An example of trading with volume

[Nick Radge]

Thanks Ann. I reviewed his book many years ago, but can't say I remember much about the volume. I'll take a look.

Here is another one today in JBM that I traded. I had my buy order 1c above Fridays close, but was filled slightly higher. Closed today was on its high. Friday was a push lower to form a double bottom with a prior pivot low, but this level was completely rejected. A close on its high with increased volume can only mean one thing - buyers were in.

 

[Nick Radge]

I read on another forum that volume is a garbage indicator and has no ability to help in a decision making process. I've mentioned herein the 3-phases a stock tends to travel through when its about to turn and start a new trend. Below is a portfolio I run that tracks a price pattern with the combined 3-phase volume analysis. This portfolio commenced in September last year and gets updated weekly. Looks ok to me and the core input is the volume. I even alluded to FLT on 8 February and it was subsequently added to the portfolio on 13th February as volume confirmed the turn. Some on the radar list are GNS, PBB, MGW and CDO again.

 

[markrmau]

Any thoughts on MIG's volume? Volume is massively up, but the SP only went up 2%. To me this means the buyers were met by plenty of sellers, so perhaps MIG could consolidate over the next few days.

Personally, I'm hanging on for $4.30 - $4.50

 

[Nick Radge]

Very good markrmau. A tight range on heavy volume means sellers. The trick is to look at the left of the current price action. You can see in this example and old high is being tested. Those that didn't exit at that point may now be attempted to exit. Tomorrow however will be the important day. If weakness occurs then sellers remain in control and until they're cleared prices will not be able to rise.

 

[Bobby]

Hullo Nick,
Is it possible to manipulate price within lower ranges of volume ?.
I just have this idea that someone or more are buying & dumping BMX in order to pick up best prices ?.

Its like for every 100,000 they get at a cheap price they dump 20,000 to 40,000 in smaller deals to set off others to sell ?.
Then pick up the next 100,000 and so on.

Is this stupid thoughts ?

Bob.

 

[Nick Radge]

Bobby,
Absolutely. Its been around for at least 80 years and was first written about by Richard Wyckoff. Professional money will attempt to get as much supply as they can at the lowest possible price. What you refer to is known as a "test". This is where a short sharp spike (up or down) on low volume occurs to determine the strength of supply or demand. The daily BMX is a very different picture to the weekly. Note that the move on the 6/3 was on high volume with a high close. Buyers are still in, but they're still not prepared to take it higher. This suggests they know they can still accumulate at lower levels. Since then prices have drifted lower again, but on light volume. So there is no committed selling, just some weaker hands taking profits which pushes prices down because the professional money is sitting back. Its just a matter of how far they'll allow prics to fall back. Look for more evidence of the large buying and then you'll know for sure.


Here is an exercise for those taking an interest in volume. Look at the charts for GCL and BPT today and look at the developing story over the last week or so for them both.

 

[GreatPig]

Nick,

Here is an exercise for those taking an interest in volume. Look at the charts for GCL and BPT today and look at the developing story over the last week or so for them both.

My interpretation...

Over the last week or so, both seem to have had higher volumes on up days than down days, with both prices gradually working higher. On the largest volume days, prices have closed on or near the highs. For BPT in particular, down days have closed above the low.

To me, that is positive news for both (from a long position point of view).

I currently hold BPT, bought on 2nd March, and did get a buy signal a few days ago for GCL but didn't buy it - mainly because I'm off overseas in a few weeks and am currently only buying stocks that I think may give a moderate gain during that time, since I'll probably sell most stocks before leaving.

Of course that now means GCL will blast off in a couple of days and BPT will stagnate

Cheers,
GP

 

[Nick Radge]

Lend Lease shows some great volume characteristics:

http://www.projectstreamer.com/users/reefcap/1404_llc/

Nick

This post may contain advice that has been prepared by Reef Capital Coaching ABN 24 092 309 978 (“RCC”) and is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice you should therefore consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision.

Past performance is not a reliable indication of future performance. This material has been prepared based on information believed to be accurate at the time of publication. Subsequent changes in circumstances may occur at any time and may impact the accuracy of the information.

