[VSA] Volume Spread Analysis Part I

[Tasuki 10]

"As they are buying (or absorbing) all of the stock on offer, this prevents substantial down-moves during the day's trading (despite all the frantic selling) and finishes up with a narrow spread on a down-day. If the professional money had not been bullish, they would refuse to buy stocks on offer, which means that the spread would then be wide and down for the day." MTM

 

With the Dow down 238 points at the close, it is unlikely that the professional money was bullish. Rather, I think my interperetation was correct, namely, that yesterday's action was a failed test, and that there was more supply below. From my perspective, the professionals brought the price down yesterday to see whether there was supply down below. Finding that there was, they let the bottom fall out today (especially obvious in this afternoon's session). This seems pretty obvious now, but this raises interesting questions about multiple viewpoints, all potentially valid, with VSA.

So, the bottom line is, Are all the sellers washed out now? Well, hard to say, but what I'm looking for before going long is a low volume test bar, or better yet a no supply bar on very low volume. Such a bar may not show up for a while, but until it does, I'd be shy about going long.

[gassah 10]

With the Dow down 238 points at the close, it is unlikely that the professional money was bullish. Rather, I think my interperetation was correct,

.

 

The point of my posts was to open one's mind to the possibility that demand might be entering the market as it often can with that type of bar, and not be fixated on one direction. In addition, markets can continue down even while demand is trying to come in which we can often see in retrospect.

 

I took Wyckoff's quotes out of context. After yesterday's bar he would still have been in position 3, a bearish position. In the course he only suggested preparing to cancel the bearish position, and only definitively canceling it if there were more positive developments. Even if there were demand coming in on that bar it wasn't a place to go long when looking at the position within the channel, if one adheres to Wyckoff's methodology.

 

nic

[Soultrader 12]

With the Dow down 238 points at the close, it is unlikely that the professional money was bullish. Rather, I think my interperetation was correct, namely, that yesterday's action was a failed test, and that there was more supply below. From my perspective, the professionals brought the price down yesterday to see whether there was supply down below. Finding that there was, they let the bottom fall out today (especially obvious in this afternoon's session). This seems pretty obvious now, but this raises interesting questions about multiple viewpoints, all potentially valid, with VSA.

So, the bottom line is, Are all the sellers washed out now? Well, hard to say, but what I'm looking for before going long is a low volume test bar, or better yet a no supply bar on very low volume. Such a bar may not show up for a while, but until it does, I'd be shy about going long.

 

Hi Tasuki,

 

Very interesting chart indeed... I have been looking at that level as well to see potential low volume tests. I have been watching global markets to guide me through my technical setups. One concern I have is the current Asian markets price action. After several sesions of overlapping value, Nikkei is rallying hard today back into the previous day range and value area.

 

This action may hold prices on the US markets, especially the Dow around the 12600 - 12650 mark. This is just a short term day trading perspective.

 

Technically speaking, with the Dow at potential support line and Asian markets rallying after a gap down... this area could hold. Afternoon session is yet to start over here but will add further comments if the Nikkei does end up reversing.

[ranj 10]

Tasuki,

 

On your Dow chart, the current down volume is high as a local relative, over the past few days, but look at the aug low and the Ultra HV down bar closing on the highs, that is demand overcomming supply, so the current selling volume should not be enough to punch through the Aug lows. I too am looking long, but will wait for a trend line break with a WRB up bar and then a low vol. test of the area.

 

ranj

[ranj 10]

Did nibble at a little long position today

SUNH, two year solid uptrend

Strongest in it's industry, and acting much stronger than everyone else

 

It had pushing through supply on 12/20 and 21st or the creek

returned to ice, or the break out point with a low vol test on the 3rd and the 7th

broke the test high today, made an upthrust like bar, which is bearish, but the context is wrong and the broader market made the same kind of daily bar.

 

The best thing about sunh is that it is acting much strong than the broader market, and it has not take any technical damage. So when the market does rally I am hoping for a nice pop past the recent highs.

 

http://charts01.stockfetcher.com/sf1chart/755953136.gif

[Tasuki 10]

Tasuki,

 

On your Dow chart, the current down volume is high as a local relative, over the past few days, but look at the aug low and the Ultra HV down bar closing on the highs, that is demand overcomming supply, so the current selling volume should not be enough to punch through the Aug lows. I too am looking long, but will wait for a trend line break with a WRB up bar and then a low vol. test of the area.

 

ranj

 

I think you've got the right approach ranj. You may notice that the overnight Globex trading is very strong, at least so far. We'll see what it looks like in the morning, but so far it looks like we may get a nice gap up by the AM. The question is, will it hold, and my best guess, looking at the market overall, is that we'll get a dead-cat bounce and then drop another 10%. If you look at the sectors that are doing well (consumer staples, healthcare, utilities) compared to the sectors that are tanking (tech, transportation, financials, housing and consumer discretionary), it's clear that the professionals are putting their money into defensive sectors because they think the market's got more downside.

