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I agree, Steve, I use candlevolume on MetStock charts, another kind of
integration of the Ricahrd Arm's concepts of volume with that of
candelsticks
Joe
>Joe,
>
>What about candlevolume charting?
>
>Steve Karnish
>CCT
>
>----------
>> From: Joseph Ehardt <jehardt@xxxxxxxxxxxxxx>
>> To: MetaStock Discussion <metastock@xxxxxxxxxxxxx>
>> Subject: NYSE Composite with New Volume Indicator
>> Date: Thursday, March 18, 1999 9:19 AM
>>
>>
>> Good morning, fellow MSers,
>>
>> As many of you can gather from my occasional posts of the NYSE Composite
>> Index with official exhange advancing-declining volume data, yesterday
>> being the most recent one, I feel that price should be evaluated in the
>> context of volume information. Price alone tells only half the story,
>maybe
>> even less than half the story. This belief of mine leads to the next few
>> comments.
>>
>> How can I understand the affect of volume on individual stocks, which are
>> my primary trading devices? Only occasionally do I trade the indexes in
>the
>> form of SPDRs, such as DIA, SPY, MDY, QQQ, and XLK. But everything I do
>> trade has volume, and yet there is no official source for how much volume
>> involved declining price trades and how much involved rising price
>trades.
>> By looking at Time and Sales data, one can make an approximation of how
>to
>> distribute volume between advancing, declining, and unchanged trades, BUT
>> there is no historical source of time and sales data from the exchanges,
>> yet alone for indiviual equities.
>>
>> I would like to approximate this allocation if I want to attempt to
>> meaningfully use volume in conjunction with price data. Other technical
>> analysts have preceded me on this issue. Joseph Granville created the OBV
>> (On Balance Volume) some time ago, but it crudely approximates what I am
>> looking for because it considers ALL daily volume of a stock that closes
>up
>> on the day to be advancing volume, and all daily volume of a stock that
>> closes down on the day to be declining volume. Very crude, indeed. OBV is
>> available in Metastock, and there is another indicator called
>> ACCUMULATION/DISTRIBUTION which MS includes. This indicator makes a
>better
>> effort by allocating volume between advancing and declining varieties
>> according to the following formula:
>>
>> the cumulative sum of [ { ( (close-low) - (high-close) ) / (high - low)
>}
>> * daily volume ]
>>
>> It is a definite improvement of the OBV indicator, and yet it does not
>> satisfy me completely. I don't like its allocation formula in numerous
>> situations.
>>
>> What I think is important about price pattern is influenced by Japanese
>> Candlestick theory. That is to say, I believe that where a stock opens,
>> trades to a high price and low price for the day, and then closes
>somewhere
>> within that context, it is that "picture" which I believe is very
>> revealing. The MS ACCUM-DIST indicator allocates volume according to
>HIGH,
>> LOW, and CLOSE information, but not consider the importance of the OPEN.
>>
>> I have "created" (only because I am unaware of someone else of having
>> devised the formula that I am using) what I call the Cumulative Allocated
>> Volume Indicator, which in the Japanese Candlestick sense of things
>> examines the body (the range between the open and closing price) in the
>> specific context of the embodying "stick" (the range between the high and
>> low price). By prorating the daily volume to advancing, declining, and
>> unchanged categories in a manner I have calculated, and then accumulating
>> them into a simple variant of the Cumulative Advance-Decline Volume
>> Indicator (which we only get for a few exchange indices), I can produce
>> what I believe is a picture of whether buying (accumulating) or selling
>> (distribution) is driving the specific stock or index.
>>
>> What I have attached is a chart that portrays my indicator, and it
>clearly
>> suggests that buying has been driving this market higher in a
>NON-divergent
>> way, in stark opposition to the simple Cumulative A-D line and the
>> Cumulative A-D Volume line. Moreover, IF (because I haven't been able to
>> find the definitive answer) the NYSE compiles advancing, declining, and
>> unchanged volume simply by doing the OBV of each equity in the Composite
>> Index, then my study may be far more accurate than the official exchange
>> data, which is included again today as the second chart for comparison
>> purposes.
>>
>> Thought you might be interested.
>>
>> Joe
>>
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