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Nasdaq - Is this the end or just a dip?


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#1 SemiBizz

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Posted 05 January 2007 - 12:17 PM

http://bigcharts.mar...&mocktick=1.gif



Although there is plenty of downside here, there's no structural damage yet. We had a huge volume day on Wednesday that set the tone for today's revelations regarding MOT warning in the middle-of-the-night, the chip downgrades of INTC, BRCM, MRVL and associated collateral damage. Wednesday was a big volume day, and as usual - somebody always knows. They setup today's trading on Wednesday. The operators are sitting back from their well-defended positions setup in Wednesday's trading to see what the street does with it. And what is the number one indicator? Volume. Volume will tell us if this is just a dip or if the bulls are finally going to get thrown off the bus.We're expecting a test now of Wednesday's lows on Nasdaq (2394.66). If that low is breached on lighter volume then we'd expect a bounce, unless it closed under the previous trading range set on 11/27 (2405.89). Now if Nasdaq exceeds the volume of Wednesday and does not test the low, that is a stealth sign of strength.

TRADING STRATEGY QID.

1) If the futures market closes like it did on Wednesday we will close 1/2 of position as these get bought EVERY time.

2) If Nasdaq does not exceed the low or does not close under the previous trading range on lighter volume we will maintain present position with previously published stop of 51.25

3) If Nasdaq closes under the previous trading range low of 2405.89 we will add to our position on a bounce.

4) If Nasdaq exceeds Wednesday's low and volume, closes under it, then we will aggressively add.

Edited by SemiBizz, 05 January 2007 - 12:19 PM.

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Volume is the only vote that matters... the ultimate sentiment poll.

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#2 traderpaul

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Posted 05 January 2007 - 12:26 PM

Question for you. Does the movement of the price creates volume? OK, It is like chicken and egg question. Which is first?
"Inflation is taking place now. Prices may not appear to be rising because they are making packaging smaller. "— Rickoshay

#3 paulstan

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Posted 05 January 2007 - 12:38 PM

I'll add my 2 cents, as I have a lot of respect for Semibizz' approach. Tim Ord has popularized this approach in the past, although I don't see him basing his analysis this way as much these days. I generally don't use ETF volume as a guide, but rather use the aggregate market volume. There are times when a change in trend will occur on low volume. I recall the move off of the July low this summer was a low volume move. Personally, I'd view the high volume earlier this week as an exhaustion day . . . and think that a close below the range, even if relatively low volume, will be significant and be a signal for at least a short-term move lower.

#4 SemiBizz

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Posted 05 January 2007 - 12:41 PM

Question for you. Does the movement of the price creates volume? OK, It is like chicken and egg question. Which is first?





You don't have to answer that question. All you have to understand is trend. Trend is (for now) Light Volume UP, Heavy Volume DOWN.
Price and Volume Forensics Specialist

Richard Wyckoff - "Whenever you find hope or fear warping judgment, close out your position"

Volume is the only vote that matters... the ultimate sentiment poll.

http://twitter.com/VolumeDynamics  http://parler.com/Volumedynamics

#5 traderpaul

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Posted 05 January 2007 - 12:45 PM

I'll add my 2 cents, as I have a lot of respect for Semibizz' approach. Tim Ord has popularized this approach in the past, although I don't see him basing his analysis this way as much these days.

I generally don't use ETF volume as a guide, but rather use the aggregate market volume. There are times when a change in trend will occur on low volume. I recall the move off of the July low this summer was a low volume move.

Personally, I'd view the high volume earlier this week as an exhaustion day . . . and think that a close below the range, even if relatively low volume, will be significant and be a signal for at least a short-term move lower.

I have done studies on volume....One of my indicator is : lots of volume and little changed in the price. 1/03/07 is a perfect example.....12/15/06 is another example....

Edited by traderpaul, 05 January 2007 - 12:46 PM.

"Inflation is taking place now. Prices may not appear to be rising because they are making packaging smaller. "— Rickoshay

#6 SemiBizz

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Posted 05 January 2007 - 01:04 PM

I have done studies on volume....One of my indicator is : lots of volume and little changed in the price. 1/03/07 is a perfect example.....12/15/06 is another example....




It's all about timeframe. On Wednesday, daily the price was changed little with respect to open and close (doji). But on the intraday it was a wild ride. As you may remember, one of the things we watch for is a high volume doji on a daily chart, per Tim Ord "Never be short a high volume doji". BTW the volume analysis techniques I use are robust across timeframes. As with any type of charting the picture varies based on time. I use 1-5 day 3, 5, 30, 60 min charts to help determine entries and exits, pivots etc.



With regard to 12/15. The most important info you can glean from that high volume day is that even with strong volume the Nasdaq was unable to break the daily high of 2468. That is a stealth sign of weakness.
Price and Volume Forensics Specialist

Richard Wyckoff - "Whenever you find hope or fear warping judgment, close out your position"

Volume is the only vote that matters... the ultimate sentiment poll.

http://twitter.com/VolumeDynamics  http://parler.com/Volumedynamics