[treadstone 10]

 

Felt this weekly SPX chart was worthy of discussion.

 

Looks like it found some support on heavy volume around 1400. But will it last?

[That One Guy 10]

Drawing a trend line from march to august and extending it into the future, shows this weeks action tested the line. However, the volume was extremely high. How do we view this? If this was a test, wouldn't the volume be much lower? Maybe this is a failed test and they need to mark down more to wash out all the sellers. Next week will tell us more about the bigger picture. It may get ugly if they break that march low.

[zdo 20]

A couple quick questions -

How do you quantify high, low, ultrahigh, ultralow volume bars?

How do you quantify small and large range / spread bars?

 

Many thanks.

[MrPaul 10]

A couple quick questions -

How do you quantify high, low, ultrahigh, ultralow volume bars?

How do you quantify small and large range / spread bars?

 

Many thanks.

 

You can qualify them by looking at the bars relative to the last 30 or 40 periods.

[jjthetrader 10]

A couple quick questions -

How do you quantify high, low, ultrahigh, ultralow volume bars?

How do you quantify small and large range / spread bars?

 

Many thanks.

 

Average is obvious and the rest are derivatives of that. I can tell you what Tradeguider uses. It's average is 15 period. Anything above 1.75 times that is ultrahigh. Anything between the average and ultra-high is high.

The inverse is true for low.

 

Spread of the bars is relative to the last 5 or 6 bars. Take the average of the last 6 bars spread and see where your current bar sits within that average spread.

 

Hope that helps

[monad 10]

Anybody attended the marathon 3hr seminar on VSA, saturday, with over 90min of what VSA is or not:, apparently lots of customers have bought TG without knowing what it is all about:doh: Anyway anyone care to share regarding their enlightenment experience.

 

Now for a mere futher cost of $2000 to over $3000, folks are going to be enlightened to extra hot VSA secrets during weekend retreats in hotels. would it be productive during week days in live markets???????

[jjthetrader 10]

Anybody attended the marathon 3hr seminar on VSA, saturday, with over 90min of what VSA is or not:, apparently lots of customers have bought TG without knowing what it is all about:doh: Anyway anyone care to share regarding their enlightenment experience.

 

Now for a mere futher cost of $2000 to over $3000, folks are going to be enlightened to extra hot VSA secrets during weekend retreats in hotels. would it be productive during week days in live markets???????

 

Ya I stuck out the event. Some technical issues that ate up a lot of time but when Tom and Sebastian talk about VSA there are always small nuggets you pick up and that made it worth it. This one was on strength. The next one is on weakness. Sebastian did a bit on testing. He's a smart guy and seems like he knows his stuff.

 

As for the Vegas seminar, no way I'd pay that. There won't be anything new. There was promised to be actual trading setups at this past seminar but they basically just told you when you see a test get in. There wasn't any specific trading plan help etc. I'm afraid we're on our own for that. I've found it comes the more you trade with VSA.

[monad 10]

There was promised to be actual trading setups at this past seminar but they basically just told you when you see a test get in. There wasn't any specific trading plan help etc. I'm afraid we're on our own for that. I've found it comes the more you trade with VSA.

 

Looks like a classic marketing ploy, Gavin was an ex-policeman, then went into advertising/marketing, Statements like "New hot indicator, or tips or trading setups" always triggers our deep seated need/dependancy i.e greed. That somebody out there has a secret to trading success. The software TG is over $2500 designed way back and full of glitches from the feedback I get, there have been countless seminars and now they are claiming they have more to reveal at further cost of $3000 over a weekend and not in a live market;)

 

I was recommended Vadym Graifer's book for a fraction of the cost and have found more on actual trading setups and how to trade in there than all the TG seminars put together. One can also invest in Wyckoff's course which is one third the cost and have more practical benefit.

[monad 10]

Anybody who really is keen to work with

 

Law of Supply and Demand

Law of Cause and Effect

Law of Effort and Result

 

http://wyckoffstockmarketinstitute.com/course.htm

[sleepy v2 10]

apparently lots of customers have bought TG without knowing what it is all about:doh:

 

Hi Monad,

 

I didnt attend saturdays seminar ... but you can you please elaborate on what you mean by the above comment.

 

Second, was their any mention of the Tradeguider Upgrade that Gavin was constantly referring to during Oct-Dec?

 

Or about their customer only forum that is supposed to now be up and running?

 

 

 

sleepy

[jjthetrader 10]

Hey Sleepy,

 

Gavin did talk about the upgrade. It's in 'beta' for EOD and a deal was just signed to program the RT version so I wouldn't hold your breath on that one.

They're still asking for ideas to add to the new version so how far along could it be?

 

The new forum is up at TG.