 

[Bobby]

Hullo Nick.
Thanks for your last reply to my post.

Gee now I know what can throw out ones analysis - (possible manipulation).

Guess you could do a whole chapter on this in your next book .

Bob.

 

[wayneL]

For those that couldn't get Nicks link to work, it works now.

 

[RichKid]

....
Here is an exercise for those taking an interest in volume. Look at the charts for GCL and BPT today and look at the developing story over the last week or so for them both.

WARNING! Learner in action below!

My attempts, please don't laugh folks, unless it makes you happy, only way to learn

BPT: big buyers are accumulating around 1.10 to 1.20, not happy to buy higher, a rounding pattern emerging, initially some tails showing them coming in as prices fall but close closer to highs and then some tighter bars later in the turn as they reach the highest price they are willing to pay, meanwhile smaller players off-loading from time to time. Overall effect is that prices have moved up steadily over the last few days, now around the resistance level again, will supply dry up before an explosion to new highs? Last week or so has seen some very low vol declines, will big buyers enter again between 1.15 and 1.20 as they have before, probably if they think it wont go lower.

GCL: Stopping volume in November, with follow through and buyers still accumulating as volume spikes show, some down days but prices are holding at higher swing lows. For example, down day and very high vol on 14 Feb but result of that effort was a small range so obviously someone is keen to buy up supply, only big instos have the fire power to buy so much; then a small dip on very low vol and again a big volume day and prices rise. Higher swing lows forming. Now for the last week or so: high vol, prices go higher, even down days see mid range closes, prices moving up steadily. Currently in an ascending triangle.

Just my guesses going by what you've posted so far Nick, thanks for info, hope I get this volume stuff right in the end.

 

[bunyip]

Nick

With your LEI trade, what was your reason for setting a profit target a little above $20?

I like the way you were bullish on LEI in the face of broker opinions to the contrary. You had the sense to listen to the message of the charts, irrespective of the fundamentals.

I've enjoyed your ATAA presentations by the way.....thanks for your willingness to help others.

Bunyip

 

[Nick Radge]

bunyip,
That was an Elliott Wave target. Under normal circumstances that is only used as a guide and I'll usually be more reliant on volume/price than targets. I finished up exiting the whole position above $20 I think.

Regarding the consensus analysis I do list it with my own research so subscribers can get a feel. The divergence tends to stand out mostly when a stock is correcting and the analysts still have outperform or buy on it. By using the EW corrective analysis and volume we can tend to get better levels rather than wearing any pain on the dips. Some stocks can decline 30% or so even though the brokers retain a buy, so its a timing issue.

I don't get them all right though! I've been bullish MXI, which is a strong buy from the analysts, yet I was looking for more of a decline, which appears not to be the case at present.

 

[Nick Radge]

Here are the results of a Model Portfolio that picks stocks basis price and volume. These have been running since September last year. Those that have read my book will note the skew between average win and average loss. Hard to discount the influence of volume when making trading decisions, and I should point out that the volume I use has nothing to do with Director volume.

Take a look at TAP today. I just initiated a position...but is it long or short?

This post may contain advice that has been prepared by Reef Capital Coaching ABN 24 092 309 978 (“RCC”) and is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice you should therefore consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision.

Past performance is not a reliable indication of future performance. This material has been prepared based on information believed to be accurate at the time of publication. Subsequent changes in circumstances may occur at any time and may impact the accuracy of the information.

 

[Bobby]

Hello Nick,

Tap, long.

Looks a bit wobbly today but .

Bob.

 

[Milk Man]

Tut tut tut Nick! :nono: Doesnt look like any fixed fractional position sizing there. Whats the go with that?

 

[Nick Radge]

Yes Milko, I know. I will also convert to that format as well when I get around to it.

Bobby, yes. Wobbly - but alas that's what stops are for!

Nick

 

[Nick Radge]

I posted this last night for subscriber's. If you have an interest in the use of volume this may be of interest, especially since Gold dumped over night.

Bolnisi Gold (BSG)

 

[ctp6360]

Holy crap Nick, you were 100% spot on with this one, unbelievable! I just subscribed to your service!

 

[Nick Radge]

I get lucky sometimes. Plenty of bad calls too.