The third way uses the market psychology that is portrayed in the price and
volume patterns of each stock.
Analysis of
volume patterns tells us which side of the market banks, mutual funds, hedge funds, and other institutions are on.
Does the
search volume pattern for an exchange - traded fund (ETF) symbol reveal an investor / trader level of interest that later emerges predictably in price movements?
As technical momentum traders, we never place much weight purely in seasonal market trends because we focus on the performance of leading stocks and broad
market volume patterns instead.
Your broker will normally provide you with a volume chart, showing history, leaders, and highlighting any
unusual volume patterns.
This is because we always prefer to pick stocks and ETFs by simply reacting to actual price and
volume patterns in the market, rather than attempting to predict what will happen.
Last week, I penned a blog post that suggested stocks were headed lower due to seemingly
bearish volume patterns in the NASDAQ Composite.
By focusing on low - priced, small - cap stocks with
explosive volume patterns, Rick has developed an excellent track record for picking Blast Off stocks that run 50 %, 60 %, or sometimes 100 % in a very short period of time.
For example, does the search
volume pattern for «XLF» reliably indicate future price movements for the Financial Select Sector SPDR (XLF) ETF?
The
weekly volume pattern leading up to the breakout above resistance was bullish, with two strong weeks of accumulation (higher volume gains) in early January.
Google Insights for Search enables users to «compare [normalized] search
volume patterns across specific regions, categories, time frames and properties.»
The strongly
bullish volume pattern and volume indicators support this outcome, in particular the strong On - balance Volume line, and the current tight bunching of the price and moving averages create the potential for a big move soon.
Since the companies involved are all big capitalization companies, we can watch the price and
volume patterns on the S&P 500 Spyder, and look for where volume is cresting, while price is trough - ing, and take a long position after the crisis.
With this knowledge, take a look at the following daily chart of the NASDAQ Composite, which shows the bearish
volume pattern of recent weeks (light volume up days, followed by heavier volume down days):
Analysis of
volume patterns in the market is crucial because well over half of the stock market's average daily volume is the result of trading among banks, mutual funds, hedge funds, and other institutions.
Instead, there was a short - lived bounce that inevitably attracted some «late to the party» Charlies who were not paying attention to the
bearish volume patterns in the market.
By focusing on low - priced, small - cap stocks with
explosive volume patterns, Rick has developed an excellent track -LSB-...]
Broad
market volume patterns, combined with poor performance by leading individual stocks, always play a crucial role in identifying significant market tops and bottoms.
Right now,
the volume patterns tell us that institutions remain in sell mode (so our market timing model is as well).
Perhaps even more important than
the volume patterns in the broad market is the performance of leadership stocks.
Although the stock market was in pullback mode throughout most of March, the price and
volume patterns of the past two days indicate last month's correction may soon become old news.
Checking
the volume pattern, we also notice that volume declined dramatically during the consolidation of the past several months.
Nevertheless, we have not been willing to establish new long positions over the past few days (though we entered a few new short positions) because experience has shown us exactly what can happen when
the volume patterns in the market suddenly turn bearish.
Many investors make the mistake of focusing purely on price patterns or percentage gains of a broad - based index, while paying little or no attention to the market's
volume patterns.
The volume pattern confirmed the move, as turnover was higher than the prior day's session, and well above the 50 - day moving average of volume.
The combination of the bearish
volume patterns in the NASDAQ and an abundance of overhead resistance (such as the 50 - day moving average), leads me to believe the next move in the stock market will be lower.
Examine price action closely before timing trades to
a volume pattern.
Notable, though, was
the volume pattern of this latest BCH run — it at least resembled the general structure of a pump - and - dump formation.
The savvy trader will pay close attention
the volume patterns in the intraday price charts.
Volume patterns are also beginning to show signs of shifting to a more bullish sentiment as upward price movements are accompanied by volume surges.