Vercingetorix

For futures like the s&p 500 e-mini what trading hours do you use? Do you use the 9:30-4:00 stock market time range or a 24 hour chart?

I look at volume relative to the average volume just by eye balling it.I will usually look at the volume of buying/selling climaxes the stock has had in the past and compare it to the current activity. On occasion I also like to look at the float and shares outstanding. The key is to remember to think relative when looking at volume. There's no standard metric when to determine "alot" of selling/buying is occurring; you just have to judge it based on the particular stock. You are correct about the large volume showing a transfer of stock. Stocks generally go through a cycle of accumulation (noobs dumping their shares to pros at low prices) mark up (prices rise as all the weak hands have been shaken out and the stock is backed by professional money who will support the stock) distribution (stock is dumped back to the noobs). Using VSA to see these patterns is incredibly powerful. Now obviously it's not always cut and dry because there are many participants in the market and it is not demarcated strictly between pros and newbies. I think of it more as a gradient with the true amateurs on one end and the true pros on the other end. Fund managers can be anywhere in that gradient and are often just as bad as the amateurs at home mind you. Also, although we speak of "professional money" this is a little bit misleading because it is used in the singular. In reality there are going to be a number of professionals working in a stock and they generally, although not always, move in the same direction. I say generally, because there are periods of consolidation which appear to be a battle between pros trying to take the stock one way and another. If you look at bidu from July 9 to September 10 (roughly) there is such a 'battle'. There is significant activity at the 210 price level which is where the conflict between those wanting to take the stock higher and those wanting to take it lower occurs. The bulls finally break through mid September handing the bears their arse on a platter. I think this why prices rose so quickly after the breakout because all bears short at 210 were held by the balls and forced to cover at higher prices. I do not think it is hard to imagine that professionals often screw other professionals in this way. Remember, there is nothing sinister going on here. There is no collusion between pros. Everybody is trying to make money at the expense of someone else. The markets are a brutal take-no-prisoners game and I love it .

Here's an update for BIDU for those that are interested. On the first day we have a up bar on high volume closing near the lows. This is selling for sure. The next arrow we have a high volume up bar closing on the highs, with the next bar down showing hidden selling in the previous bar. On the third arrow we have a up bar on massive volume followed by a down bar, this is also hidden selling. If this isn't a buying climax I don't know what is. To give you an idea of the large transfer of stock that's going on the outstanding number of shares is 34 million shares. The news about the stock is also very rosy. I couldn't find anything negative about it, one video covering the stock said it was still cheap lol... I don't know how someone can say that a stock that's doubled in 5 weeks is still cheap.

I think we might have possible buying climax in Bidu. The stock has moved rapidly (50 points in 4 days) on heavy volume. Today we had an up day that closed well off its highs on very high volume. Longer term I don't know where the stock is headed, but limited upside from here I would say.

Not to blow smoke up my own arse here, but once again vsa proves of great use.

I think we're going to get another wave down to shake any early longs out and suck some new shorts in. The weak volume rally is what is telling me that this recent move up is not the real thing. We'll form either a head and shoulders or double bottom and then rally to new highs. I'm of the persuasion that this is a correction and not the start of a bear market. The reason is simply the amount pessimism is too great for this to be a bear market. Bear markets don't happen when everyone expects one. Also the price action during this correction looks bullish from a vsa perspective so I would say that the pros are buying this correction like they did the last one in march.

What do you mean by foresight analysis? Calling out trades using VSA in real time? I posted some charts of some swing positions I took using VSA in this thread: http://www.traderslaboratory.com/forums/30/vsa-chart-day-1476-new-post.html Earlier in this thread I was bullish on the stock indexes using VSA a month ago: http://www.traderslaboratory.com/forums/8042-post58.html

Here is another earnings play I took today (bought the may 125 put for 3.00 this morning) of a company reporting after the close. 1) We have a classic selling climax pattern here. We have an ultra wide ultra high volume up day. The next day is a down bar with high volume indicating that there was hidden selling in the previous bar. 2) Here we have stopping action. The volume is lower than the selling climax which leads me to believe that this alone is not accumulation for a significant move higher. It may have been short covering or buying for a 'mini-campaign'. 3) I consider this box to be action indicative of what I call a "mini" campaign. A full blown campaign would be the accumulation of a large quantity of stock and then marking it up significantly before distributing it to the public. This is the same idea except on a smaller scale... This idea of a miniature campaign isn't a vsa concept but it is something I've noticed on some charts. Anyway we get an upthrust before moving lower. We test for supply and than move up. There is a no demand pattern followed by a test. I point this out because I've noticed that many times during a markup of a stock that it follows this pattern of no demand followed by a test before moving higher. The next three bars are healthy up bars on good volume closing near the high. 4) The "mini" campaign I just mentioned was a bull move, but I think it was a smaller bull move in what will be a bigger bear move. This is an upthrust bar into new all-time highs which I expect to precede a bigger bear move in the stock. The bar occurred on high volume which is "extra bearish"

