Decoding Volume: Support/Resistance/Supply and Demand

[tech/a]

Interesting day, could see the sellers come in as IFN hit $0.555. The volume bar on the chart shows the sellers happy to offload, but we still ended up on a high for the day. Looking at the volume at $0.495, one can assume that there are quite a few strong holders that may follow the pack and dump on any sign of weakness.

I suspect that we may find some resistance here at $0.555 - $0.56, in fact I have a sell order sitting at $0.56. The depth has certainly swung around and the buyers are stepping up to the plate. If we can get enough volume tomorrow we may see the sellers get over powered.

Well I'm long!
Took my own analysis!
Stop 49c so will see.

 

[roland]

Well I'm long!
Took my own analysis!
Stop 49c so will see.

ha ha, I'm long too! You may remember me with OZL, I did the same silly thing with IFN

 

[roland]

I find the 4 highlighted bars quite interesting....

1. long down bar on medium volume, closing low
2. high volume, longish bar ending high
3. smaller bar, testing low, reduced volume
4. volume still declining, with another test of the low, ending the day low

almost looks like we should have seen more weakness than what eventuated? Did we really see enough tests of the volume on the lows?

 

[roland]

Another interesting fact is that the UK Childrens Investment Fund have relentlessly increased their holdings at regular intervals:

Shareholders buying
Date Shareholder Previous % New % Shares Traded
06-12-10 The Children Investment Fund Management (UK) LLP 22.17 23.23 8,255,466
15-09-10 The Children Investment Fund Management (UK) LLP 21.09 22.17 8,176,155
31-08-10 The Children Investment Fund Management (UK) LLP 19.96 21.09 1,169,830
28-05-10 Leo Fund Managers Ltd and on behalf of Leo Capital Growth SPC Funs and Pluirma Fund -- 5.07 --
21-05-10 The Children Investment Fund Management (UK) LLP 18.85 19.96 7,918,987
09-02-10 The Children Investment Fund Management (UK) LLP 18.37 18.85 3,910,397
02-02-10 The Children Investment Fund Management (UK) LLP 17.34 18.37 8,257,684
20-01-10 The Children Investment Fund Management (UK) LLP 16.28 17.34 8,498,947
21-12-09 The Children Investment Fund Management (UK) LLP 15.00 16.28 7,847,097

Having 25% of the shares tied up with a firm holder has to bolster some SP support

 

[tech/a]

Short SPI though!

 

[roland]

Short SPI though!

Not sure what SPI is: Share Price Index?

Interesting to highlight the fact that this particular "Fund Manager" has no risk management, one wonders how far down the toilet their equity chart is

 

[roland]

The 6th was quite a noteworthy day for IFN:

- large volume spike
- touched an all time low
- UK Children's Investment Fund buys 65 million
- Macquarie Presentation

Quite boring today, touched 0.56 but was instantly pulled down by sellers. I suspect there are sellers in the wings from the 6th that want a couple of pips above 0.535. I further suspect that the buyers are looking for a break above 0.56.

If we keep churning for a couple of days, I'd be reasonably confident of a break with some volume once we clear 0.56

What do ya reckon Tech?

 

[tech/a]

Nothing excites me yet.
I took the trade due to a low risk entry so would like to see some good range if its going to rise on medium volume.
High volume and range would indicate possible selling weakness.

ahh its all guess work at this point.
Patience.

 

[roland]

wooh hoo, did you see the opening volume Tech? 2.5 Mil

 

[tech/a]

No wasn't looking.
The only stock in my resources portfolio in the red!
Gotta go there is some lawn growing outside I want to watch!

Good to see some indexes behaving themselves! (as in obeying analysis).

 

[roland]

Well there is some desk trader that wants IFN to go up, constant minimal trades eating up whatever is on offer.

 

[Wysiwyg]

Here is a video showing retrospective trade entries using high volume wide ranging bars in conjunction with MT Predictor's projected decision points and/or prior pivot points.

http://www.mtpredictor.com/help/videos/DP1/DP1.html

 

[Wysiwyg]

Have a stock that although being at support level has a constant stream of sellers wanting to sell at support. Price rises off support a little only to be swamped by supply. Surely the sellers are selling at a loss or maybe there is a majority of short sellers among them. Volume average.

 

[cynic]

Have a stock that although being at support level has a constant stream of sellers wanting to sell at support. Price rises off support a little only to be swamped by supply. Surely the sellers are selling at a loss or maybe there is a majority of short sellers among them. Volume average.

Could it be that this support level has transmuted into resistance as they sometimes do?

 

[Wysiwyg]

Could it be that this support level has transmuted into resistance as they sometimes do?

No the support level hasn't been breached. MSB it is.

 

[Wysiwyg]

Have a stock that although being at support level has a constant stream of sellers wanting to sell at support. Price rises off support a little only to be swamped by supply. Surely the sellers are selling at a loss or maybe there is a majority of short sellers among them. Volume average.

Still happening. Price rose off support only to be sold down again. Another observation is the size of the sell parcels. It is like thousands of home traders are dropping small parcels into the markets throughout the day. Average parcel size 570 and not sitting in the queue but stacking when buyers start eating into a level.

 

[tech/a]

Its a bot.

A good explanation of how it works here.
Good chance big trades are buying OR selling.
Basically done NOT to move the market.


https://en.wikipedia.org/wiki/Algorithmic_trading

 

[aBadTrader]

This thread is Gold - that makes things quote clear and it also goes to show that you have patience to wait for the setup instead of trying to anticipate the setup - definitely a skill a new (bad) trader like me should be taking on board.

My question to you is, what software do you have or have you employed in seeking out those setups? They can occur on so many charts on so many stocks and finding them would be difficult. Any advice on that front?

 

[tech/a]

This thread is Gold - that makes things quote clear and it also goes to show that you have patience to wait for the setup instead of trying to anticipate the setup - definitely a skill a new (bad) trader like me should be taking on board.

My question to you is, what software do you have or have you employed in seeking out those setups? They can occur on so many charts on so many stocks and finding them would be difficult. Any advice on that front?

I use Metastock only because I've had it set up for years
Amibroker
Ninja
And there is something new and VERY powerful on the horizon.
Using Python.

But follow Petes thread
Implement notation is so important.
You can have all the potential in the world
And fail because you can't put it into practice
Profitably.

 

[minwa]

it also goes to show that you have patience to wait for the setup instead of trying to anticipate the setup - definitely a skill a new (bad) trader like me should be taking on board.

I have found anticipating setups is better than waiting for setups. Setups are overrated - they fail just as much (actually more) as they succeed. We scan for setups that worked and draw our attention there ignoring the many same setups that failed previously.

A confirmation of a setup is usually the breakout of a level. Eg. mid point of double bottom, neckline of head & shoulders, trendline of pennants/flags/triangles. This gives you a unfavorable reward to risk as opposed to anticipating and getting before the setup confirms.

It really does not have much to do with setups..