Trading with Volume Spread Analysis (VSA)

[adultvish]

Re: Volumes on 03 Feb 2010

Volume on S & P CNX NIFTY index were lower than yesterday. We had an up bar that closed on the high. Yesterday's bar was a down bar on increased volume and wider spread(weakness?). However, that today's bar was able to close on its high even with lower volume hints that yesterday's down volume contained more buying than selling. Today, we have been able to close above the high of the up bar of 28 Jan 2010. This bar can be said to weak because it was a high volume up bar closing in the middle. The two up bars following this bar(28 Jan 2010) had reduced volumes, thus further deepening the concerns about weakness on 28 Jan 2010 bar. That we have been able to close above the high of that bar is good news for bulls.

Volumes in F&O today are comparable to yesterday's. This means that there is divergence of volumes in cash and derivatives market. So how we interpret this divergence? Does the low volume in the cash market signal weakness and the high volumes in F&O signal professionals taking position for a bearish move? From yesterday's hidden buying on a seemingly weak bar, it is unlikely that we will resume bearish trend. So we are looking forward to up days.

Volume being less is actually a positive sign overhere. Had the volumes been good, then it would have been created some doubt.

 

[nimish_rulz]

DIIs and FIIs Cash Market
Today the FIIs were net buyers in the cash market in the tune of Rs396.13 Crore and DIIs were net buyers by only 0.46 crore. Giving the inflow of money for the first time in last 2.5 weeks. So far there had been outflow of money which made the markets weaker. However, The selling from FIIs has been reducing at a good rate since last Wednesday. I am yet to analyze historically what happens next but if we look very recently, this resulted in a move from 4500 in Nov to 5100 in 2 weeks time. However DIIs supporting the market for the days when it fell booked some profit today but at the same time they invested which gave a positive money inflow to the market today by almost Rs400 crore.

FIIs and their F&O position for today:
Index futures Net Buyers Rs 2446.95 Crore
Index Options Net Buyers Rs 8.98 Crore
Stock Futures Net Buyers Rs 452.06 Crore
Stock options Net Buyers Rs 46.53 Crore( Bought Options worth Rs 54 Crore But sold around 8 Crore)

This shows the liquidity is coming back in the system as the overall liquidity in the system in the past 21 days is negative but the negative number is reducing at a good pace since last Wednesday.

 

[shrithakar]

sir i have seen charts called volume profile charts which i have attatched in another thread "volume profile chart" and one member reffered ur name for explaination of chart.will u pls reffer to that chart.i attatch the same in this post for ur ready ref.i will be thankful to u if u can educate me regarding this.
with regards,
shripad

 

[bunny]

NIFTY spot at 4880 or -51. The market had opened with gap down and gone more down. BUT, the volumes are very low. Even after more than 4.5 hours of market opening, the volume is only 92 mn compared to yesterday's whole day volume of approx. 164 mn. Time to buy this manipulated markdown.

NIFTY F&O volumes are half of yesterday as of writing this.

If you do not feel aggressive, you can aslo wait till closing to see complete volume.

 

[adultvish]

NIFTY spot at 4880 or -51. The market had opened with gap down and gone more down. BUT, the volumes are very low. Even after more than 4.5 hours of market opening, the volume is only 92 mn compared to yesterday's whole day volume of approx. 164 mn. Time to buy this manipulated markdown.

NIFTY F&O volumes are half of yesterday as of writing this.

If you do not feel aggressive, you can aslo wait till closing to see complete volume.

Yes,
Absolutely correct Sir.
And, thanks for the confirmatory post

 

[adultvish]

EU Market in green
may be now we can see some upside movement in Nifty, preventing it to be closed in red.

 

[findvikas]

I agree that 4880 can give a good bounce back.. it was a retracement from the previous wave in 5min chart and already corrected 50%

Low was 4818, High was 4948... total 130 points... 50% retracement comes to 4883..
I would be watching a break of 4870 to add more shorts otherwise I will keep holding my shorts.

 

[bunny]

EU Market in green
may be now we can see some upside movement in Nifty, preventing it to be closed in red.

I have no expectations of green closing.

 

[adultvish]

and, the way market is behaving.
there are absolute chances of giving a great surprise to shorters.

It is actually making quite a strong base before making another upside move to break the 5300 wall. Minor bases made with one or two sessions were proved to be futile in last one-two months. Therefore, this time it need to soak all the supply at this level so as to avoid any hurdle during its upmove, which is expected anytime in recent future.

 

[adultvish]

I have no expectations of green closing.

But I do have. If it will not be green, then it will not be red either.
difference of 5-15 points doesn't make a difference. But it will definitely be showing its intentions on bar today.