I found one stock that interests me. 1) These two bars are wide, ultra-high volume down bars. The first closes in the middle of its range and the second on its high. These would represent buying... the only problem is I don't know their proper VSA name. I'm tempted to say selling climax, but I think that only refers to bars like these that occur in recent new low territory. I'm going to have to consult the book... 2) These look like test bars for supply. The stock is a bio-tech stock reporting earnings today after the close. Bio-techs are excellent candidates for black-swan events (new drugs, fda approval, buyout, acquisition, etc). Even so it's a high-risk, low-probability play.

I have no way of scanning for specific VSA patterns since the software I use (quotetracker) doesn't have any chart scanning abilities, although if you were able to program such a thing in another charting package I would be interested. I ran across BIDU because it's been on my radar screen for some time since this is the third time I've played BIDU earnings, each time profitable. I'm running through some charts for companies reporting earnings next week. If I find anything good I'll post here. I've found that out of 50 earnings releases there might only be 2-3 worth playing; the rest are too much of a crap shoot because the chart is not clear. I know what you mean about thinking differently when it comes to VSA. VSA is still a new concept to me and before I would rely heavily on moving averages and MACD/RSI divergences. I still throw those indicators up on a chart sometimes because they're like having a crutch. A chart with nothing but price and volume can seem intimidating.

Thanks Flatwallet. I bought some May 125 calls for 0.45 last Thursday. They're currently worth 7.5, but I think I'll let them go by the end of the day. By far my best trade in 18 months of playing earnings. These are once a year type plays.

Yes, that was a no supply day. If you look at the volume you can see that the weeks before today the liquidity in the stock really dried up, allowing for the stock to rise 30+ points in 3 days (counting today's after hours action). It will be interesting to watch the action tomorrow to see what the professionals will do. I think that they will gap the stock up above 134 to put it in new 52-week high area which would put all all shorts in the red, from there they'll either distribute or hold on to the stock and let it run.

Follow up on BIDU. The markup process has begun. BIDU releases earnings after the close. This should be interesting, let's see if VSA can predict what the stock will do after 'news' is released (I've usually found that the direction a stock will be taken is determined before the earnings ever hit the wire). edit: It's 134 after hours. How sweet is that.

Is there a recording that can be downloaded? Thanks.

I must have misread the instructions. I see how it works now. Thanks for the reply.

I don't see where I can attach images, the layout of the forum seems to have changed since your post. Any help would be appreciated. http://img78.imageshack.us/img78/397/attachvm4.jpg On an unrelated note I can't find where I can edit my signature...

