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See http://www.pixi.com/~marvel/code/heeding.htm for an interview that
Richard Arms did with Barron's. He discusses the "volume at the top"
issue...
Steven Buss
Walnut Creek, CA
sbuss@xxxxxxxxxxx
-----Original Message-----
From: Harley Meyer <Harley.D.Meyer-2@xxxxxxxxxx>
To: A metastock-list@xxxxxxxxxxxxx <metastock-list@xxxxxxxxxxxxx>; Jim
Greening <JimGinVA@xxxxxxx>
Cc: Bill <WPhill9611@xxxxxxx>; Claud Baruch <claudb@xxxxxxxxxxxxx>; Herb
Carter <carterh@xxxxxxxxxxxxxxxx>; huw evans
<huw.evans@xxxxxxxxxxxxxxxxxxxxxxxxxx>; Jim Greening <JimGinVA@xxxxxxx>;
MICHAEL J ARNOLDI <marnoldi@xxxxxxxxxx>; Michael Liew <MAL2@xxxxxxxxxxxx>;
Randy Burkhardt @ Home <randy@xxxxxxxxxxxxxxxx>; Steven Buss
<sbuss@xxxxxxxxxxx>
Date: Thursday, October 30, 1997 1:39 AM
Subject: DJIA update
>I haven't downloaded yet but just wanted to send the charts while I had
>time tonight. I don't like it. Well if I'm short then it's actually
>looks pretty good :).
>
>New highs minus new lows declining. This is one of the conditions we
>look for at the top of a market that has been moving up.
>
>Total volume is increasing. From CANSLIM we want price & volume to move
>together. Here they diverge. For a bullish correction we are looking for
>prices to move down after volume drifts lower. And looking for prices to
>move higher from a correction with increasing volume. So this is the
>area that causes the greatest concern.
>
>Since we have volume increasing as prices decreased over the last few
>days, then this might cause an even deeper correction down the road.
>
>If we get a good upward surge in up/down volume with in the next couple
>of weeks we should be ok. (Remember all 4-5 conditions must also be
>present). If not & prices move higher be careful.
>
>Here is some food for thought: If all 4-5 conditions are true then we
>can go back into the market with confidence.
>Review->
>coming off of a correction:
>1-NH-NL increasing
>2-total volume increasing
>3-surge in up/down volume where 10 day MA >> 50 day MA
>>> - means "much greater than"
>4-upper channel of down trending channel is broken
>
>Going into a top:
>
>Reverse the above conditions.
>
>Ok, using a little bit of logic:
>
>If 1 and 2 and 3 and 4 (from above) are true then it is safe to go back
>into the market with confidence.
>
>But 2 (increasing volume) can't be assumed to be true given that volume
>has increased to a record level over the last few days. In essence, we
>would have to assume that for many weeks in a row that volume will
>continually move to record levels as prices move higher.
>
>Hence the hypothesis is false. Which implies that the entire statement
>is 'vacuously' true. But we are not interested in 'vacuously' true
>statements.
>
>
>So is it reasonable to assume that 2 (increasing volume) can be true
>given the current level of volume?
>
>Now if volume decreases to a more reasonable level (average over 50
>days) then prices will more than likely decrease (observations from
>William O'Neal & CANSLIM). More than likely under the current
>conditions, the market might become even more nervous.
>
>Hence we could move lower.
>
>Q.U.E.D.
>
>In closing. After skimming Greenspan's speech I will say that we might
>be headed to lower levels. I will re-read it because it was very
>informative with respect to global markets. But when he & Alice Revlin
>act as cheer leaders and when I hear Alice make comments that investors
>are in it for the long run. To me she is saying. Hey it is ok if the
>market moves lower because investors are willing to stick it out and not
>panic. (Greenspan's fear).
>In Greenspan's speech he also stated that growth in earning would be
>slower than previous years, but still growing. Just not at the same
>pace.
>
>One more side note: On Nightly Business Report several weeks ago, there
>was advice given that one should add to there portfolio. A small portion
>of short positions, to offset losses from a market decline. Might be
>some good advice.
>
>Harley Meyer
>
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