[mister ed 10]

Anybody who really is keen to work with

 

Law of Supply and Demand

Law of Cause and Effect

Law of Effort and Result

 

http://wyckoffstockmarketinstitute.com/course.htm

 

Monad - that is great information thanks, be very worthwhile for people interested in VSA to co have a look at. VSA is a subset of Wyckoff analysis. Have a look to at the recent postings of gassah too, he runs a Yahoo group focused on Wyckoff analysis, he has posted some good info and links also.

[gassah 10]

Williams took the Wyckoff-SMI course and I think it was 1964. SMI showed me the check he paid with. Quite nostalgic.

 

nic

[monad 10]

Monad - that is great information thanks, be very worthwhile for people interested in VSA to co have a look at. VSA is a subset of Wyckoff analysis. Have a look to at the recent postings of gassah too, he runs a Yahoo group focused on Wyckoff analysis, he has posted some good info and links also.

 

Wyckoff addressed all the three parameters, namely volume, price range and close, so in that respect there is nothing fundamentally different in VSA.

 

e.g in Wyckoff there is SOT, (shortening of thrusts, narrow price ranges) , in a rising market with low volume, this is termed as NO DEMAND in VSA etc.

 

there is a ton of info and charts, daily commentaries etc on the following:

Worth looking at the charts where various trendlines, support/resistance levels and individual bars like SOT, upthrusts, spring etc are identified.

 

http://www.ltg-trading.com/site%20map.htm

 

http://www.ltg-trading.com/archives.htm

[monad 10]

Hi Monad,

I didnt attend saturdays seminar ... but you can you please elaborate on what you mean by the above comment.

Second, was their any mention of the Tradeguider Upgrade that Gavin was constantly referring to during Oct-Dec?

Or about their customer only forum that is supposed to now be up and running?

sleepy

 

The event was supposed to be for TG customers who were asked to send in charts with questions. I sat with a colleague who owns TG, many customers were unable to get in as they filled the room with non-customers who paid a small fee. Then instead of getting on with addressing the charts , we had over 100minutes of Gavin with his slides rattling on about what is trading, what is VSA and what it is not etc as if he had an audience full of kids, who had bought TG at a cost of over $2000 without knowing what trading is all about.

 

As for the TG software they have been promising an upgrade for the past 4-5yrs and do not hold your breadth if any ongoing announcements are made in this respect, it is a 2-3men operation and now in the processing of glossing up the website, prior to this there was supposed to be a website University nothing has materialised., My friend has continuous problems with the live price cursor which keep disappearing, as to the VSA indicators, plus if you observe these VSA indicators, they appear all over the place depending on the timeframe you are trading, in a strong downtrend, you will keep getting signs of strength which can completely throw you our, same with a strong uptrend.

One can operate with a normal charting package which plots bars and vol and

trade with Wyckoff's principles. The key is to identify the supply/demand signals and construct setups as per Vadym Graifer and create your own edge.

check out the ltg-trading site and have a look at the charts, you can learn a lot from that.

good luck

[monad 10]

Monad - that is great information thanks, be very worthwhile for people interested in VSA to co have a look at. VSA is a subset of Wyckoff analysis. Have a look to at the recent postings of gassah too, he runs a Yahoo group focused on Wyckoff analysis, he has posted some good info and links also.

 

would appreciate the link

[jjthetrader 10]

True, the TG software does throw up signals everywhere but that is because it's incapable of reading the background. Even Tom says to ignore the signals if you've got strength or weakness in the background.

 

No TG event has ever been as good as it's hyped up to be. Gavin is always promising things and never get to them. It's just how it is. He's a great marketer.

 

Vadym gives you setups but you've still got to make them your own. I read the book and it helped but I've still crafted my own entries and exits combining everything including TA (not tits and ass).

[mister ed 10]

would appreciate the link

 

The Yahoo group is at http://finance.groups.yahoo.com/group/Wyckoff-SMI/

[Tasuki 10]

The event was supposed to be for TG customers who were asked to send in charts with questions. I sat with a colleague who owns TG, many customers were unable to get in as they filled the room with non-customers who paid a small fee. Then instead of getting on with addressing the charts , we had over 100minutes of Gavin with his slides rattling on about what is trading, what is VSA and what it is not etc as if he had an audience full of kids, who had bought TG at a cost of over $2000 without knowing what trading is all about.

 

As for the TG software they have been promising an upgrade for the past 4-5yrs and do not hold your breadth

 

For me, the most disturbing part of Tradeguider's marketing strategy is the fact that Gavin has quite insightfully figured out that Asia is the new "main event", where their up-and-coming prosperity is breeding a massive population of inexperienced traders who swallow Gavin's sales pitch hook line and sinker. In my estimation, the folks at TG see no economic reason to upgrade their software (I found it intolerably buggy when I tried it), because they have literally millions of potential customers throughout Asia who are as gullible as they are inexperienced. Why bother upgrading the software when you can just swell your ranks with newbies from other countries? I really feel for the Asian traders who are being taken for suckers.