I'm still new to VSA (been reading up on it the past few weeks), but I'll give this a shot. The chart is a daily chart of BIDU. I've made some handsome profits on the short side with this stock, but am looking for it to rally over the coming weeks/months. First set of bars 1) The first bar here is a selling climax. It a down day with a wide range and excessive volume which closes near the highs. To give you an idea of how excessive the volume is, the float of this stock is about 26 million shares and the volume that day was over 14 million. It looks like a major transfer of stock occurred here. Earnings were reported after the close the day before, I remember because I was short. 2) The subsequent rally is littered with no demand bars which tells us we should expect lower prices to test supply. Second set of bars 1)We get a down bar with wide spread and high volume closing off the lows. The news is bad because the Chinese stock market is down 9% and this is a Chinese company. The next day is an up bar indicating that there was buying in the previous down bar, however it closes off the highs and still has high volume. There is supply in the market still. The next bar makes a lower low than the previous two bars and closes near the highs. This is a test. Despite the volume being lower than the previous two bars it is still above average. At this point we need more information. If the next day is an up day than this will be a successful test (supply has been removed) otherwise it was a failed test (supply is still present). 2) The next two days are down days indicating that the previous bar was a failed test and supply is still present. 3) We get a short lived bounce that occurred on no demand bars. Expect more testing/lower prices. Third set of bars 1) I don't glean anything new from the first 3 bars. It is the fourth bar that catches my attention. This is a down thrust bar (wide spread down bar on high volume closing near the highs) which is intended to stop out longs and sucker in new shorts. I remember watching this stock fall $6 in the first 20 minutes of trading. The news on this stock was bad and we sliced through the widely watched 200-day ema. Any weak longs that were clinging to hope surely got stopped out here. Aggressive bears were suckered into entering a bad position as well. 2) The next four bars show a complete dry up in volume. For the first time it appears that supply has been absorbed. Fourth set of bars 1) The first bar is a an up bar on above average volume and above average range closing on the highs. This is the first healthy up bar we've seen. After seeing the previous action this bar is very encouraging. 2) Any excitement is put on hold as we see two bars which look like no demand. This of course does not change any of our past analysis, all it tells us is that further tests into the previous areas to the left to test for further supply is possible. This shouldn't come as a surprise. Before the professionals mark this stock up they must be sure that supply as been removed and the stock can rise unencumbered by weak longs trying to get out at break even. I would be very surprised however if we make new lows. What I imagine will happen is we will end up forming a reverse head and shoulders pattern by making a higher low on this next series of tests. This week should be interesting for BIDU. Further considerations: 1) Ultimately I think the accumulation phase is coming to an end and the stock should rise to all time highs. Predicting future prices is a dicey proposition, but with such a large transfer of stock from weak hands to strong hands the stock is poised to do so. 2) Unrelated to VSA, the short interest is 10%. Not excessive by any means, but it should provide a good amount of fuel to drive prices higher. Whether this is important to a chartist or not is debatable. I generally try to ignore all non-technical information, but I believe such information is of use when looking at a longer time frame because it represents potential imbalances in supply and demand. 3) Analyzing stocks on a daily time frame is difficult because many times there will not be enough activity to analyze. I have noticed this is especially true on the really small and low volume stocks (I'm not talking about bidu, but much smaller stocks) which makes VSA either difficult or near pointless. Looking at a weekly, or even monthly, chart is advised. Remember that the point of VSA is to detect professional activity, if there is no activity to detect then the method proves of little help. 4) Since I am new to VSA, I have trouble at times having faith and confidence in my analysis. This especially true in this stock because I had expected it to recover much sooner. I saw the strength on Feb. 18, and thought the stock would go higher. When the stock eventually fell as low as $94 I began to "lose faith" in this method and/or my own skill. It is important that background strength or weakness does not 'disappear'. This is why I think confidence is huge component of a successful trader which I am still working on becoming after a year or so in the markets. Naturally this does not mean that you should bet the farm with out a stop. I may very well be wrong here and currently do not have an open position in the stock. 5) I subscribe to John Carter's newsletter at tradethemarkets.com. I do not mean to bash John in any way, indeed I have read his book twice and think there is much to learn from him, but strongly disagree with his analysis that the stock will continue lower. The shortfall in John's method is his reliance on moving averages and the 'ttm trend' to detect the trend of price. This is a perfectly valid method, but designed to smooth out data thus eliminating the subtleties that each bar contains ( Read in between the bars ). This shortfall was apparent when he was looking to short a rally in the dow after the one day reversal on Mar. 14. I was surprised because after that day I became extraordinarily bullish. This is rare for me because majority of my trades are on the short side and I dislike going long. This has further reinforced what I have read that a trader must always formulate his own opinions. I apologize for such a long post, but I would like to cap it off with a quote from Wyckoff (I just ordered some of his books and am waiting eagerly to read them) :

Excellent thread, very interesting. I recently read Tom Williams' book (the older edition not master the markets). I was wondering what you thought about the stock indexes. Looking at the dow I would think that there is background strength, but still a lot of supply. Now bear with me, the concepts of VSA are new to me so this might be totally off, but here is what I see: 1st arrow) We had that down day on a wide spread and high volume the day before. This bar is an up bar on even higher volume. Does this indicate 'hidden' buying on the wide spread down day? 2nd arrow) We make new lows but close near the highs. Is this a stop bar or a test bar? The volume is still high so if it is a test bar does this indicate there is still supply? 3rd arrow and 4rth arrows) These bars look like no demand which would make sense if professionals want more stock at lower prices. 5th arrow) Is this a stop bar, test bar, or down thrust bar? either way I take it to be bullish since we closed on the highs (and found support @ 200 ema). Since we took out the lows from the previous move down it looks like a giant stop run on the daily time frame. I'm probably off on my analysis, but it looks like all the market needs is a shakeout move and then it should rally. I would be very interested in your guys comments.