Monday, October 26, 2009

Advance/Decline and Volume

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It's nice to be right - see my yesterday's "Volatility" post. Yet, the first tree hours of today's trading session were somewhat disturbing. I think every trader has the moments when from one side the logics tells that the market should not go that way (in my case it should not go up) and from other side there are emotions that it goes in opposite to the expectetions way anyway. I believe many of those who read my blog yesterday were somewhat skeptical during these first three hours. Yet, by the end of the session I think the points mentioned in my last two posts should make some sense.

I understand that sometimes it is difficult (especially if you are reading this first time) to follow my my technical analysis, especially when I do not post a chart snapshoot. As a rule I always use a set of technical indicators you may see in the "S&P 500 Chart" post. You may always get the same chart I'm not telling that you have to rely on the results of my technical analysis or follow my steps precisely. Every trader has to do analysis by him/herself. I'm just trying to share some of my experience in the analysis and if somebody can learn something from this it makes me happy.

Just a few thing that I would like to drag your attention to. The market is down and the sentiment becomes more bearish. During the today's decline in period from 11:30 until 12:00 EST we saw a big volume spike. As a rule volume spike during the price decline means panic selling and could reverse the trend up, yet it was not the case. It is a bearish sign when the indexes ignore volume spikes to the price downside. Another bearish point is the further increase in the volatility.

If we are in a correction  and you ask me when we may expect to be back in uptrend I will answer "I do not know". I may only say let's watch the charts - we may see reversal tomorrow we may see it in a week. In particular I would be paying more attention now to the volume surges (low negative MVO) on the Nasdaq 100, S&P 500 and DJI and advance/decline issues and volume ratios on the S&P 500.


Anonymous said...

Fantastic analysis. I have been folowing you posts and analysis for about a year now and 95% of the time they have been spot on. Can't thank you enough for all I have learned. Please keep it up!

TraderJoe said...

Thanks, for the worm words. I appreciate your comments. It is nice to know that somebody cam make use of my knowledge of some aspects of technical analysis.