winky pop wednesday, page-170

Hi Wayward,

I'm well aware of all that you are saying. Not new news.

Yes - volume does tend to fall as a trend gets extended to the upside. And then it falls, as the volume increases. Falling volume as the price rises is a pre-condition for the fall to occur. It's not a timing signal - it's a pre-conditon. An alert.

I'm not a short term trader. And I look at multiple time frames - monthly, weekly, daily, and sometimes intra-day. But I don't pay much attention to intra-day - they cloud the picture too much. And, particularly in America, where volume is now 70% created by HFT computers. With lots of quote stuffing, intra-day is just a mine field. Recently I saw Bank of America go through a 40 cent range in one second as a result of HFT activity. So intra-day is not of much interest to me. It's controlled by mathematicians and their machines making huge amounts of money on astronomical numbers of trades taking advantage of miniscule imbalances that ordinary humans can't even see. In the longer run, it doesn't affect the trend. But - if 70% of the volume is being created on these miniscule trades, which don't affect the visible trend on the daily chart, what's holding this market up? Knowing this sort of stuff means that the current volume is low, low, low. What's pushing this market up? Not much.

You are quite right to say we need to attend when volume rises. Last night we got just that. :)

Currently, the volume on the Dow is not just showing low volume - this is diabolically low volume on the monthly chart. It's now at a low so low we haven't seen anything like this since 1999. Nothing like this.

Simple Economics 101. Low demand, same goods on offer, price will fall.

Now, watching for any increase in volume and a down move.

Redbacka