Trading with Volume Spread Analysis (VSA)
- Thread starter bunny
- Start date
- Status
Sir,
as regard to the chances of green thing being short-lived, I am still clue-less. It may be short-lived or otherwise; but I am expecting a strong and clear indication before this greeny start changing its color to red.
regarding positive indications
First take Jai prakash associates' chart
The chart denotes a trending zone between 125-170 since May 2009, with increase in volumes at almost every rise (around 170) denoting supply, which resulted in down move towards the level of around 125. Except on one occasion of 13th July; all other upmoves are backed up with decrease in volumes denoting decrease in supply. Therefore, the upmoves in this chart are caused by lack of supply while the downmoves are results of excessive supply. Had the script being in uptrend (in background) the current levels and movement can be taken as a preparation of a downside move; but because the script is in trending zone, the demand and supply factor has to be applied accordingly.
Now, on 5th feb the volumes were 2,10,75,116 (almost double of 30 days average volume). The bar was red, the spread was between 122-128 (6 points only); which is not acceptable in terms of bearish movement. The spread should have been wide with such huge volumes which it was not. And as per VSA (that I could understood after reading the book which you were kind to provide in you signature), during falling markets the strength is to be checked in downbars with the aid of following factors.
1. Principle One -
During panic selling situations,
and after substantial fall
I need to ask myself
Are the smart players are prepared to absorb the panic selling at these price levels?
In order to check it, I need to focus on down bars.
Why focus on down bars?
Because the strength will always appear on down bars as high volume
closing in the middle or highs;
Or the next bar has reversed sharply closing on highs.
Therefore,
volume must be high on down bars
and
the closing be in the middle or high on the same bar or in the next bar.
And, if the answer to first principle question is yes. then this is a strong sign of strength.
The closing of jpassociate on 5th feb was 124.80. The spread was 122-128 - middle point will be 125. The closing is almost near to it. The second bar is of no value being saturday's special trading. On 8th feb the volumes were 150% more than average volumes. The spread was 123.25 - 127.80 (middle point 125.50). the script was making new highs and the close was 126.15 - again the close was near the middle point. The rest is history. The volumes are decreasing day by day while the script is going higher - in other words, the supply is being absorbed. The move is expected to continue till we see a narrow-spread bar with high volumes and the script is trading at highs. The average middle point of the trending zone of jpassociate is around 147 [ (125 + 170)/2 ]. so expecting a rise at least to these levels, where from, it has to be addressed again in the light of demand and supply.
as regard to the chances of green thing being short-lived, I am still clue-less. It may be short-lived or otherwise; but I am expecting a strong and clear indication before this greeny start changing its color to red.
regarding positive indications
First take Jai prakash associates' chart
The chart denotes a trending zone between 125-170 since May 2009, with increase in volumes at almost every rise (around 170) denoting supply, which resulted in down move towards the level of around 125. Except on one occasion of 13th July; all other upmoves are backed up with decrease in volumes denoting decrease in supply. Therefore, the upmoves in this chart are caused by lack of supply while the downmoves are results of excessive supply. Had the script being in uptrend (in background) the current levels and movement can be taken as a preparation of a downside move; but because the script is in trending zone, the demand and supply factor has to be applied accordingly.
Now, on 5th feb the volumes were 2,10,75,116 (almost double of 30 days average volume). The bar was red, the spread was between 122-128 (6 points only); which is not acceptable in terms of bearish movement. The spread should have been wide with such huge volumes which it was not. And as per VSA (that I could understood after reading the book which you were kind to provide in you signature), during falling markets the strength is to be checked in downbars with the aid of following factors.
1. Principle One -
During panic selling situations,
and after substantial fall
I need to ask myself
Are the smart players are prepared to absorb the panic selling at these price levels?
In order to check it, I need to focus on down bars.
Why focus on down bars?
Because the strength will always appear on down bars as high volume
closing in the middle or highs;
Or the next bar has reversed sharply closing on highs.
Therefore,
volume must be high on down bars
and
the closing be in the middle or high on the same bar or in the next bar.
And, if the answer to first principle question is yes. then this is a strong sign of strength.
The closing of jpassociate on 5th feb was 124.80. The spread was 122-128 - middle point will be 125. The closing is almost near to it. The second bar is of no value being saturday's special trading. On 8th feb the volumes were 150% more than average volumes. The spread was 123.25 - 127.80 (middle point 125.50). the script was making new highs and the close was 126.15 - again the close was near the middle point. The rest is history. The volumes are decreasing day by day while the script is going higher - in other words, the supply is being absorbed. The move is expected to continue till we see a narrow-spread bar with high volumes and the script is trading at highs. The average middle point of the trending zone of jpassociate is around 147 [ (125 + 170)/2 ]. so expecting a rise at least to these levels, where from, it has to be addressed again in the light of demand and supply.
Any up-bar closing in the middle with good volume is a sign of weakness. If the volume is high, smart money will have sold into the upbar; If the volume is low, then smart money is not participating in buying the up move.
09 Feb 2010 bar is a narrow spread up bar with good volume - weak.
10 Feb 2010 bar is an average spread good volume up bar closing on the lows - weak.
11 Feb 2010 bar is a narrow spread up bar with good volume.
09 Feb 2010 bar is a narrow spread up bar with good volume - weak.
10 Feb 2010 bar is an average spread good volume up bar closing on the lows - weak.
11 Feb 2010 bar is a narrow spread up bar with good volume.
Bunny i agree that with up bars vols should be increasing to indicate strength.. but in addition one has to have the overall perspective about the scrip's chart too . JP has fallen from 168 levels , and quite a bit , so an upmove now with increasing vols shows... IMHO.. that buying interest is back , and being backed by vols .. hence the stock has the potential to go up close to it's previous high ... the end point of which will be shown on charts ..
just my two bit... BTW u guys might want to keep an eye on IVRCLinfra too..which has got hammered like JP and has just turned .
BTW..US showing strength..as is europe ..greece problems solved ... industrial numbers for december are encouraging.... so we shd have a good upmove on Monday ..Inshallah !
just my two bit... BTW u guys might want to keep an eye on IVRCLinfra too..which has got hammered like JP and has just turned .
BTW..US showing strength..as is europe ..greece problems solved ... industrial numbers for december are encouraging.... so we shd have a good upmove on Monday ..Inshallah !
Last edited:
- Status
Similar threads
-
-
High Volume stocks live on spreadsheet for Intraday trading
- Started by dillip91
- Replies: 17
-
-
-