon I will be able to grasp the VSA, require you continue to spend ur precocious time and effort in responding to my queries.

Hats off to you Sir.
:clap::clap:

 

[adultvish]

Re: Maruti vsa

If professionals indulge in huge selling on down days, it will perpetuate a viscous cycle.
Say due to selling, the price comes down. Now to manipulate the price a bit upwards, they have to again buy. This buying may attract other professional's attention who will now get an additional opportunity to sell. Nobody wants to buy into other professional's serious selling. On the contrary, if they sell on the up days, the herd is ready to buy their selling orders.

Got ur point.
Thanks
Professions do not sell on down days.
*** edited ****
thanks

 

[adultvish]

Page 35
Accumulation areas unfold in a variety of disguises and intensities but the principles are always the same. Understand the basic principles and you will have little difficulty in your analysis. Strength always appears on down bars as high volume closing in the middle or highs, or the next bar has reversed sharply closing on the highs (bottom reversal) The news is always negative to very bad on the lows, never good. Accumulation usually takes time.

Market makers and trading syndicates during the accumulation period will at times have to sell the market as well as buy to keep the price levels down to allow for more buying. But overal', they are buying more than they are selling.

And always expect a shake-out at the end of the accumulation phase (sometimes known as a spring) It is always better to wait for confirmation which will follow all of these basic principles.

That is, if a market is still weak you will see the following up bars tend to have a narrow price spread and are closing in the middle or low, usually on low volume.

A high volume up bar closing in the middle or low will mark a high point of that move. If a market is strong you will basically see the opposite. Which is down barfs on narrow price spreads closing in the middle or highs on low volume. If the market is very strong, a single down bar on low volume is all that is needed to send the market up rapidly. But all of these observations will pass you by if
you have failed to recognize the major indication in the background. In this case the Selling Climax.

 

[shinchan]

Hi Bunny.


your views on this chart please.

 

[bunny]

Re: Maruti vsa

Because, if they do not sell on down days, they won't be buying either.

They will buy, because the herd will be eager to sell to them. Professional interests band together. They know the real situation because they can see many things that we cannot see. For ex: Before corporates announce their results, CFO or other director or high employees of various companies have a "meeting" with "some people" and the "cat is out from the bag".

The long down and up bars are created by the herd

These are created by the professionals by continuously marking up or down the prices.

So the professional buying or selling is not to be judged on the basis of wide spreads. The professional buying and selling is to be judged on the basis of either normal or narrow spreads.

Both are important Neither can be analyzed independently.