Trading with Volume Spread Analysis (VSA)
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I am myself not very sure about accumulation and distribution. IMO, majority of the accumulation and distribution happens only at the long-term tops and bottoms. At other times, it is only opportunistic and temporary mark-up and/or mark-down consisting of absorption and shake-outs.
Again, I have no real idea about it, but its is only my thought because I think it may be difficult to move so much money in-and-out of the market so frequently. So you will need to get some sort of confirmation for somebody who is more knowledgeable. A couple of days ago, I was discussing the market processes with the 'owner' of a huge brokerage house but could not get enough time to ask him about this. Next time I am going there, I will see if he has any insights on this.
Again, I have no real idea about it, but its is only my thought because I think it may be difficult to move so much money in-and-out of the market so frequently. So you will need to get some sort of confirmation for somebody who is more knowledgeable. A couple of days ago, I was discussing the market processes with the 'owner' of a huge brokerage house but could not get enough time to ask him about this. Next time I am going there, I will see if he has any insights on this.
Chart: JINDALSTEL daily
The last daily bar (18 JAN 2010) is a down-bar. The spread of this bar is narrower than the previous bar and and has higher volume (Squat bar). The outlook is bulllish and would advise you to hold the stock. When the stock will try to cross the trading range, it will do so by leaps and bounds.
The broader market is showing signs of strength. Eventually, this stock will also move up to catch-up with them.
The last daily bar (18 JAN 2010) is a down-bar. The spread of this bar is narrower than the previous bar and and has higher volume (Squat bar). The outlook is bulllish and would advise you to hold the stock. When the stock will try to cross the trading range, it will do so by leaps and bounds.
The broader market is showing signs of strength. Eventually, this stock will also move up to catch-up with them.
Volumes on 18 JAN 2010
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.
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.
Current strategy for selecting
During the last few days, many stocks across all levels of market cap are breaking above their trading range resistances. The professional money is absorbing all the supply. Following down-bars have confirmed absence of selling pressure. Given this situations, most stock will be northbound. The stock selection strategy to trade the current situation is to select stocks that have a trading range to its left - one which has not been broken through. If you are tracking charts with daily price limits/bands, the you should look for batteries of lower circuits instead of a trading range.
In case you missed the opportunity to board before the breakout, enter on the 2nd down-day after breakout when the volumes are low. This will give you the bottom-most entry of the next leg of up-move.
During the last few days, many stocks across all levels of market cap are breaking above their trading range resistances. The professional money is absorbing all the supply. Following down-bars have confirmed absence of selling pressure. Given this situations, most stock will be northbound. The stock selection strategy to trade the current situation is to select stocks that have a trading range to its left - one which has not been broken through. If you are tracking charts with daily price limits/bands, the you should look for batteries of lower circuits instead of a trading range.
In case you missed the opportunity to board before the breakout, enter on the 2nd down-day after breakout when the volumes are low. This will give you the bottom-most entry of the next leg of up-move.
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